Let’s be clear – no one is suggesting that continual improvement isn’t a good thing. However, what deserves some real exploring is whether incremental improvement is killing true innovation within your business. There are a number of reasons this can happen – incremental improvement can feel like “enough” if your business is achieving success; even as opportunity for true innovation abounds. Incremental improvement feels safe, whereas innovation can be scary. And, perhaps worst of all, you are focusing on incremental improvement under the guise of innovation – in other words, you don’t really see the difference.
In any of these instances, it is time to break up with the idea of incremental improvement and accept the fact that today’s market landscape demands true innovation. I recently had a conversation with Dan McClure, systems innovation choreographer at Innovation Ecosystem, which you’ll see soon on the podcast. It was clear in the first few minutes of our talk that Dan isn’t one to shy away from the challenges of true innovation, and he’s created a career from his inclination and passion for it in helping companies embrace real innovation.
“Most organizations are in the habit of working. They have built up a set of systems, they’ve built up a value proposition. They’ve built up a marketplace. That all work together to essentially deliver value to their customers and to their shareholders and to their employees. Everything works,” says Dan. “And for those types of organizations, simply making an incremental change to make things a bit better makes them more profitable, more competitive. Sustains their role in the marketplace. The challenge is, if they need to make a bigger change, let’s say a competitor comes in and offers a radically better proposition, or the fundamental basis for their marketplace disappears, then they can’t make small changes to the way things work, because those won’t be enough.”
Disruption Can Be an Opportunity or a Threat
What Dan’s referring to is disruption as a threat, which is a very common viewpoint. What happens if a new competitor enters our market with a compelling offer? How do we pivot if the need for our core product declines drastically? What do we do when our value becomes commoditized? These are the type of disruptive circumstances that kick companies into gear when it comes to taking action – but of course, they have to hope it isn’t too late.
But it’s important to remember that disruption can also originate as an opportunity. Perhaps you see a gap in your customers’ needs that isn’t currently being met, but to jump in and address that need will be disruptive to your organization. Disruption as an opportunity can sometimes be more challenging in the sense that it is far easier to squander. Whereas disruption as a threat is obvious and forces action, disruption as an opportunity can be more subtle and easier to overlook – particularly when your current business is performing well. Weighing the decision of disruption when it is an opportunity versus a threat is an important skill to practice.
With disruption of both types rampant in a number of industries today, meeting these threats and opportunities with innovation is imperative. But companies commonly default to the comfort zone of incremental improvement. “An incremental project is going to be easier to sell, lower risk to execute, and easier to adopt. And that’s a very attractive thing in an organization. Nobody wants to be the person who’s spearheading a failed project,” explains Dan. “Now contrast that to a disruptive change, which requires an entire system to change. Here we’re saying, ‘We’re going to imagine a much bigger opportunity, we’re going to have to hypothesize over what we think the opportunity is, we’re going to have to change lots of different pieces and put in new things that nobody’s thought about before really carefully and therefore the risks are going to be higher. And finally, we’re going to have to get everybody else onto an entirely new page.’ If you compare selling those two projects, it’s a heck of a lot easier to sell that small incremental project. And at the same time, it’s the big disruptive system change project that really offers the hope of getting past these big threats that we were talking about earlier.”
The Art of Selling Innovative Change
With both the threat and opportunities of disruption high, it’s important for stakeholders across the business to become more comfortable with the unknowns and discomfort that embracing innovation brings. That said, as Dan points out, some of the discomfort can be alleviated with a more refined approach to suggesting innovation. If you recognize an opportunity or threat within your company, make sure you think about what innovation you think is needed before you articulate the need. “Let me give you a few examples of things that people do wrong when they go and talk to senior management about innovation. The first thing is they arrive and deliver a dead rat,” says Dan. “So, they walk through the door and they say, ‘The world is ending. Everything is going to go bad and we need to change something.’ And then they stop talking and they’ve delivered the dead rat, but they don’t actually have a solution. As the innovator, the person who’s proposing the change actually has to think through what it is they want to see.”
As you envision an innovative change to address disruption, be sure you don’t inch back into an incremental approach. “Come in with a solution that is complete and compelling. It’s not enough to make one little foray into some change.,” warns Dan. “I think Servitization is a good example because companies think, ‘we’ll simply add a bit more service onto our product, do what we’ve always done.’ What the system innovator needs to do is if they’re going to go to management is come up with a big enough and powerful enough system change that it truly does create new, differentiated value.”
Finally, consider how to not eliminate but minimize risk. Risk is inherent in innovation and it needs to become more comfortable for companies looking to take market-leading positions, but that doesn’t mean it should be a free for all or that strategies shouldn’t be explored to minimize risk. “You’re asking an organization to take big leaps in faith, plow into areas of uncertainty and so you need a strategy that allows you to evolve this new market opportunity over time,” says Dan. “And it can’t be we’re going to invest for four years, put millions of dollars into it and then see if it works at the end. There must be early points of feedback, all the way along the way to show that this is all working. I think if you do that well, we’ll find that a lot of those senior leaders that seemed like they might be anti-change, are very appreciative of the fact that they don’t want their company to fail either and they have a real opportunity here.”