Coworking spaces are better for creativity and are becoming associated with innovation. However when I researched "innovation" I was surprised to find that, despite knowing it is important, we are prone to avoiding it.
It is well recognized that innovation is key to economic growth. Increases in living standards and well-being, throughout history, are linked to innovations. Agriculture, steam, electricity, penicillin and the atomic bomb were all important innovations in their time and contributed, in no small way, to the shape of the world we live in today. The pace of innovation is accelerating; the development of computing, followed by the World Wide Web, Search Engines and Social Networks all happened within a few decades. It is now normal that several disruptive innovations will occur in a person’s lifetime. Recently David McWilliams wrote, in the Irish Independent, that we are on the cusp of a fourth industrial revolution emanating from " a groundbreaking series of innovations in genetics, artificial intelligence, robotics, nanotechnology, 3D printing and biotechnology - all connected by billions of smart devices".
Resistance to Change
But while most would agree that innovation is critical to growth, it is also a fact that many people, organisations and even countries give very little priority or resources to encouraging it. In “Managers of Innovation” John Storey and Graeme Salaman describe the gap between what is known about innovation and what actually happens in practice. In many cases the use of the term “innovation” is no more than a P.R. exercise. In a world of globalization and shrinking product life cycles, rapid innovation is needed more than ever, however it is given little priority. Why is this? What can be done to improve our commitment to innovation?
Innovation implies change, which is something that people find threatening and will resist. The Luddites resisted the Industrial Revolution in the 19th century which threatened to replace skilled weavers with low skilled factory workers. Today we can see similar resistance from people who refuse to use Facebook. But such resistance will not, in itself, hold back change and innovation. According to Storey and Salaman the real problem lies with the managers whose responsibility it is to balance innovation, which they know to be important, with the urgent, day-to-day pressure of production, sales and income.
A Risky Business
Innovation is inherently risky, many innovations fail to make any return on investment. Pitching this against the day-to-day struggle to survive makes is easy to see that there is a conflict of interests when responsibility for innovation is delegated from the CEO to management. Even when a team is solely responsible for innovation they must compete for resources with those whose focus is on income generation. This tension can even exist at the micro-enterprise level, where a single person must balance the need to plan for the future against the imperative of earning a living.
Innovation does not need to be disruptive, in the sense that it changes the status quo for the good or the not so good. Indeed most innovations are tiny incremental innovations, like adding wheels to the rubbish bin – where would we be without wheelie bins? And other innovations are transformational – remember when Lucozade was what you bought for people when they were ill? Now it’s a sports drink. Although the multiplicity of small innovations that occur every year won’t themselves change the course of history, the accumulation of these incremental and transformative innovations does increase our collective well-being, lifestyle and wealth.
Innovation Life Cycle
There is a life-cycle to innovation:
- Disruptive innovation
- Incremental innovation
- Transformative innovation
The cycle starts with a disruptive innovation, take the Department Store as an example – massively innovative in the 19th century and made possible by the increasing living standards generated by the industrial revolution. Once established they introduced incremental innovations, for instance escalators, restaurants and concession stores in an effort to maintain their customer base and attract new customers. Malls were a transformative innovation, being made up entirely of concessions. Incremental innovations and transformations continue until the final phase of the cycle when the business becomes entrenched, focused only on income and fueled by complacency.
This status quo continues until the next disruptive innovation – online shopping for instance – and the department store loses its dominant position. Being large and lethargic the store doesn’t recognise the threat until it is too late. Attempts to join the online world follow with mixed results, from shrinking turnover to complete closure. Some, like Barnes and Noble, might make the jump to on-line successfully, but in reality a whole sector and way of life winds down and stagnates while humankind marches forward in the brave new on-line world that we now take for granted.
