Innovate or Die!

This week, we are going to talk about innovation. We're surrounded by this word, innovation. We have heard of terms such as Disruptive Innovation, Incremental Innovation, Radical Innovation, Innovation strategy or Innovation leadership, just to mention a few. Companies even have CIOs these days and other corporate roles at the executive level related to innovation. Therefore, it′s undeniable that innovation is important.

However, if we were to search for the definition of innovation we would find many different opinions depending on the author. For Nick Skillicorn is “turning an idea into a solution that adds value from a customer′s perspective” whereas for Mike Shipulski is simply “work that delivers new goodness to new customers in new markets, and does it in a way that radically improves the profitability equation”. (In this article for reference)

But the question is: Why do companies need to innovate? Is it for growing purposes or just because they want to add value to society? Or maybe it is because they want to maintain their competitive advantage… Reality tells us that companies which struggle to solve their problems, cannot grow or maintain their competitive advantage will eventually die, right? All this suggest that companies have two options, either innovate or die.

If these are the two options, you say “well I'm going to choose innovation, I have made the choice, I am committed, where do I start?” Suddenly, we find a thousand different experts who show us contradictory information. Innovation is about something new! No, it’s reinventing the old. It’s about making improvements! No, it has to be disruptive! No, it has to be incremental. It just being lucky! and so on and so forth. We are accustomed to hearing all these buzzwords related to innovation that are mutually opposed or inconsistent, which does not help us very much. How are we supposed to implement something which lack of a standardized definition to the point where you can put together incompatible concepts and still making the argument that we are innovating? Truth is that a lot of what we read about innovation is in fact just the reverse engineering of success stories of different companies. In order words, "Do what these tech companies are doing, and we can call ourselves innovators".

Innovation has no other metric than results and success. It is not simply the process of doing something different, but the difference that generates success. At the end of the day, Innovation is contingent on the outcome it produces. However, in the context of managerial culture, there is another concept that we don’t hear as often. It is the concept of adaptation. Why don't we say firms need to learn how to adapt? Why have we substituted innovation over adaptation? The problem with adaptation in our current managerial environment is that it fails to address a fundamental concern that is embedded in the idea of what good management is. It basically refers to the key performance indicators of the company and how remuneration of managers is always tied to these KPIs related to growth. Innovation has a positive connotation always related to moving forward, driving results, whereas adaptation is more neutral. It is related to achieving the optimal outcome at the end. In reality, it would make much more sense for us to say, not innovate or die, adapt or die.

Sometimes the right way to adapt is to innovate, but it's not the only way. Usually when you see companies facing challenges, their solution is to try radically new ways of doing things internally in the name of innovating process, or investing ridiculous amount of money into R&D in the hopes that they get a revolutionary product that will save them. What is less likely to see are companies that are capable of reinventing themselves, changing their focus and existing business model to become something else, knowing that in the short run could negatively impact their financial results and these KPIs identified as key for success, but in the long run those changes could be necessary to remain in business.  

Key Take-Away: We are thinking about innovation in the context of growth and tech. However, sometimes it’s not about growing, but about adapting and being flexible. If that means reducing your size in order to optimize your position in the market, then go for it. Pay always attention to the circumstances around you since we live in a fast-paced changing environment!