“Innovate or die.”
It’s a business theory as popular today as it was in the 1980’s when it was first popularised by Peter Drucker. In fact a simple Google search for the phrase brings up over 600,000 references, and more than 125,000 news articles. But it also brings up the key question facing our business leaders as they ponder their organisations in the new reality of 2020: What is the future of innovation?
The traditional view of innovation has been centred around disruption: “How do we shake things up around here?” And whilst the sentiment is admirable – even necessary – it tends to lead down a path strewn with silos, misfires and investments which never quite deliver on their promise.
Perhaps we have been focussing on the wrong thing.
If you believe the populist view, innovation is held back mostly by a lack of commitment and investment. But the numbers simply do not support this. In a 2018 report published by Harvard Business Review on the obstacles to innovation faced by large corporations, lack of budget ranked only #4 and lack of executive support was #7. The top three spots in the survey, however, were all taken by cultural and organisational issues:
#1: Politics, turf wars, and a lack of alignment.
#2: Cultural issues.
#3: Inability to act on signals crucial to the future of the business
The issue it seems is not a lack of corporate will, but a lack of understanding and focus on the things that can make a real, meaningful difference.
This is where inertia rears it’s ugly, energy-sapping head.
I recall a conversation with a client a few years ago. We were discussing a marketing program which they had been running for many many years, costing millions of dollars – ostensibly a key pillar of their engagement strategy. But as we discussed its real impact on the business there was a sinking realisation that “we do it because we’ve always done it.”
The single biggest risk for any business right now is Inertia.
There is an instinctive understanding that to stand still is to be left behind. And to be stuck in a rut – whether in product, service or organisation, is to lose the momentum that all businesses need to survive.
It’s explained rather better than I could by Donald Sull, Senior Lecturer at the MIT Sloan School of Management, in his article “Why good companies go bad”:
“Active inertia is an organisation’s tendency to follow established patterns of behaviour—even in response to dramatic environmental shifts. Stuck in the modes of thinking and working that brought success in the past, market leaders simply accelerate all their tried-and-true activities. In trying to dig themselves out of a hole, they just deepen it.”
So how do we understand how to overcome Inertia, without disrupting the strengths of the organisation?
Over decades spent helping organisation to build and/or reinvent businesses, brands and products, we have come to the conclusion the answer comes directly from physics.
Just as inertia works in the world of physics – so too in the world of business – to change it first you need to identify where it is happening – and then you have to apply force.
To find the Points of Inertia, and then figure out the strategic imperatives which can force them in the right direction, our process looks at three distinct factors:
Business Smart: Understanding the opportunity and the barriers within the organisation – its cultural reality.
Brand Smart: Examining the products and services which define the brand, and the ecosystem needed to sustain meaningful innovation.
People Smart: Identifying the required behaviour change to get people on-board: building momentum internally and externally.
This allows us to zero in on what we call the Strategic Imperatives – the points where we can apply the right amount of force to drive momentum. Experience tells us that the solutions can and should run the gamut of tools available – product and service innovation, process and systems reinvention, internal and external communications and technology integration all have a role to play.
What is equally important is that the organisation changes its core focus from simply anchoring itself to growth, and puts strategies in place that can enable it to make progress.
The distinction is subtle but significant: where growth is simply focused on making things bigger, progress is defined by making things better. (Good news: the two are not mutually exclusive.)
But the key difference is this: Progress doesn’t just happen. You have to make it. Which makes it the avowed enemy of inertia.
It also gives us the opportunity to understand that it does not require disruption to drive success. Simply breaking through the inertia barrier we can even incrementally make progress, and create sustainable momentum over time. Think of IBM’s transformation from hardware manufacturer to technology systems leader, or Amazon’s steady morphing from book-seller to data-driven retail behemoth. Of course, like everyone, we love a home run. But it does not define the process or the outcomes.
Like so many things, inertia then is a conundrum which can be solved. And whilst there is no single formula, there are rules which, when applied consistently, can get things moving in the right direction.
Newton would be pleased.
Related Links
The Biggest Obstacles to innovation in large companies?
Why Good Companies Go Bad
