“Live in the market, not in a spreadsheet” Cheryl McKinnon
I agree with Noah that the word innovation is so overused that it’s all but meaningless. And that what meaning is attributed to it is often misplaced. A point he eloquently makes in his excellent post (and the presentation which I’ve embedded below) in which he draws the distinction between invention (as ‘the creation of a new idea or process’), innovation (as ‘arranging the economic requirements for implementing an innovation’), and diffusion (‘adoption and imitation’). Noah defines three separate roles (which might be fulfilled by a single person) in the innovation process: the capitalist who provides the money; the inventor who creates the idea; and the entrepreneur who adapts the idea, brings it to market, and commercialises it. Each role is a different task, requiring different skills.
He goes on to refer to a 30 year-old HBR piece (aptly called Managing Our Way to Economic Decline ) that suggests that despite success clearly being derived from an organisational commitment to competing on technological grounds (over the long-term offering superior products to market), management focus has shifted away from the long-term development of technological competitiveness and towards short-term cost reduction, away from the insight that comes from hands-on-experience and towards analytic detachment. Sound familiar?
The example given in the post is Sony’s shift in the 1980’s from a process of defining new opportunities based on personal intuition (often that of the co-founder Akio Morita, who’s withdrawal from active management was a catalyst to the shift), to a data-heavy, analytical approach: “Those processes were very good at uncovering unmet customer needs in existing product markets. But making the intuitive bets required to launch disruptive businesses became impossible.”
The interesting thing of-course is that whilst it is innovation that brings new things into the world, it is often imitation that spreads them. With the internet being the greatest copy machine ever invented, copying is not such a dirty word anymore. It can spread ideas and knowledge, and make the process of perfecting insights and innovations quicker and more efficient. It’s not only the innovators that can win big, imitators can too, and sometimes bigger. As this presentation from Andy Budd points out, the iphone wasn’t the first touchscreen phone, the iPod wasn’t the first MP3 player, Windows wasn’t the first Graphical User Interface and Dyson didn’t create the first bagless vacuum cleaner. But what all those examples have been very good at is what you might call artful imitation – imitating and reinterpreting the right thing, in the right way at the right time.
As this piece on imitation points out, the best imitators are those that sample widely and aren’t afraid to change the current model for something new. I’ve long felt that a big part of the reason that (some) large organisations are so bad at innovation is that there is too much energy spent looking internally and not enough externally. My hunch is that in tough times this only gets worse. People start worrying about their jobs, looking at ways to incrementally improve processes, and companies get into that spiral I’ve talked about before of trying-to-do-what-they-did-before-but-more-efficiently. Worse than that, they look at new stuff through the lens of the old stuff, frame the future in the context of the past or the present, use existing assumptions and models as their start point (Russell reminded me yesterday of the point that Clay Shirky made about how established businesses will often use existing cost base assumptions as the start point for innovating product rather than thinking how it might innovate its cost base to enable a totally new form of product).
And let’s not forget that if innovation is the commercialisation of new ideas, then a major reason why it is difficult for established companies to innovate disruptive models or technologies is because it does not make economic sense for them to do so. Noah speculates that part of the reason why so many large organizations are so disappointing from an innovation perspective is the shift in corporate mindset resulting from more company presidents being derived from financial and legal backgrounds rather than technical. He may well be right, but I’d like to add that it is just as likely to be because their focus is in the wrong place.