Innovating Innovation Part II

Technology is forcing changes in the process of Innovation, says the MIT Sloan Review:

Technology is transforming innovation at its core, allowing companies to test new ideas at speeds—and prices—that were unimaginable even a decade ago. They can stick features on Web sites and tell within hours how customers respond. They can see results from in-store promotions, or efforts to boost process productivity, almost as quickly.

The result? Innovation initiatives that used to take months and megabucks to coordinate and launch can often be started in seconds for cents.

And that makes innovation, the lifeblood of growth, more efficient and cheaper. Companies are able to get a much better idea of how their customers behave and what they want. This gives new offerings and marketing efforts a better shot at success.

Well, yes - but in fact historically that has not been the real barrier, its changing hearts and minds. Now MIT reckons this is all changing too:

Companies will also be willing to try new things, because the price of failure is so much lower. That will bring big changes for corporate culture—making it easier to challenge accepted wisdom, for instance, and forcing managers to give more employees a say in the innovation process.

Put bluntly, we believe this is largely wishful thinking. We did a piece of work for NESTA on Innovation in the 1930's depression earlier this year, and what we found was fascinating - it needs a major crisis like the Depression to overturn old "we've always done it this way" models and allow innovative new things to happen, even if they are blindingly obvious (we're doing a piece of work on this at the moment by the way, my cup runneth over with examples of blindingly obvious innovations that were vigorously resisted for ages, or even culled).

Likewise, in various guises I have been involved with creating change in enterprises for 20 odd years, and I can't think of one occurrence where cost alone and of itself stopped a company trying something out. Far more typically I have seen things like:

- Unwillingness to adopt new things because of "not invented here" and/or "we tried it before, didn't work" (aka no-one gets fired for saying No)

- Political Sensitivities internally - either no one has the motivation to go up against the existing power base, or the baby is strangled at birth by the big divisions

- The company is structurally/culturally unable to capitalise on the innovation (you often see this with companies that acquire new technologies, even Google struggles)

- The total cost allocations make new things look unattractive as they attract full development costs upfront, whereas old things have a lot of costs amortised. (I know of one hardware company that had better Unix kit than Sun but whose cost allocations told it that mainframes were more profitable. Result - Sun took the Unix workstation market)

- The "will this be an issue on my watch" mindset - the person who needs to make the decision knows the chickens don't come to roost until he/she is out the chair. Why make a controversial decision and risk being seen to have erred?

It has been possible to cheaply simulate many things for at least 20 years (I recall running SIMAN models on IBM PC-AT's 20 years ago - took all night, but we knew the results by morning). Machiavelli noted the reasons for innovation failure 500 years ago, long before Web 2.0 tech made things cheaper, when he said:

`` We must bear in mind, then, that there is nothing more difficult and dangerous, or more doubtful of success, than an attempt to introduce a new order of things in any state. For the innovator has for enemies all those who derived advantages from the old order of things, whilst those who expect to be benefited by the new institutions will be but lukewarm defenders. This indifference arises in part from fear of their adversaries who were favoured by the existing laws, and partly from the incredulity of men who have no faith in anything new that is not the result of well-established experience. Hence it is that, whenever the opponents of the new order of things have the opportunity to attack it, they will do it with the zeal of partisans, whilst the others defend it but feebly, so that it is dangerous to rely upon the latter.''

This has little to do with trying things out a bit more cheaply, and everything to do with Being Human.

The real breakthrough in forcing innovation outside of depressionary times (apart from warfare) has come from 2 models:

- Funding innovation in new companies that force the issue with the status quo one way or another

- Incremental innovation developed by Japanese "Lean" manufacturers. What they did was reduce the fat in the system - inventory, batch sizes, dwell times etc and thus forced innovation to cope with the new situation. ("We drain the river a bit each time, new rocks appear, we clear those and then we drain the river a little more" is a standard analogy.

Now to be fair, MIT Sloan is focussed only on innovating digital rather than physical goods, but I think they are being naive if they think that a skunkworks project is going to be adopted even if is successful in pilot (never mind cheap to do). I am sure every reader of this blog who has been around a bit has seen a sure fire winner pilot being taken out beyond the corporate bikesheds and clubbed to death because it upset some status quo.

So, alas MIT Sloan, but I think you are talking out of your academic hat. Cost is a factor, but not the factor. Unless one can force an environment where those little experiments will become adopted - and break the inertia - they will go the way of SIMAN models, scenario studies, breakthrough discoveries etc and sit on the shelf unloved and unused.

Now finding out how to create that environment sustainably, AND get it adopted as best practice, is an excellent use of academic time in my view.

By the way, Innovating Innovation Part 1 is over here......

Update - rather nice article echoing some of this from Bankervision.