We discussed in the last two parts of the series that how basic organizational designs can be linked to strategic innovations so that the teams work together and execute the growth plans well. We have discussed the challenges while studying some world class companies old and new namely Apple, Google, NYTC, GM, CMT, Polaroid, Tesla etc. This time and this being the last in the series, my intention is to explain the factors that underline the success of innovation and truly are considered disruptive.
There are numerous companies that as per their expansion plans create more autonomous and independent business units. There are corporates that even spin off new and uncertain business models and have to pursue hard to get hang of things initially. There we see innovation is not only strategic but needs much more depth reaching out to join the roots rapidly. Those who believe in creating this new DNA for organisation for strategic innovation have identified at least five essentials:
Cognitive filters: It is important to understand that while innovation can be deployed easily it may not necessarily go in the direction and trajectory as most appropriate or desired. The management needs to control innovation the way functional responsibilities or tasks are assigned, monitored and assessed. It is almost imperative that the filters are put in place to check where the information is leaking or in abundance clogging the innovation system or process.
Competency traps: In the case of Polaroid, we studied that while it is a competitive challenge to maintain superiority and it is certainly not easy loosing the ground, it is a trap to stick to it and not let help come in. Executives must consciously think of either collaborations inside or elsewhere or simply wait to perish.
Local searches: Market intelligence and local talent both play an important role in executing all things related to disruptive innovation.
Preservation of power: Executives want to protect their power, it is alright as long as it does not become jingoistic but forthright for a company in the best interest of deploying a new DNA in place.
Absorption capacity: It is not only about how well the innovation bearers or executives absorb new knowledge in the most appropriate manner but also timing must be right and least to learn and adapt to a new change or culture. This is also essentially a part of cognitive involvement.
While understanding about the essentials supporting the creation of the new strategic innovation DNA for an organisation is helpful, it must also be accepted that not all innovations are equal:
- Continuous process improvement involves countless small investments in incremental process innovation.
- Process revolution also improves existing business processes but in leaps.
- Major leaps in product/s or service innovations may also lead to major changes in an organisation – culture, structure or talent.
- Strategic innovation may include innovation in processes or products but always involve unproven business models.
So when the new innovation DNA also means entering a risk territory where business models are unproven and remain non-performing for a while then there must be a good time to realise that the new set of disruptive technologies will also become sustainable. It is not easy to identify but organisations can keep a regular check on its health. For any Strategic Innovation especially an outcome of a disruptive technology, it is necessary that following is kept in mind:
- Most new technologies lead to improved performance leading to sustaining technologies. They can be discontinuous or radical in character.
- Disruptive technologies bring to market a very different value proposition as compared to that that was available earlier or so far.
- Generally, disruptive technologies initially underperform before they contribute in establishing a process or a product. But they have other features which customers value immensely.
- Migration and upgrade of capabilities must be done diligently.
- Freedom must be allowed within teams to form a different culture and value system so that the experiment becomes successful.
However investment allocations for disruptive technologies have two major challenges: Disruptive products are largely simple and cheap and they yield lower profits.
Disruptive technologies are first commercialized in emerging or significant markets.
How far can the fringe be expanded, decides the success of disruptive technology innovation, for example small off road or dual sports motorcycles introduced in North America by Honda Kawasaki was considered a disruptive technology over on-road motorcycles made by Harley Davidson. Similarly online or offline health maintenance organisations deem disruptive technology to conventional methods of resolving health issues. We earlier discussed how electric cars and self-driven cars is a disruptive technology, even though the market today seems limited and products are expensive, it will perhaps drastically change automobile market and may be considered a breakthrough innovation of its time.
Role of innovation lead: Here I would like to quote an exemplary article ‘Collective Genius’ written jointly by eminent authors namely Linda A.Hill, Greg Brandeau, Emily Truelove and Kent Linebacker in Harvard Business Review in 2014. The authors had compiled information in reference to very big companies like Google and revealed the links that leadership share with innovation. They explained that the rhetoric of innovation is often about fun and creativity, but the reality is that innovation can be very taxing and uncomfortable and hence require extremely resilient leadership.
While they had mentioned a lengthy list of qualities and dimensions that drive growth when strategic innovation is deployed, two foremost qualities I see are as under:
1.Willingness: One of the biggest qualities of a leader spearheading strategy innovation is to create a community that is also willing and able to innovate even if it means overtime. Innovative organisation must nurture a sense of belongingness within the community which further rests on three elements: Purpose, Shared Values and Rules of engagement.
2.Ability: While organisation’s willingness is necessary but it alone may not be sufficient. The group also needs three specific capabilities: Creative abrasion, Creative Agility and Creative Resolution.
One will find organisations that are ready to commit investments of almost all forms to innovate for the sake of long term growth but still may not be focussed enough to identify and develop the leaders of innovation for tomorrow. On the parallel side, we certainly need talent that are not direction setters but can create a context in an organisation where innovation can actually take place.