INNOVATION CULTURE IS A PREREQUISITE FOR SUCCESS
When the upper management in an organization help to create the framework for healthy conflict management, and project managers are professionally and personally able to process conflict in a positive way, then – and only then – development in an organization becomes possible. This creates the foundation for a culture of innovation.
Well-known innovations like the iPad don’t appear out of thin air or as the result of a “problem-solving” meeting. They are born in an environment where there is room to disagree and where tons of good, bad and crazy ideas are continually being presented.
Creating a culture of innovation doesn’t mean that all traditional projects and working methods within the organization should be put on standby. It simply means that during project development – and even between projects – there should be room for disagreement and discussion, and that upper management should genuinely appreciate when employees present ideas, no matter how bad or nutty they may be.
When was the last time you celebrated the best idea that turned out not to be marketable after all?
THE DIFFERENCE BETWEEN DEVELOPMENT, INNOVATION, AND DISRUPTION
We rarely hear about innovation without the word “disruption” being mentioned. And the two are often erroneously considered to be synonymous. What’s more, in most cases the innovation being discussed is not innovation at all – it’s development.
Let’s get the concepts straight.
Development deals with gradual improvements, which happen as a natural consequence of thinking about and working with a product or service.
An example of a development is a smartphone getting an improved camera.
Innovation is a process as well as a result.
For a result to be an innovation, it must be a real and evident breakthrough (not just an improvement).
An example of innovation is when Apple invented Live Photos.
The innovation process is the work that leads to innovation. There is no definitive recipe for an innovation process, even though there are many processes and tools that can inspire and motivate development and innovation. In future blog posts I will share some of my perspectives on these. For now, however, you’ll find plenty of inspiration and insight into the core elements of a good innovation process in the article “What Your Innovation Process Should Look Like” from the Harvard Business Review.
Another great example is a popular approach within digitalization: pretotyping. Take a look at this interesting article from Medium: “Break the Innovation Barrier with Pretotyping“.
An important cross-disciplinary point: For innovation to blossom, it is essential that your innovation team is assembled correctly – and that a positive conflict environment is created where innovative ideas are encouraged. We’ll look at that more closely later.
Disruption is commonly defined as an interruption of the normal course of a process. In this specific context, however, disruption relates to a sudden, existence-threatening change to an industry’s normal business model. We all know examples – just think of what Uber did to the taxi industry. Contrary to innovation, disruption is exclusively a result. And it is rarely predictable. Of course, disruption can be an objective set out at the start of the innovation process. But this convergence of the objective of creating disruption and the innovation process has caused consultants to erroneously regard disruption and innovation as synonymous.
An innovation becomes a disruptive innovation when its impact is so significant that it disturbs or even destroys what had so far been a successful business model for a particular industry.
Let’s look at some examples.
PERSPECTIVE AND EXAMPLES OF DISRUPTION
With the above-mentioned definition, it’s apparent that an innovation like the smartphone has induced disruption – and often in areas that have nothing to do with telephony (manufacturers of cameras and alarm clocks certainly took a knock). On the other hand, how great should the impact on an industry be before one can call it disruption?
For example, has Airbnb’s business model disrupted the hotel industry? Yes, to some extent. And, as mentioned above, Uber certainly had a major impact on the taxi industry in many of the countries where it operates.
Now, let’s say a municipality applies a software robot to assess and manage forms and documents. Is that disruption? Not so much. The latter is just the application of a well-known innovation to a new process. It certainly results in a development for the municipality, but the future of an entire industry’s business model is not being brought into question.
A START-UP WITH THE POTENTIAL TO CREATE DISRUPTION IN THE NEWS INDUSTRY
Another example from personal experience.
In one of my companies, NewsButler, we are working on a new and innovative digital platform for the presentation of news – a kind of Spotify for news. This is an innovation, and nothing more. But NewsButler has the potential to create disruption in the news industry, if we are good enough and lucky enough.
If it turns out that we are able to establish a new digital business model in the news industry, one that changes the existing hierarchies and paves the way for new players, then – and only then – can we say that we’ve disrupted the news industry (and I sincerely hope that we will be able to say that some day!).
But until we see the results, it is “just” an innovation. It is also worth mentioning that even if NewsButler doesn’t cause disruption, it doesn’t mean that it was a failure, or even a bad idea. If we construct a profitable and respectable media firm using our innovation and technology, that’s a victory too. Everything new doesn’t need to result in disruption to be regarded a success.
Technology can in and of itself be disruptive. In other words, it doesn’t necessarily need to be tied to a specific solution. Blockchain, as an example, will probably disrupt a range of sectors (in addition to the finance sector).
