Innovation works best when we take alternative perspectives.
We usually come to the Crystal Ball from the view of innovators. This week, let’s pretend we’re the business owners – the budget-allocators, the decision-makers, the blessing-givers – who work with innovative people and teams.
What do you actually ‘get’ when you invest in innovation? I’m not talking metrics or numbers yet, but conceptually, what are the right dimensions, metaphors, and references to assess innovation’s value proposition? Is there more than one?
What ‘jobs’ do innovation do for an organization?
If this were a business case, here’s one way you could think about it.
Start from first principles. Innovation needs to free and democratic. No one ‘owns’ innovation’, but it does require dedicated ‘keepers of the flame’.
Innovation can initiate, and drive things directly, finding new opportunity spaces. It can also respond to support the business and diffuse innovation throughout while solving existing challenges.
It can be proactive, playing offense, or it can be reactive, playing defense.
There are likely positive externalities of investing in an innovation team – things you need to do anyway which benefit everyone.
Since the housing market is ripping, let’s use the home as a widely understood metaphor for the flavours of value innovation can deliver. Cue up a 2x2.
Smoke Detector (Defense + Initiate)
The smoke alarm gives you an early warning sign before things go wrong. You might not notice it, but it’s always on in the background, protecting you from unseen or unheard risks. It’s a leading indicator of things to come, and its warning signal will initiate further action. It is designed for a specific job and does that job well.
In innovation terms, this looks like: Sensing and scanning, through trend analysis, ecosystem engagement, and in-market research. A good innovation team will have a formal process for capturing, assessing, and filtering these early signals back to the business. Even better, they’ll have pre-set triggers and pre-established channels to flag disruptions before they arrive. Futures, strategic foresight, and scenarios can all be built off of these. These are led by innovation, in partnership with the business.
Home Insurance: (Defense + Support)
Despite best-laid plans, stuff happens. That’s life. The value of a solid insurance policy is clear when you have to pick up the pieces. Accidents are guaranteed, but how quickly you recover from them is entirely within your control. It’s in the background, mitigating downsides, and lets you sleep soundly at night. The goal isn’t to ‘win’, but preventing total loss. A lagging indicator for sure, but when you need it, you need it.
In innovation terms, this looks like: Countervailing R&D – i.e. a ‘red team’ whose job it is to design concepts that could put the company out of business or stress-test existing business models. This work allows the business to pivot quickly when systemic shocks happen. Could be a simple as a fictitious press release from a competitor, or a robust set of scenarios that plan for overnight regulatory changes, new industry standards, or social movements that flip customer preferences, etc. These are led by the business, supported by innovation.
HVAC: (Offense + Support)
Like a good referee, you only notice HVAC when it’s not working. But get it right, and it enables everything else to happen in complete comfort. It’s a source of huge efficiency gains and avoider of pains. Get a heat exchanger and watch the energy bills fall. Keep the heat on all winter to avoid burst pipes. It’s active in the sense that it’s constantly staying ahead of changes, via the thermostat. It’s supportive in that it creates the conditions for success, without being the goal in and of itself.
In innovation terms, this looks like: Service design, defined as the “activity of planning and arranging people, infrastructure, communication and material components of a service to improve its quality, and the interaction between the service provider and its users.” Also facilitation, ‘stakeholdering’, bridging parties as a neutral arbiter, and teaching others through hands-on experience. This works best when there are clear and accountable business owners, who partner with innovation to make the business run better, faster, cheaper. The business ultimately owns and operationalizes the outcomes, supported by the innovation (and other) teams.
Workbench: (Offense + Initiate)
There’s something magical about buying your first cordless drill. New jobs materialize before your eyes. This needs tightening, that needs drilling. Your ‘workbench’ can be a humble multi-tool, a well-equipped toolbox, or the holy grail: garage space dedicated to a kitted out workshop. As your toolkit expands, the potential for what you can build expands too. A new deck, an updated backsplash, some potlights, or even an addition off the back. The workbench is where the art of the possible becomes reality.
In innovation terms, this looks like: Proposition design, business modeling, markets/product exploration i.e. what most people think of when they think of innovation. There’s a reason why this one comes last. Innovation does all these things, but not ONLY these things. Investing here does indeed get your new viable business ideas with real profit models, partnership structures, and product strategies. This is where a lot of new value is created. It works best when it interacts with the other quadrants.
Broadly, this just an example of what innovation could do for you. And there’s much more in each of these quadrants, suitably based on your business, your position in the market, and your headwinds.
Don’t get too caught up in the exact metaphor here. [Ed note: be thankful we didn’t go full sports analogy, with offense/defense, goals/assists, and a sketchy mapping of coaches, goalies, players, and fans…].
It’s the dimensions that matter. By creating tension, we sharpen our focus on what’s important.
As our friend Roger Martin says, strategy is choices (and if you don’t have a choice, you don’t need a strategy). But it’s rarely A or B. Through this lens, we exercise integrative thinking and come up with a combination of solutions that are better than any individual option.
Your innovation team may not be as far along in your journey. Maybe you’ve got a one-person team. That’s okay. Help them pick one quadrant and be great at it based on what you need most.
Or maybe you’ve got a full-on team who needs a long-term commitment from the org to invest in core innovation infrastructure the whole company will benefit from. Explore the blend of quadrants, understand they are more than a mere proposition design shop, and likely a competitive advantage in many subtle ways.
In either case and everywhere in between, think about the intangibles that that innovation is bringing by nature of running a well-functioning team.
Maybe they’re quietly the “Ellis Island” of talent for the organization. The Innovation team may be the first port of call for emerging, scare and wonderful skillsets to enter the organization. They train these new folks, coach them, integrate them, and then set them free into other parts of the business.
That’s worth something, even if it’s hard to quantify.
As you digest this, here’s one last thing to consider.
We’ve discussed what innovation can do for you. But, to paraphrase JFK, what if we’re asking the wrong question? Instead:
“Ask not what innovation can do for you. Ask what you can do for innovation.”
Onward.
What we’re reading
You’re probably not ready to retire — psychologically – Your emotional ‘glide path’ is as important as your financial plan. Notable as we continue to build retirement tools…
It’s Time to Toss SWOT Analysis into the Ashbin of Strategy History – Roger Martin on why SWOT is a dreadful way to start a strategy process. Hint: it has to do with choices…
How Can We Predict Plausible Futures? – Balancing the pull of the future, the weight of the past, and the push of the present.
A “rental pension” program to compete with homeownership – A fascinating thought experiment at the intersection of several systemic issues. (H/T to my OCAD buddy Tamara)
Most Innovative Companies 2021 – Overcoming the Readiness Gap, BCG’s annual ranking of innovative companies and characteristics.
The last word
“Truth springs from arguments amongst friends”
- David Hume