Innovation is not a discipline or taught specifically in most business schools. Most of the thinking and development were happening within the academic arena and seldom address the practicality of real world business. The last two years there has been a lot of hype around it. Yet the market has not fully appreciated the needs for innovation consultants or a more rigor approach to innovation strategy. There are very few companies like us that focus on innovation as a core practice supported by business economics rigor and inter-disciplinary design sensitivity. I think many of us have yet mastered the skills to fully mobilize the human minds and our hands are tired by some old management models. That's why 'deisgn thinking' is about creating the future.
The traditional approach was, “How do you get employee to buy into the vision and work towards the organization’s goals?” This is still valid, but not enough. Today we also need to ask, “In additional to the alignment question, how do you build organizations that harness the power of creativity and imagination?” You cannot command those human capabilities. Imagination and commitment are things that people choose to bring to work every day—or not.
The opportunities for organizations are huge for sure. Against the backdrop of waves of digital disruptions, accelerated globalization, and the declining predictability of strategic-planning models, only new approaches to managing organizing talent and corporate imagination to maximize shareholder value creation will provide companies with to win. Embracing uncertainties are unavoidable (I stress unavoidable, but the key is not to avoid the but take advantage of them) for any innovation initiatives, from new customer applications to new business ventures. These strategic innovation initiatives, no matter what nature, will always have the following risks:
1/ Technology risks – Can we deliver on time and will it be robust enough?
2/ Customer risks – Will they buy and use? Do they appreciate our customer value propositions?
3/ Business risks – Do we have a viable economic model? Can we make money?
4/ Organization risks – Can we successfully integrate with our current system and processes? Or the underlying culture that drives organizational behavior?
This uncertainty arises from many sources—the disruptive, complex and rapid changing nature of the technologies; the complication risks of integration within and across organizations and the extended supply/demand chain. Customers' level of engagement and rate of adoption of any innovative offerings are hard-to-predict in nature (So much about the hockey stick). It is often a painful process to push any innovation project forward within any large organizations, it takes both courage and wisdom. It is easy to see many are looking to each other and ready to do the nodding of their heads for the sake of getting a painless consensus or quick to point out a hundred reasons why it never worked in the past. Unfortunately, that does not improve the quality of the decisions without legitimizing constructive conflict and by encouraging critical evaluation. The art of managing the future.
What is needed are better assumptions and recommendations and to a higher level of critical thinking and corporate imagination. Given the potential risks of innovation projects, the defensive posture expressed by many organizations towards these efforts naturally come as no surprise. The results are translated into defensive posture and penalize high potential projects that have larger risks but also larger upside potential by using an excessively high hurdle rate.
Another manifestation is applying a veneer of predictability to innovation project investments by demanding rigidity in project planning and execution. These defensive maneuvers actually increase an organization’s exposure to unnecessary risk as to reduce it: downplaying uncertainty discourages vigilance to potential problems; rigid project plans invite corner cutting; and a blame-the-risk-takers-first mentality deters forthright communication. Innovation project investments are pursued because there are strategic reasons. It can be an attack or defensive move. There need to be a built-in option to change scale when the investments can be increased or decreased in response to future conditions, or when the production system enabled by a project can be scaled up or down. Thus a scale-down option may be viewed as an alternative to simply cutting the project. It can be used as an option play for a creative process into the future. As Janice Kirkpatrick wrote in her book Innovation—the politics of change (1996)
"The creative process, the process of designing, is an excellent ‘tool’ for analysis, synthesis and reconstruction of the world. It reveals the ideologies that motivate us and excite us. This gives us clues which we can then use in developing an innovative strategy which may yield a future which will be appropriate: familiar yet new, challenging yet supportive."