When the pandemic struck and the economy began to shut down, many businesses struggled to stay afloat. Just as they were getting back on their feet, supply chain snarls and rapid inflation dealt them another blow. Faced with a growing number of challenges, many companies asked: Should we stick with what has worked in the past or pursue innovations that could set us up for the future? Perhaps surprisingly, that question is not easily answered. According to journalist Matt Richtel (@mrichtel), studies have shown, “Outwardly, we praise innovation. Inwardly, we harbor a visceral aversion to it.”[1] He adds, “The emerging science of implicit bias has revealed that what people say about creativity isn’t necessarily how they feel about it. Research has found that we actually harbor an aversion to creators and creativity; subconsciously, we see creativity as noxious and disruptive, and as a recent study demonstrated, this bias can potentially discourage us from undertaking an innovative project or hiring a creative employee.” In other words, organizations might well look for any excuse not innovate. The pandemic and rising inflation may provide those excuses. The question is: Would that be a wise choice?
Innovation During Disruptive Times
Innovation brings about change — and change can be disturbing. Centuries ago, Niccolo Machiavelli, in his classic The Prince, wrote, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.” Jim Bailey (@JimBailey88), CEO of the Americas at Capgemini, argues that, despite the discomfort, innovation is essential. He explains, “Few things in our personal lives feel safer than routines. … Routines are healthy, predictable, and comfortable. In business, not much has been comfortable over the past two years. It wasn’t comfortable for the restaurant industry to rapidly shift to online ordering and curbside pickup. Airlines and cruise lines rethinking the entire traveler experience wasn’t comfortable, either. But what happened as a result, in these industries and in many others, were newly-forged paths, broken barriers, accelerated timelines, and groundbreaking discoveries. Innovation happened. Innovation is supposed to be uncomfortable.”[2]
According to Bailey, leading companies are not letting hurdles, like the pandemic and inflation, get in the way of innovation. He reports, “Companies can’t sit still — they must respond accordingly. Two thirds of organizations surveyed in 2021 said their strategy would change significantly in the next three years as they adapt to the pandemic, and other unforeseen disruptions could make that flexibility even more essential.” Nonetheless, he recognizes that some businesses will hesitate to innovate. He explains, “A business comfortable in its routine is often change-averse. This fear of failure is one of the biggest barriers to innovation, and one that organizations must overcome to avoid the risk of falling behind. … Innovation can often seem like the opposite of resiliency, which is another reason why it often feels uncomfortable. But the reality is, doing more of the same leads to lost industry relevance, evaporating any resilience equity the business may have had previously.”
If, as Bailey reports, companies are changing their strategies to better succeed during volatile times, what considerations should they take into account? Urko Wood (@urko_wood), Founder and Innovation Guide at Reveal Growth Consultants, suggests they take the advice of Richard P. Rumelt (@RichardRumelt), an emeritus professor at the Los Angeles Anderson School of Management.[3] According to Rumelt, a good strategy has three elements. First, a diagnosis that defines or explains the nature of the challenge. Second, a guiding policy for dealing with the challenge. And, finally, a set of coherent actions that are designed to carry out the guiding policy. Wood suggests asking several questions when applying these elements to a corporate innovation strategy. They are: “What is your diagnosis of the challenge? That is, how do you explain the nature of the challenge and identify a few critical things to simplify the often-overwhelming complexity involved? What is your guiding policy for dealing with the challenge? That is, what is your approach to coping with or overcoming the obstacles to success? Do you have a repeatable set of coherent actions that consistently accomplish your innovation objectives?”
Applying the Three Elements of a Good Strategy
1. Diagnosing the nature of the challenge. Wood suggests a good place to start an innovation process is with a technique championed by the late Harvard Business School professor Clayton Christensen. It’s called the jobs-to-be-done (JTBD) innovation approach. In his book entitled Competing Against Luck: The Story of Innovation and Customer Choice, he and his coauthors Karen Dillon (@KarDillon), Taddy Hall (@taddyhall), and David S. Duncan, touted the Jobs-to-Be-Done approach. According the book’s introduction, that theory helps companies understand their “customers’ struggle for progress and then [creates] the right solution and attendant set of experiences to ensure [they] solve [their] customers’ jobs well, every time.” They add, “This is a book about progress. Yes, it’s a book about innovation — and how to get better at it. But at is core, this book is about the struggles we all face to make progress in our lives.” Wood adds, “JTBD simplifies the often-overwhelming complexity of markets by identifying the ‘jobs’ target customers want to get done, the ‘criteria’ they use to measure success, and where they struggle in the process given their current product/service solution. Obtaining this information enables companies to identify and rank the opportunities in their market, target the most promising opportunities, and consistently hit the mark.”
2. Establishing a guiding policy for dealing with the challenge. Wood observes, “The guiding policy or overall approach to cope with the challenge of innovation is very simple: first discover your target customers’ unmet needs and then develop solution ideas to address them. Knowing where to focus your creativity makes all the difference in the world.” My personal preference for defining innovation is the innovation formula, which is: innovation = new x valuable x realized. If any of those variables is zero, there is no innovation. Establishing guiding policy is a way to ensure ideas are realized. Csaba Toth (@ICQ_GLOBAL), Founder of ICQ Global, states it another way. He writes, “Innovation must be investable. … It does not matter how good an idea or framework is — if it is too complex for people to understand or apply in their life, they are not going to do it, so those solutions are not going to have any positive impact.”[4] Guiding policies can help ensure the right ideas — the ones that can be actualized — are the ones that receive resources.
3. Creating a set of coherent actions that are designed to carry out the guiding policy. Actions are carried out both by individuals and companies. According to Toth, organizations should focus on improving both individual competencies and corporate capabilities to ensure coherent and successful actions are routinely taken. He explains, “Capabilities belong to an organization. By structuring work, it can perform a task by combining the work of individuals. As the organization repeats the process it learns, gets better and gets faster. … Competencies belong to an individual. These are the activities that a person can perform because they have learned how and practiced the skills required. It is the job of management to develop and organize the competencies of a firm to create the capabilities required.”
Concluding Thoughts
Jake Goeckeritz, Vice President of Marketing at Syxsense, insists, “Innovation is the lifeblood of any great company, and it shows up to a great degree in any really successful corporation. Many of the most prosperous businesses of the present — including Apple, Netflix, Amazon and Uber — completely changed the way the world looked at things and innovated their way into becoming complete game changers in the modern marketplace.”[5] They changed the marketplace because their innovations had value, which is the second variable in the innovation formula. Wood notes, “By focusing only on pre-validated market opportunities that you believe you can address and win, you can be confident that you will be creating unique value for your target customers and competitive advantage for your firm.” Toth adds, “Commercial innovation is more important now than it has been for a long time — as seen in changing technology, rebuilding from the pandemic, financial outlook changes, work from home and supply chain issues.” Rather than kill innovation, the pandemic and inflation should spur organizations to become even more creative. Time will tell.
Footnotes
[1] Matt Richtel, “We Have a Creativity Problem,” The New York Times, 16 April 2022.
[2] Jim Bailey, “Yes, innovation is supposed to be uncomfortable,” Fast Company, 5 April 2022.
[3] Urko Wood, “Does your innovation strategy pass the 3-elements test?” The Business Journals, 2 March 2022.
[4] Csaba Toth, “Innovation Is Not Always Glamorous: Three Obstacles And How To Overcome Them,” Forbes, 25 March 2022.
[5] Jake Goeckeritz, “Five Ways To Foster Innovation And Why Its Crucial To Every Company,” Forbes, 24 March 2022.
