Harper Lee famously said that we all have at least one story in us, and TV shows such as Dragons Den or Shark Tank are often a very real manifestation of this in the sense of innovation. Most people have some sort of idea in them that they think will change the world in some way.
When you’re looking to build a culture of innovation, you’re out there telling employees how important their ideas are, which can be the ray of hope those folks need that have been sitting on their pet project for any slither of opportunity to give it a go. In a world of unlimited resources, you may even be able to experiment with all of these crackpot ideas, but most of us don’t have unlimited resources, and our organisations can’t really sustain employees coming up with The Homer.
Keeping your focus
Of course, whilst some ideas are as out there as Homer’s attempt at a dream car, many bad ideas are bad because they merely tinker at the edges of what has already been done. That isn’t to say the incremental improvements aren’t a valuable thing, because they are, but they should be distinguished from more transformational innovation.
In Vijay Govindarajan’s Three Boxes model, those incremental changes are what he calls box one innovations, with box three innovations confined to those that really move the needle. Distinguishing them is important, both because you want to do both, but also because both require different things in terms of approaches, behavior, resources and permission.
As with so much in life, the key is in striking a balance so that you can both explore those radical, game changing ideas, whilst also providing an environment where incremental improvements can be made to those things you already do well, your business engine if you will.
Striking the balance
Doing this well is a weighty topic in its own right but the ‘dual operating system’ approach is nice in that it reminds us to distinguish the two parts of our business. This way you can continue to generate income from your profit centre whilst experimenting more with ideas and solutions, potential ‘innovations’ that will disrupt your market. Whereas Kotter proposed the dual system, Govindarajan suggests adding a third box, whereby one box focuses on what you already do well, a second box examines what things you should stop doing, and the third box explores the radical end of the innovation scale. A nice way to think about it is:
- Box one is about the present
- Box two is about the past
- Box three is about the future
Maintaining the balance between these three will depend on your circumstances, with there being times when one box deserves more attention than others. As a leader, it’s your job to maintain that balance, and understanding the balance between them is key to doing so successfully.
For instance, you can’t innovate if you’re losing money, so you need to ensure your organisation remains profitable. The caveat being some trains of thought suggest that those very budgetary constraints promote real innovation, some even suggesting a brave move is to ask for less money when driving innovation. Likewise, if you don’t figure out which things you need to abandon, then you’ll inevitably fall into the innovators dilemma of not being able to change what was once successful but no longer is, which in turn will make the pursuit of radical innovation impossible. It’s this ‘forgetting’ process that is usually the biggest challenge, as it underpins what made you successful in the past, but undermines what is likely to make you successful in the future.
However, I have a different perspective than Vijay as I like to think of innovation in terms of types. Incremental innovation is a type, so is radical, they just sit at opposite ends of the scale and I think ‘forgetting the past’ should be an approach used across the whole of that scale as in my thinking it’s not a ‘type’ of innovation.
When CEOs and senior teams want to build a culture of innovation, balancing the right mix of activity on the types of innovation focused on across the organisation is absolutely crucial. You don’t build a culture of innovation that shifts the needle by an increase in incremental innovation as you’re more than likely doing that already so it’s almost business as usual. If not, you should at the very least think of it as the price of entry for being in business.
Similarly, you don’t build a culture of innovation by focusing on radical innovation because it typically only involves a small number of people at senior level and the volume of ‘radical’ scale projects being worked on at any one time, for the majority of organisations, is usually something you can count on one hand. So, for me my ‘box two’ is a focus on what I call ‘differentiated innovation’. Activity focused around unearthing customer or market problems or opportunities and deploying small focused teams to solve them and come up with really creative solutions, some of which might just turn into game-changing, radical solutions but the majority will be significant enough to shift the needle a little in their own right but collectively make a big and more importantly, continuous impact.
Whichever approach you take, or if you combine my box 1,2 and 3 with Govindarajan’s focus on ‘things you should stop doing’ as a core pillar underneath them all, the reality is you’ll be a long way towards building that culture of continuous innovation that will put you in a great place to adapt to whatever changes come your way.