Contributed by Nelson Soken PhD
We at Barnes & Conti have been going back and forth regarding the topic of incremental versus disruptive innovation. What spurred our conversation was a blog post that discussed the necessity for insurance companies to continually look for opportunities to disrupt themselves before a competitor or an upstart does it to them.
Our back and forth conversations included discussion of the work of Clayton Christensen and the controversial critique of his famous book “The Innovator’s Dilemma” by Jill Lepore published in the June 23, 2014 issue of The New Yorker magazine entitled “The Disruption Machine: What the gospel of Innovation gets wrong.” Admittedly, our exchanges went down a similar path as many other articles written since Lepore’s, where we found examples that either supported or refuted the underlying theory of disruptive innovation as proposed by Christensen. In his research, did he cherry-pick examples that fit the theory? Why are many companies that were deemed disruptors in the book not in existence anymore, while others that were deemed the incumbent are still around and successful? Does the path that the adoption of new products takes hold true for all industries? Do you have to have disruptive innovation, or can you be as successful over time with many incremental innovations that pose lower risk?
After a series of fascinating e-mail exchanges on the merits of the theory of disruptive innovation, the research methodology used in developing the theory, and the rebuttal itself (of which I won’t bore you with the details), I asked myself a question:
“Are we focusing too much on the theory, and missing a really important point that more practically impacts organizations?”
Let’s start with the clear empirical evidence that, based on much cognitive psychology research, human beings are terrible at predicting the future and estimating risk; in many cases, we do post-hoc analysis and rationalize our way to a foregone conclusion. This suggests that none of us can “a priori” know which new gadget or service will be the next transformational idea. However, we certainly still need to be vigilant at monitoring our organizational environment, and to invest some amount of real time incubating and nurturing various types of new ideas. As Alan Kay once said, “The best way to predict the future is to invent it.” The real practical value of the conversation around disruptive innovation should help organizations take the time to self-reflect and assess whether they are prepared to succeed for the long haul and in light of an uncertain future. Organizations need to regularly perform organizational fitness testing or scheduled maintenance check-ups and tune-ups. Even if we can’t predict the future, we can certainly be prepared for various possible futures, to both reduce risks and to increase the probability of success.
Are you and your organization, prepared for the future? This is an important question, and here at Barnes and Conti we believe in organizational fitness, which requires individuals and the overall organizational culture to be provisioned with the mindset, skill sets, and competencies that help optimize their performance in an ever-changing, uncertain world.
Let’s face it; one of the major challenges in any organization is the resistance to change. Because of cognitive biases, our natural tendency is to preserve the status quo and strongly resist change. For example, loss aversion is a person’s tendency to strongly prefer avoiding losses vs. acquiring gains (i.e. hang on to what you already have as opposed to choosing something different of more value). Making choices involves risk.
One of the major organizational challenges in building and sustaining success is developing a deep and ongoing understanding and appreciation of yourself and your organizational culture. As Jim Collins, author of books such as “Built to Last”, “Good to Great”, and “How the Mighty Fall”, once said: “Whether you prevail or fail depends more on what you do to yourself than on what the world does to you.” For excellent and readable discussions on change, decision-making, and human cognitive biases, I recommend reading Chip and Dan Heath’s books “Switch” and “Decisive.”
Here are some questions to ask yourself and your organization as you pursue innovative excellence and strategic success:
- How skillful are we, throughout the organization, at internal and external influence, negotiation, and collaboration?
- What critical thinking skills and tools do we promote and use to make better decisions, while supporting long-term vision and strategy?
- How do we encourage and support everyone in the organization, regardless of role, title, or skills to practice creative thinking and contribute ideas that may help move the organization forward?
- What processes do we have for identifying, prioritizing, and measuring different types of innovation, so the best ideas are fully nurtured?
- How strategic is our day-to-day thinking, and does it align with the organization’s culture and overall strategy?
- Where do we take risks as an organization, and what does an intelligent risk look like?
- How can we be more helpful and skillful consultants or coaches to one another, so that expertise and support can expand throughout the organization?
- What do individuals and teams need to take successfully address and future challenges?
In order to succeed in an unpredictable future, we all have to continually and diligently prepare ourselves and to make adjustments wherever and whenever needed (organizational tune-up and fitness testing). Focusing on what we can control (ourselves and our organizational culture) increases our likelihood of success. The practical question regarding disruptive versus incremental innovation is whether your organization is ready for the long-term, which requires agility, flexibility, and foresight to deal with a range of potential futures.
So if you are ready to identify and deliver value through innovation, whether incremental or disruptive, get a tune-up so your organization is firing on all cylinders.
For more information and resources, go to Barnes & Conti Associates.