Thoughts on innovation

In the land of corporate buzzwords, innovation is a strong contender to be king. Many CEO’s pride themselves on leading innovative businesses, asserting how important it is to stay ahead of the game by continually innovating. They believe that innovation is the only way to remain relevant and lead a prosperous organization.

They are right in saying this. Economists argue that it is innovation, both technological and otherwise, that drives us forward. This holds true for societies as well as for companies. Disruptive innovation is the key to future success in business[1].

Almost halfway through the summer holidays, I have outlined two observations concerning innovation. Instead of deep-diving into the topic, I take a few steps back to look at the nature of innovation and what that means for your organization.

An outcome and a process

Most commonly, innovation is referred to in terms of products, services or methods that are new or significantly improved compared to what existed before. Penicillin, the assembly line, the transistor, … are all examples of products or services that were considered innovations in their time. This way of looking at innovation focuses mainly on the end result, i.e. the final product.

There is however another, more elemental aspect to consider and that is the process behind innovation. It is this process that eventually leads to innovative products such as the transistor. In this regard, the process of innovation is more fundamental than the final product. However, the process often remains hidden from view, with all the glory going to the end product.

Due to this duality between product and process, innovation shares some characteristics with science. On the one hand, science is a collection of facts and theories that try to explain the natural world. On top of that, science is a method of discovering these facts and theories. Like innovation, it is both an outcome and a process[2].

In our line of business, which is innovation consulting, we are mainly focused on enabling the process-aspect of innovation since it is more fundamental. Therefore, it is vital to understand how the process of innovation takes place.

Foxes and hedgehogs

In broad terms, there are two schools of thought on how the process of innovation leads to innovative products. It is useful to take a look at both these dynamics since they are instructive as to how innovation comes about within your organization.

The first school of thought views innovation as a linear process. As economist Robert Gordon puts it: “[…] it is useful to think of the innovative process as a series of discrete inventions followed by incremental improvements which ultimately tap the full potential of the initial invention.”[3] This type of innovation feels straight-forward and there are many examples of products that came about through this process. The first computer could only do limited calculations and was of little everyday importance. But over time, little improvements were added. The accumulated result grew into one of the biggest innovations of our modern times.

The second school of thought maintains the view that innovation comes from the recombination of existing ideas. Combining ideas from different fields can push innovation forward in very unpredictable ways. As complexity scholar Brian Arthur writes in The Nature of Technology: “To invent something is to find it in what already exists”[4]. Again, there are many examples to pick from. Jim Simmons, a mathematician working in the field of theoretical physics, realized his theory could be extended to financial markets. Using his expertise in physics helped him to develop the financial models that are at the core of Renaissance Technologies’ success, now described as the most successful hedge fund.

People generally gravitate to one of these schools of thought, making the distinction between specialists and generalist feel natural. A group of specialists tends to make small improvements on existing products that eventually lead to a big result. They are experts within their fields who put one innovation on top of the previous one. Generalist take a wider look instead and draw inspiration from many different subjects rather than from an expert-understanding of one particular field.

As always, the ancient Greeks already understood this division between generalists and specialists, as the poet Archilochus wrote: “The fox knows many things; the hedgehog knows one big thing.”[5]

What does this mean for you?

Although these two insights are general and probably familiar to you, they provide valuable insight that is directly useful to your organization. Two main lessons stand out:

1.    Focus on the process behind innovation, not just on the product

The processes that generate innovative products are more important than the innovative products themselves. If you are not able to keep innovating, you will be out of business once the next big thing comes along and you missed it completely. Because who’s to say your innovative product wasn’t just a lucky shot?

The following example illustrates this point beautifully. In his book Creativity, Inc[6]. former CEO of Pixar Ed Catmull describes how his team was struggling to produce good movies and losing their innovative touch. Mr. Catmull understood that the issue was not with his team, since they had produced massive hits in the past. The issue was the process. Cultivating a process that stimulates innovation took a lot of time and effort, but Mr. Catmull was able to turn the slump around. Instead of trying to replicate the old successful movies, the team focused on the process, enabling them to recapture their innovative spirit which lead to major successes such as Frozen. 

2.    Get the right team for your business

The nature of your business somewhat determines whether you need a specialist or a generalist team. Especially the pace of change within your business is of great importance[7]. In a fast-changing sector, such as gene editing or quantum computing, generalists struggle to keep up with the tremendous amount of innovation that takes place. A high level of expertise is therefore necessary to understand the latest developments. On the other hand, specialists often struggle in sectors with a slower pace of change, such as the natural resources sector. Generalist can draw inspiration from other fields whereas specialists find it hard to come up with novel ideas.

Taking a step backwards

Understanding the different dynamics of innovation, the importance of the process and finding the right team are vital for the lifespan of your organization. It will help you uncover hidden assumptions, identify potential risks and hazards, offer a fresh perspective and shift your focus to better methods.

Sometimes, all you need to do is take a step backwards to see why you are stagnating. Only by balancing the big picture with your internal story you can properly move forward.

[1] https://hbr.org/2000/03/meeting-the-challenge-of-disruptive-change

[2] Henry Edison, Nauman bin Ali, Richard Torkar, Towards innovation measurement in the software industry, Journal of Systems and Software, Volume 86, Issue 5, 2013, Pages 1390-1407, ISSN 0164-1212, https://doi.org/10.1016/j.jss.2013.01.013

[3] Gordon, R. J. (2012). Is U.S. economic growth over? faltering innovation confronts the six headwinds. Cambridge: National Bureau of Economic Research, Inc., https://dx.doi.org.kuleuven.ezproxy.kuleuven.be/10.3386/w18315

[4] Arthur, W. Brian (2009). The Nature of Technology: What It is and How It Evolves. Free Press.

[5] Epode of Archilochus - https://demonax.info/doku.php?id=text:archilochus_poems

[6] Catmull, Ed, and Amy Wallace. Creativity, Inc: Overcoming the Unseen Forces That Stand in the Way of True Inspiration., 2014. Print.

[7] Teodoridis, F., Bikard, M., & Vakili, K. (2019). Creativity at the Knowledge Frontier: The Impact of Specialization in Fast- and Slow-paced Domains. Administrative Science Quarterly, 64(4), 894–927. https://doi.org/10.1177/0001839218793384