Three Myths of Innovation

In a recent series of video interviews for The Refinery Leadership Partners I explored three common and damaging myths about innovation.
Myth 1 - Innovation is just about products 
With much of the world’s corporate and public R&D budgets dedicated to developing new technologies that are then patented and embedded in new products such as medicines, cars, cell phones, computers, etc., it is easy to believe that innovation is only about new product development. Innovation however, applies to anything that can be changed and then adopted by users to address some form of problem or opportunity. Consider, for example, Pink Shirt Day, a ‘social innovation’. On the 27th February 2007 two Nova Scotia grade 9 students asked their friends to come to school wearing pink clothing as a protest against bullies who were tormenting a boy who often wore a pink shirt. This innovation was a novel way of protesting and raising awareness of bullying. It has since has been adopted by schools in North America, with the 27th February each year known as Pink Shirt Day.

Thus, innovation the verb (i.e. process) and innovation the noun (i.e., result) can be applied to all instances of adopted change. For example, the first time companies used celebrities to endorse their products was a marketing innovation; when the manufacturer Pilkington invented float glass technology this was a process innovation; and when Netflix transformed how we access and consume movies and TV shows this was a service and business model innovation. 

Myth 2 – Innovation is everybody’s job 
I agree that many companies probably need to do more innovation, but I think there is a stronger need for companies to do innovation in a smarter way. So I when hear the mantra that ‘innovation is everybody’s job’ I wince, because if everyone is innovating (and innovating all the time) that doesn’t leave many people to look after existing customers and to make sure they receive existing products and services in a way that will delight them.

Smart innovation is about balancing and adjusting the extent to which employees focus on exploration activities (i.e., being innovative) versus focusing on exploitation activities (i.e., being efficient and reliable). This capability to strike a balance, and when necessary adjust the balance over time, is known as organizational ambidexterity. The extent to which a company’s employees should focus on exploration or exploitation will depend on the rate and direction of change (i.e., the environmental velocity) in a company’s industry. The greater the industry velocity, the more a company should pursue exploration. 

Myth 3 – Listen to the customer 
When innovating, should companies listen to and learn from their existing customers? It depends! If companies want to develop incremental innovations that refine their existing offerings, then listening to customers will very likely be a good source of information. But if companies are aiming to develop radical or discontinuous innovations, then their existing customers are unlikely to value the performance attributes of the innovation. This is the logic behind this quote by Steve Jobs:

“It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them."

Thus, it is doubtful that companies will shape and create new markets by listening to customers who are on the whole comfortable with their current products and services.

One exception to this lesson is when companies observe and understand the actions and needs of creative consumers, defined as: "customers who adapt, modify, or transform a proprietary offering" (Berthon et al. 2007: 39). Creative consumers include individuals such as Walt Blackader, a ‘lead user’ who developed the sport of rodeo kayaking and associated products forit; and households in rural India that use their top loading washing machines to churn curd and make lassi, a yogurt-based drink. Creative consumers are the sources of many radical and discontinuous innovations because they possess and combine information on the problem/opportunity and information on the solution.

More innovation myths

For a comprehensive list of other innovation myths and associated lessons check out ScottBerkun’s excellent blog

Further Reading

This posting is based on research and content from the following publications:

Using Cladistics to Understand and Shape the Evolution of Economic, Social and Technological Systems

"there is natural speculation that organizations,
like species,can be engineered by understanding the evolutionary processes well enough to intervene and produce competitive organizational effects'' (March, 1994)

What is cladistics?
Here is the second posting on how evolutionary concepts can be used to understand and manage both innovation and change.

  The evolution of mobile phones: miniaturization
in the style of a Russian Doll by Kyle Bean.

Most economic, social and technological systems change over time, and in a way that is much like biological evolution. Thus, to map and understand the change in industries, products and technologies, myself and other researchers have borrowed the technique of cladistics (also known as phylogenetic systematics) from the biological sciences, to classify how different types of system have evolved overtime.

The word ‘cladistics’ is derived from the Greek word ‘clades’ meaning ‘branches’; cladistics is concerned with understanding how systems adapt and branch out over time. A cladistics analysis results in a ‘cladogram’ (see Figure 1 and Table 1), a tree-like diagram that depicts the pattern of relationships among different types of systems that share a common ancestor. The creation of a cladogram involves following three core assumptions (see McCarthy, 2005):  

1. The systems in any population (e.g., different organizations in the same industry, or different products in the same market) are related to each other, in that they have descended from a common ancestor. For instance, automotive companies such as the Morgan Motor Company, Tesla Motors, and the Ford Motor Company all have very different strategies and practices, but they can all be traced back to Karl Friedrich Benz and Bertha Benz who founded the first manufacturer of gasoline-powered automobiles – the company Mercedes-Benz.

2. System evolution follows a tree-like branching pattern with large punctuated changes (known as cladogenesis) producing new branches i.e. new systems or new species. For instance, the shift from the Ancient Craft Production method of automobiles, to Mass Producers in the 1920s, and then to Just-in-Time Systems in the 1970s (see Figure 1) represents some of the key branching moments in the history of the automobile manufacturing industry. Also, consider the evolution of mobile phone handsets. In 30 years they have transitioned from large shoe box sized devices, with antennas and keys, that were only able to make telephone calls, to much smaller candy bar sized devices with touch screen communication and no antennas. Currently mobile phones are evolving into multi-media devices that are again slowly increasing in size. 

3. Cladogenetic change is accompanied by a more continuous series of incremental change known as anagenesis. This is the improvement or refinement of a system rather than the creation of an entirely new type of system. Anagenesis is evolution within a branch lineage, while cladogenesis is evolution that results in a new branch.

For more information on how to undertake a cladistics analysis, see the five step process described in section 5 of this article. 

Figure 1 Automotive industry cladogram
(from McCarthy et al. 2000)

Table 1 Operational practices (characteristics) for the
automotive industry cladogram (from McCarthy et al. 2000)

Cladistic studies of industries and products

So what does a cladistics analysis tell us? Here are four core insights that cladograms provide for management scholars and practitioners:

  • System Recipes – the lineage or branching network for each type of system in a cladogram represents the DNA or recipe for that system. For example, if you wanted to know precisely what constitutes a Lean Producer strategy (see Figure 1) you simply trace all the characteristics on the branches that connect the ancestor branch (Ancient Craft Systems) to the Lean Producer branch. Thus, the first three characteristics in this recipe would be 1, 2 and 47, and the final three characteristics would be 15, 23, and 29.
  • Change Sequence – cladograms help us to understand how to transform one type of system to another type of system (e.g., from Mass Producer to Lean Producer) by providing information about the sequence in which changes should be made. For instance, a flexible, multifunctional workforce (characteristic 24) must first be in place in order to practice set-up time reduction (characteristic 25).
  • Path dependency – where you want to take a system, regardless of whether it is a social system or a technological system, often depends on where the system has come from. This is known as path dependency. If an organization wishes to successfully change from a Mass Producer to a Lean Producer it must adopt the characteristics on the Lean Producer branch (e.g., 29, 23, 15, 49, 35, etc.) but also it must drop, unlearn or stop doing those Mass Producer characteristics that will be in conflict with being a Lean Producer (e.g., 52, 46, 20 and 14).
  • The Velocity of Change – whether it is products, technologies or industries, a cladogram depicts the velocity of change. The changes in both the rate and direction of characteristics overtime can be counted to determine how dynamic the system is changing, both in terms of pace and continuity. Once the velocity is determined managers should then ensure that the velocities of their companies innovation processes (organizational, product and technological) are appropriate for their industry and market conditions.

Further Reading