Innovation as a Discipline: Why It Now Belongs Beside Finance and Marketing
For most of modern corporate history, innovation was an episodic phenomenon, a serendipitous event. In today’s world it is rapidly becoming a business discipline. What was once perceived as being the exclusive realm of inventors or visionary CEOs is increasingly being recognized as an important organizational function.
In organizations that have success with innovation, it doesn’t just happen; it is becoming part of a systematic approach. Innovation in the 21st century will be to businesses like finance and marketing were in the 20th century.
The Historical Pattern: From Craft to Discipline
Finance didn’t begin as a discipline. As corporations grew, they developed accounting systems. This evolved into broader principles such as discounted cash flow, portfolio theory, and financial controls. Business schools began to contribute to and further refine these principles. Finance became professionalized, standardized, and systematized.
Likewise, a similar evolution occurred with marketing. What started as simple selling evolved into key principles such as segmentation theory, brand management, consumer psychology, and multichannel marketing. Universities codified these frameworks and corporations built departments around them.
The Pressing Need
In today’s world, innovation isn’t just a nicety; it is a necessity. The pace of change, particularly the pace of innovation, is accelerating rapidly. Thirty to 50 years ago, a company could experience several generations of senior management teams before a major change was experienced within their industry. Now, there can be multiple major changes within one generation of management.
Product life cycles are shortening. Competitive moats are rapidly weakening or disappearing as barriers to entry fail to stop competitors. Competition can emerge from anywhere in the world from surprising sources. Large corporations can no longer just rely on huge economies of scale as they become more and more vulnerable to quicker, innovative ventures.
Businesses are being forced into being more adaptive. The key is to progress from being reactive to being proactive. But even that is not enough. Most adaptive exercises tend to be incremental in nature — continuous improvements, refinements, quick adjustments. There is an increasing need to move beyond adaptability to agility – the ability to create and pursue major new opportunities faster and better than the competition.
What Must Change
Business as usual will simply not get you there. This is where innovation comes into play.
Strategic innovation (as opposed to incremental innovation) begins with a change in management understanding. Developing ongoing, strategic innovation is not a once-a-year planning session and it isn’t isolated within a few senior managers or one department such as R&D. Innovation has to become the purview of the entire management team. It is a recognition that innovation can come from anyone, anywhere, all the time.
The second mindset change is the recognition that strategic innovation always involves major unknowns, major risks. The mistake that has been made in the past is that managers decide an innovation opportunity is too risky and they subsequently walk away. The other mistake is that they convince themselves that there is minimal to no risk and decide to go all in – convinced that their vision of a major innovation is absolutely correct. The latter involves committing major resources for the length of the implementation and ignoring signs that the original vision is not 100% correct.
The discipline of innovation now recognizes that strategic innovation involves regimented experimentation to determine the optimum path to success. This should not be mistaken for the mantra that emerged in the last decade or so to “fail often and fail fast.” Failing often and failing fast amounts to throwing things at the wall and hoping that something will stick. It usually results in a lot of failure and “innovation fatigue.”
What is needed instead is a disciplined and regimented experimentation process that utilizes the concept of intelligent failure to turn unknowns into knowns and determine a clear route to the finish line. This derisking of a potential innovation is designed to occur early in the process before the major project expenses are incurred.
When done properly, this approach can be used on a number of strategic innovation initiatives. They form an ongoing portfolio of opportunities that are managed much like a venture capitalist manages a portfolio of high-risk, high-reward investments. It recognizes that not all of the initiatives will be a huge success. The key is to learn quickly which ones will fail, which ones will bring a good return on investment and which ones will be home runs.
The Emerging Discipline of Innovation
This represents only a couple of the key principles that are shaping the emerging discipline of innovation. A number of other complementary principles are rapidly coming into play. Together they will assure ongoing, sustainable innovation.
As with other business disciplines that have emerged over the past century, organizations will have to be trained in the skills needed to practice ongoing innovation. Distinct innovation processes will need to be established and organizational structures may need to be modified. Even the organizational culture will need to be reshaped to assure repeatable innovation success.
Innovation will no longer be a one and done. It will no longer be a once-in-a-generation phenomenon. Innovation is destined to truly become a way of life in every organization.
About Merle Symes
Merle Symes, author of The Innovation Edge: How Large Companies Lose It And How To Get It Back, leads The Provenance Group®, a consultancy dedicated to business innovation and transformation. He works with senior managers and boards of directors to reignite the innovative spirit of mature organizations. He has assisted senior management teams in organizations ranging from Fortune 500 companies to early-stage ventures. Symes’ previous executive positions include: CEO of the tech venture, Graematter; president of Ulrich Medical; and vice president, external technology for Bausch & Lomb. He has held board director positions on both public and privately-held companies as well as university and charitable organizations. Symes holds an MBA from the Wharton Graduate School and a B.S. in chemical engineering from the South Dakota School of Mines & Technology.