Before discussing what we can do to support innovation, let’s look at obstacles to innovation:
- Competition for resources
- Tension between short term earnings and longer term risk
Size blocks innovation. Despite this, as we will see later, some major innovations come from very large organisations. Large organisations suffer from inertia, internal rivalry, silo mentality, competition for limited budgets, complacency, conformity, relentless focus on the bottom line and an overabundance of committees. All of these serve to block new, risky and creative activity. Large organisations, especially wealthy ones, can find ways around the need to innovate. They can study the market carefully and be a fast follower – for instance Apple’s iPad was not the first tablet computer. Others can innovate by acquisition – consider Facebook’s recent acquisition of WhatsApp.
The ever present competition for resources between production and sales, on one side, and creativity and innovation on the other means that risky innovation must battle for resources with income generating activity. Complacency in successful organisations leads to arrogance. The need for risk and experimentation is not seen as a priority. If we’ve always solved problems in the past successfully with our usual approach then there is no need to change it, or if a given approach never worked in the past we shouldn’t try it now.
If inertia, conformity, competition for resources and blinkered focus on the core business are obstacles, what can we do to facilitate the creative thinking and risk-taking that is critical for innovation and growth?
There is no clear recipe for innovation but some of the ingredients are well known. Terms that occur again and again in the innovation literature are:
- Customer feedback
If large size is an obstacle then it follows that entrepreneurs are well placed to be innovative. On the other hand one person alone is less likely to innovate than a team. And a team of engineers is less likely to innovate than a team made up of engineers, pharmacists, accountants and linguists; a multidisciplinary team. Finally a team that has worked together for years is less likely to innovate than a team that is brought together for a single project.
In a network of people information can flow quickly or slowly. If the network is dense, everybody knows everybody, then information flows quickly. In less dense networks information flows slowly. Fast information flow is the enemy of innovation. This might seem counter-intuitive but in a network where information flows quickly everyone in the network knows what everybody else knows. So there is little new information, and little opportunity to innovate.
Apart from the need for unique information the level of risk is an important ingredient. Innovation is closely tied to risk. Innovators must take risks if they are to be successful. Statistically there is a positive correlation between willingness to take on risk and levels of innovation.
If people in a network are “strongly tied” then the level of risk that people are willing to take is reduced. This is because people feel that they must justify risky, non-safe, decisions. In a “weakly tied” network people are more willing to take risks despite what others think. The definition of “weakly tied” is that they meet less than twice each week. So people working closely together is not conducive to innovation.
This does not mean that a small tight team couldn’t have outside links to wider networks which could be very good for innovation. In fact this is one way in which larger organisations solve the challenge of size. By setting up small teams and inviting outside experts to be part of these, Procter and Gamble maintains its position as a very large and innovative organisation. In “How P&G Tripled Its Innovation Success Rate” Bruce Brown and Scott Anthony describe the P&G “Connect and Develop” model for innovation which helped to shake up embedded ways of thinking and increased P&G’s levels of innovation success in the early years of the 21st century. The Pentagon’s DARPA team (Defence Advanced Research Projects Agency) goes a step further. None of it’s projects involve DARPA members. They have been responsible for such innovations as the World Wide Web, Remote Surgery and Stealth Bombers. DARPA pulls together teams of experts from multiple disciplines - from academia, commerce, non-profits and government agencies - for short term projects during which the team might meet two or three times a year while they continue to work in their own university or other organisation. As Regina Dugan and Kaigham Gabriel in “Special forces – Innovation” point out, hiring brilliant people into full-time teams is precisely the wrong way to build a team “who will challenge the wisdom of experience and take on risky efforts”.
So large organisations have solved the problem of size by actively collaborating with smaller organisations and experts. An added advantage is that the risk associated with innovation is spread.
Innovate or Die
So what’s the message for potential innovators?
- Embrace risk
- Get out of your comfort zone
- Collaborate with people from disciplines you don’t understand
- Build loose, distributed, multi-disciplinary networks
- Ensure responsibility for innovation rests at the top of your organisation
- If you must delegate innovation then empower people, offer support and trust them
Remember that innovation doesn’t happen inside organisations, it happens in the spaces between organisations. No matter how big, or how small, there is opportunity to contribute to innovation, growth and the well-being of the world.