In the ordinary course of business, emergent innovation strategies do a good job. They arise from a deep-rooted wisdom of the past and tends to replicate past successes. I have earlier written about the different logics used in emergent innovation strategies. I have also highlighted their pros and cons. But, in times of change, emergent innovation strategies become inadequate and sometimes counter-productive.
For example, Polaroid tried to leverage digital imaging by adding printers to digital cameras. Kodak tried to sell more film in the digital era by producing developing photo CD players. Blackberry continued to rely on its physical keyboard in the face of virtual keyboards. Apple never imagined that Google could enter the smartphone market. These actions stemmed from autonomous innovation logics that perpetuate past successes. As these examples show, at times of discontinuity, autonomous strategies backfired.
The counter-productive nature of emergent strategies points to the benefits you can derive from a deliberate innovation strategy.
The five most important benefits from a deliberate strategy are as follows:
1. Effective Resource Allocation
One drawback of emergent innovation strategies is the potential for ineffective resource allocation. Ineffectiveness arises when the past allocation logic no longer delivers results. The previous resource allocation methods usually stop working during times of significant change in your business.
The good news is that business leaders do not miss significant changes taking place in their industry. When Sony launched its digital camera, Kodak’s team took notice. The problem arises when the changes are at a business unit level or are not spectacular in nature. For example, Dollar Shave Club (DSC) didn’t appear on the radar of P&G’s top management team early on.
There is another situation when the emergent innovation strategy leads to ineffective resource allocation. It happens when the innovation needs of a business go through rapid change. At such times, autonomous strategies push the resource allocation out of whack. An example of this phenomenon is from the Disk drive companies as documented by Clayton Christensen. He found that disk drive companies continued to use old resource allocation model even when their industry was changing. As smaller and more portable drives emerged, sales continued to focus on core customers. Due to that, the innovation focus became out of sync with emerging business needs. It led to a large-scale disruption in the industry.
2. Organizational Alignment
Consider a football team wherein half the players are mistaken about the goalpost. These players will fight their teammates who are trying to push the ball to the right goalpost. During times of change, innovation needs change fast. Without a clear and deliberate innovation strategy, your organization can behave exactly like this.
In my interviews with Kodak managers, I found a surprising fact. What defeated Kodak’s digital efforts was not Sony but managers at Kodak.
When the market was moving towards digital cameras, Kodak developed cutting edge digital cameras. But at retail stores, its employees were pushing the customers away from digital cameras. They were sending a message that analog cameras were better than digital cameras. These employees believed that the goal was to sell more film.
During times of rapid change, old goals and old strategies continue. At such times, old goals clash with emerging goals. The result can be a lack of organizational alignment. A deliberate innovation strategy can help you avoid alignment issues.
3. Blindspot Management
When you drive a car at 200 mph, your success depends on an immense focus on the road and your driving. Due to this speed, you develop a tunnel vision. This tunnel vision makes you succeed as a race car driver. If you try to overcome the tunnel vision you will not be able to win the car race. The same happens when you lead a fast moving business. What makes you successful (focus) also makes you vulnerable due to your tunnel vision. This focus is why you develop blind spots. Thye are an inevitable part of life.
While the upside of blind spots is effective actions, the downside can be costly. In my book The Dark Side of Innovation, I explain in great detail how research in cognitive sciences explains decision mistakes of firms. In the book, I linked blind spots and other cognitive errors with potential disruption of firms.
Blind spots can make you miss many opportunities and challenges. Apple’s inability to predict Google’s entry into mobile phones was one such example. Who would have thought ten years back that Amazon, Google, and Apple would be bitter rivals?
A robust innovation strategy process can help you avoid blind spots. Such a process should contain a horizon scanning mechanism that allows you to see far off threats and opportunities. I developed an active environmental scanning process in my book the dark side of innovation.
You can also learn more about this process in my podcast episode on predicting disruption.
Such a method, when used as a part of your innovation strategy process, can be a life saver for your business. It can help you avoid the downside of your inevitable blind spots.
4. Unlocking Value
As companies wade through streams of emergent innovation strategies, they sometimes miss major opportunities to unlock value. At other times, they are so busy trying to focus on the innovation success that they pay less attention on how to make money from their innovations.
TiVo was a great example of a company whose innovation was wildly successful but who made no money from this success. TiVo created a cult-like following for its DVR. People began to use the word Tivo as a verb. However, TiVo couldn’t protect its innovation and make money from them. Tivo like situation occurs for many start-ups who are so busy making their inventions successful that they forget to think about profiting from them. The typical thinking is that once the innovation becomes successful, profits will automatically follow. Unfortunately, it is not always true.
Kodak had developed extensive capabilities in electronics and imaging that would have allowed it to enter the printers business early on. However, its entry into the printer business took place much later when it was struggling with the digital threat at an existential level.
A deliberate innovation strategy forces you to think about unlocking hidden value and tapping profit opportunities in a systematic manner. It helps you unlock value on a going basis.
5. Innovation Stickiness
Innovations often arise in one of two ways. First, managers connect the dots in the market and develop innovative ideas. Second, managers connect technical dots to create new solutions.
However, innovators rarely step back and think about how to make their innovation more sticky. A wrong read of the market can also lead to innovations that find no demand. For example, Segway was a technical innovation that just didn’t stick in the market. At this same time, new coke was a response to Pepsi challenge that backfired in the market.
Often, emergent innovation strategy uses heuristics to determine potential stickiness. A deliberate innovation strategy forces you to consider whether your innovation will be sticky or not.
Key Take Aways
In short, a deliberate innovation strategy can lead to superior innovation performance. It helps you get a greater bang for your innovation bucks. Which of these benefits does your firm stand to gain the most?