Tuesday, November 18, 2014

Does Your Organization Really Want Disruptive Innovation?

I was recently at lunch with an innovation leader of a Fortune 500 organization. He is a super smart guy and also a great person to “chew the fat” on strategic issues with. We were talking about the desire from his leadership to focus on supporting the development of disruptive ideas.

While this is a really valid topic and there is much talk of the value of disruptive organizations and their ideas, we debated the ability of large, complex organizations to support disruptive thinking.

As you are likely aware, disruptive innovation has been the holy grail of success for corporate leadership over the past 20 years, in part driven by evangelists like Clayton Christensen and his consulting firm Innosight. Of course, since Clayton Christensen wrote his seminal book on disruptive innovation (The Innovator’s Dilemma) in 1997, the business world has drastically changed. The book has also come under scrutiny in a recent New Yorker magazine article that critically examined the underlying research of the book. In the article, Jill Lepore pulls apart certain elements of Clayton’s theory with focus on the motivators of disruptive innovation and an analysis of case studies that were used.

Despite these criticisms, the thinking around the value of disruptive innovation continues. In fact, it has become even more of a priority for leaders of mature businesses, as they see a steady stream of new entrants lining up to destroy their existing business models. In the past these leaders could rely on their scale and reach to crush upstarts. However, now (perhaps justifiably) they are seeing that technology, social and economic circumstances have converged to the point where challenger businesses can rapidly overtake incumbents.

It is only natural for leaders of established businesses to determine that they want to pursue disruptive innovation. Sure, in the right circumstances (e.g. desperate and in fear of imminent collapse), I think truly disruptive innovation can be a valid path to the long-term survival and growth of large, mature organizations. However, most organizations that I deal with are more stable. I feel that they talk about changing market dynamics, competitive landscape, and margin pressures as mid-term concepts, rather than immediate, burning needs that threaten the ongoing existence of their business. As a result, they talk (a lot) about pursuing disruptive innovation, but the reality is that they don’t really want, or are able, to support it.

The reasons for this are complex, but at its heart it is just easier in a large organization to say “no”, rather than a risky “yes”. Ironically “no” as a response rarely has any negative repercussions. Further, as a leader there is an infinite variety of ways to say “no”, without actually uttering the words. Ask for more details, direct the idea to another group, say “yes”, but with an impossible budget or timeline. It’s easy to kill an idea. Saying “yes”, can be risky and time consuming.

So we started talking about how these incumbent organizations can truly support disruptive ideas.

One option is to separate the ides out from the (possibly toxic) culture of the “mother ship” business and grow them through an incubator. The issue here is that the ideas eventually need to come back into the organization to generate the necessary returns, which is when the real problems start.

Alternatively, HR and innovation groups can partner and set up systems to encourage the development of new ideas, but small changes in set HR policies rarely make a long-term difference to how a company operates. We talked about open innovation as an opportunity, but once again, as that thinking is introduced into an organization, they are often shot down (it is generally far easier to say “no” when the idea came from outside).

In the end we both agreed that the only way for a large organization to develop disruptive ideas is to build a broad base of support from within the organization. Short-term steps won’t cut it in terms of developing ideas that seek massive change within an organization. It just makes sense when you think about it.

I have written about building this base of support in the past, but in short, it revolves around the need to build networks of employees within organizations that are connected with innovative thinking and approaches. Some companies choose to call individuals within these networks “Innovation Catalysts”, “Innovation Champions,” etc. Whatever they are called, it is important to note that there are a bunch of variables and approaches to growing these resources, but what is very important is that a full strategic framework to guide the development of the network going forward. Short-term thinking around these networks just won’t work.

So that was lunch. In retrospect I wish it was easier for large organizations to be disruptive, but like I said, it’s just a tough situation and requires a hell of a lot of energy to work well.

I will let you know what we talk about next time around.

About the Author: Anthony is the CEO of Culturevate (www.culturevateinc.com), an organization that empowers a company’s employees to execute ideas and inspire a culture of innovation, through employee networks, a resource portal and training programs (developed in association with Professor Chris Labash from Carnegie Mellon University). Anthony is a widely read author (www.culturevateinc.com), speaker and advisor to industry leaders at organizations such as Pfizer, U.S. Postal Service, Johnson & Johnson, ADP and Fidelity. He previously led The BNY Mellon innovation program and has a Masters of Commerce (University of Sydney) and Bachelor of Economics (University of Newcastle).

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