Creative drills
Yorai Gabriel
4X Co-founder, Product strategist, Innovation architect, Author - The Innovators' Drama -> Helping mindful leaders reduce the cost of transformational frictions and blockers to generate faster and better impact.
Innovations in innovation, shifting focus from more to better.
Innovation is a recovery mechanism; the question is what recovery strategy are you taking - leadership or imitation?
The first conscious debate regarding innovation and the original meaning of the word came from the Greek word, Kainotomia, meaning new cuts. The word was used in a discussion how to establish financial recovery after the social war which left Athens in financial ruin. According to Xenophon, new cuts (i.e., new mines) should be created to revitalize Athens economy.
Since then, almost 2500 years have passed and not surprisingly new stuff is still the intuitive approach to recover. But is new always better?
Back in the mining (and oil) industry, new perceptions of competitive leadership are emerging, challenging the assumption that investment in production growth at all costs is the best way to establish a competitive advantage. These examples may shed new and creative light on how we should address innovation.
New operational paradigms, led by EOGResources (NYSE:EOG) and ConocoPhillips (NYSE:COP) are challenging traditional business perceptions that more new is better, according to the Motley fool website. These companies approach also indicate that the mindset toward innovation is changing, becoming more mindful and aware of the potential of well-executed business creativity.
Drilling for returns and not oil is an approach that re-organizes the mechanics of growth and productivity. Instead of focusing on production quantities, a shifting focuses towards maximizing the profitability from each well. With 54% of wells losing money (According to Chesapeake Energy's CEO), Setting the bar at 30% Net profit at a 40$/barrel price tag seems ambitious and demanding. And cannot be accomplished without creative reverse engineering.
Oil is just an outcome.
Looking at ConocoPhillips reveals another strategy, production as a function of debt adjusted share basis. What this means is that production quota is not the most important metric, but instead the impact on debt and shares allocation, which is what interests investors more. ConocoPhillips realizes that an oil and gas company job is not the production of oil, but instead creating an appeal for investors who invest in oil and gas. Looking at WeWork recent numbers, Or concerns around Tesla's bankruptcy signals, suggest that addressing the leverage and growth ratios is a smart move, based on shifts in market priorities. (who is the real client of the company, or what they buy precisely?)
Accomplishing bold strategies requires careful application of creativity - the proof is in the Outperformance.
What’s the lesson here?
Needless to say, if you want to lead the pack, you need to lead the pack. Leading is about being first, bold and outperforming. With so many imitative innovations these days, careful observation would reveal that many are not innovative at all, not in approach nor execution. Leaving many innovations as catch up or stay in line ventures.
But the more important lesson here is that no matter what innovation approach an organization chooses, quick and effective adjustment of operational mechanics, is critical to accomplishing bold objectives. And to do so, a careful, in-depth creative approach is needed.
- Articulate a clear goal. Before you “Just do it,” just say it. How do you want to position your creativity? Leading, imitating or following behind? There is no right or wrong answer here, only a guiding compass for assessing the creative efforts and their financial outcomes.
- Identify the critical value mechanisms that require attention. What are you producing? Think carefully; Amazon produces impulse buyers; Google produces attention events, Facebook delivers hours of gaze, etc.’. What are you… creating?
- Rewire performance engines to fit with the real production measurement, not the convenient outcome. As with the example of oil wells. Oil is one of the byproducts an oil and gas company creates, and although highly significant, as a business, it’s not the most important.
2500 years after the innovation discussion started, we should still ask ourselves, do we need new wells or do we need to be better at mining.