DISRUPTION IN THE FINANCE SECTOR
An interesting example of disruption in the finance sector that essentially has nothing to do with technology is the innovation of low-cost index funds. It has revolutionized parts of the investment market – to the benefit of regular people saving up.
The famous podcast, Freakonomics Radio, has both an entertaining and insightful episode on this subject, titled “The Stupidest Thing You Can Do With Your Money”.
THE RIGHT COMBO OF INNOVATION CAN LEAD TO DISRUPTION
In most cases, when companies want to create disruption, they focus on a specific innovation. However, it’s the combination of innovation within digitalization, technology and business model that most often leads to disruption. And even then, you still need to be really good, and have a little bit of luck on your side.
THE COMPOSITION OF INNOVATION TEAMS IS CRUCIAL FOR SUCCESS
For organizations to have a chance at successfully developing something really innovative, the teams that work on innovation projects must have the right composition and be suitably positioned to access the professional diversity of the business.
A professionally and culturally homogenous team will typically have impressive professional depth within a specific area. However, the team runs the risk of becoming short-sighted and segregated from the rest of the company – a disconnect which does not lead to innovation but to development within the team’s area of expertise.
An innovation team brimming with professional diversity, however, is securely anchored in the wider company. That broad organizational reach makes it much easier for the team to source ideas from the various departments and individuals, and this makes it easier to fully utilize the idea-generating potential that exists within the company. Thus, a heterogeneous innovation team is essentially a precondition for innovation success.
What’s more, the placement of an innovation team within the organization must be such that the team members have the freedom to dedicate themselves to execution. In other words, day-to-day responsibilities should not be given priority over innovation work or, at the very least, they must not be allowed to interrupt time dedicated thereto.
But innovation is not born of harmonious teamwork. Feathers must be ruffled. Conflict is critical.
For good ideas and true innovation, you need human interaction, conflict, argument, debate
– Margaret Heffernan
FRICTION AND CONFLICT LEAD TO INNOVATION
How do you make an innovation team innovate?
The American entrepreneur and writer Margaret Heffernan has very concisely explained it: “For good ideas and true innovation, you need human interaction, conflict, argument, debate.”
Friction between people can either be stimulating (constructive conflict) or stifling (destructive conflict). The difference between a constructive and destructive conflict is just the way you handle it. In a safe environment, conflict creates positive energy and development. In other words, if you want to productively harness the idea-generating power of interpersonal friction, and through that achieve development and innovation, you have to establish a healthy conflict environment.
A healthy conflict environment requires a common understanding and acceptance regarding conflicts and how to handle them. Such an environment is characterized by respect for different opinions and attitudes. That respect naturally creates a safe environment where confidence among individuals is fostered – and it’s confidence that empowers them to express opinions and contribute novel ideas.
But safety is a relative term. People vary greatly in terms of how they experience conflict. Some have a hard time with even the most mild-mannered of disagreements while others thrive on intense friction and draw their motivation from it. Pay close attention to individual personalities when composing an innovation team.
This matrix can be utilized to broadly categorize a team in relation to the conflict environment. A given field is not a diagnosis but should be seen as a risk or an opportunity necessitating further analysis. For example, if the environment is characterized by distrust and immediate agreement, there is not inevitably hidden conflict, but there is a breeding ground for it.
In groups where there is a high degree of trust and obvious agreement, it’s beneficial to instigate disagreement and debate. This can, in the right contexts, produce a greater quantity and higher quality of innovative ideas than if they were left to continue with business as usual.
It can be useful to think in terms of a provocation limit – the point at which an individual feels provoked, where the interpersonal tension becomes too much, and where any hope of a constructive outcome is lost. There is a direct relationship between a team’s innovation potential and its provocation limit. The lower the provocation limit, the lower the innovation potential. What’s more, you should be very careful when mediating conflicts in a team consisting of individuals with both low and high provocation limits. Those with a low threshold for provocation might experience the innovation process as extremely uncomfortable, even distressing.
Any conflict can be constructive (stimulating) or destructive (stifling) – how you handle it determines the outcome.
SUMMARY AND FURTHER INSPIRATION
When an organization wants to innovate, it must:
- Be aware of what innovation is and is not.
- Create the right team – heterogeneous, deeply rooted in the organization, and allocated enough time to work.
- Establish a healthy conflict environment.
- Support a strong innovation culture among management, for example, by celebrating all innovations and inciting healthy conflicts and debate.
Of course, there are many other factors that could influence an organization’s ability to successfully innovate, including management/governance processes that clamp down on innovative experiments (for example, with a strict and inappropriate budget process).