Transformative Innovation I: Overcoming Barriers

Author: Udaiyan Jatar, Published: January 14, 2014

Transformative Innovation

It is probably obvious to most people that we will need more Earths if we cannot reduce consumption, manage population growth, or get more from less. We will likely need to do some combination of all three, but “getting more from less” is what this series of articles is about.

The story is the same at the micro level. Most leaders of organizations large and small are finding that they have fewer resources than they need to meet the growing needs of our stakeholders (communities, donors, shareholders, employees, and so on). Unfortunately, we cannot achieve our expanding goals with declining budgets by doing what we have always done. To transform our outcomes, we must transform what we do and how we do it. As the saying goes, doing the same thing over again and expecting a different outcome is the definition of insanity!

I think we can agree that transformative innovation (TI) is necessary, especially for Social Enterprises.

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An example of incremental innovation is moving from rotary dial to touch-tone phones. This innovation improved productivity incrementally. However, cellular phones are transformational. Even if you are a farmer in a remote village, you can access a world of information from a cell phone. This innovation, along with the Internet, has dramatically improved human productivity, and cut costs and reduced materials used at the same time.

The problem is that TI is rare and unpredictable. Why? Most of us blame barriers like lack of vision, funding, risk-taking, talent or even luck. But to unleash innovation, the boards and senior executives of organizations need to remove the many invisible barriers first, before tackling the more obvious issues.

Barriers to Transformative Innovation

Human Nature. Let’s start with the obvious: as far as possible, most of us avoid the unknown; until of course it is unavoidable. So we avoid change by taking “practical” steps within the domain of the familiar until it is too late and disaster has struck. This tendency gets amplified in our organizational behaviors. Question is, can we do what we should do before disaster strikes?!

Poorly Defined Core Competencies. Emanating from our basic nature is our most sacred of management principles: “Stick to your core competencies,” or “Avoid mission creep.” The unintended consequence of this is that it forces us to abandon new ideas that are necessary to achieve an objective if they are too different from our old ideas and activities. This kills innovation before it has even started. By definition, we can’t be experts in something that doesn’t exist yet. We cannot restrict ourselves to activity-based core competencies and still create transformative innovation. This intractable conflict explains why small entrepreneurs—not large organizations—conceived and incubated most of the world’s greatest innovations, organizations, and brands: United Way, Susan G. Komen for the Cure, Goodwill, Apple, Coca-Cola, Nike, etc. were all started by small “entrepreneurs” who came from outside the sectors they eventually assumed leadership of.

The key is to not define our core competencies or our missions by what we do, but by our desired outcomes. This means giving our people the freedom to develop new competencies by removing artificial constraints to transformative innovation. Apple is a great example of this—the fear of the unknown didn’t prevent them from taking on the music industry or the cell phone industry with the transformative iPod and iPhone. If transformative innovation itself doesn’t become a  core competency, it will be difficult to survive, let alone thrive. You can bet Apple defines its core competencies entirely differently than any of its competitors. What are your organization’s?

Illogical Time Horizons. We measure performance in annual accounting cycles (a legacy of the agricultural era) that simply make no sense more than 200 years into the industrial age! The annual agrarian cycle forces us to create annual business plans and incentives. Therefore, our projects face invisible and irrational pressure by trying to show meaningful progress for an annual review. Wall Street takes this irrelevant seasonal timetable to another level of idiocy by tracking companies’ quarterly results – this would be funny if it wasn’t as harmful as it is. Transformative ideas don’t have anything to do with how long it takes for the Earth to revolve around the sun. Forcing annual results squelches innovation. But, you might ask, “if we invest big money in innovation, don’t we have to measure results as frequently as possible?”

The smart question is, why do we invest big money? It is because we are conditioned to want big results quickly.

Unreasonable Scale. Coupled with illogical time horizons is the mentality of trying to achieve scale quickly. This makes our TI experiments too big and our failures bigger. These failures, then, discourage future innovation. The trick is to start small. If you start small, your risks are lower and the need for quarterly or annual monitoring is felt less acutely. This gives the innovators breathing room to learn by doing, learn what works and what doesn’t through low-cost and frequent trial and error, and improve—just like all those small entrepreneurs did who created iconic brands. Starting small can lead to bigger and quicker results at lower cost. Ironically, the best ideas tempt us to go too big, and thus fail spectacularly. There are creative ways to start and test the biggest initiatives in a small way. At Blue Earth Network, our approach to social enterprise is to “Think Big, Start Small and Scale Strategically”.

Impossible Success Criterion. The greatest entrepreneurs failed frequently and gained rich insights before they achieved their breakthroughs. Failure is the best teacher. And, if your project doesn’t encounter any failures along the way, you probably aren’t thinking big enough in the first place.

We won’t get transformative innovation right on preconceived metrics or on rigid timelines. Instead, one needs to promote several quick and low-cost experiments, and allow serendipity to emerge.

The barriers listed above are systemic and are difficult to reconcile with conventional management wisdom, but they can be overcome—even by large organizations.

Posted in: Innovation