Tag Archive | Environment

Entrepreneurs and politicians

politics dilbertInnovation is more important than you think, even if you are a well-established Fortune 500 company. According to Eric Ries (The Lean Startup) “creating an innovation factory, a group of people who create disruptive innovation on a continuous basis, is probably the only sustainable path to long-term growth”.

Clayton Christensen (The innovator’s dilemma) has described 2 types of innovation:

  • Sustaining innovation: incremental improvement to existing products and serving existing customers.
  • Disruptive innovation: breakthrough new products.

Yes, only disruptive innovation generates new sources of growth. Bad news is that many big companies are great at sustaining innovation but poor performers at disruptive innovation. That’s why 60% of the companies fail jumping into the next generation and disappear after the first technology revolution (learn more here).

Innovation_process

Innovation needs a) a management process and b) the correct environment. The innovation management process must focus on learning and is very different from general management techniques, which focus on execution (i. e. doing things on time and on budget). Facilitating and cultivating a learning environment is the responsibility of senior management (learn more here)

If both things are present (correct management processes and a great environment) more ideas are tested, learning cycles are shorter and the probability of innovation increases exponentially. Using Scott Cook’s words, we convert politicians into entrepreneurs:

When you have only one test, you don’t have entrepreneurs, you have politicians, because you have to sell. Out of a hundred good ideas, you have to sell your idea. So you build up a society of politicians and salespeople. When you have five hundred tests you are running, then everybody’s ideas can run. And then you create entrepreneurs who run and learn and can retest and relearn as opposed to a society of politicians.

Scott Cook

Scott Cook, Intuit chairman, via The Lean Startup

Recommended books:

  • The Lean Startup, Eric Ries (link)
  • The innovator’s dilemma, Clayton Christensen (link)

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Innovation and environment

Environment and innovationIt is almost impossible to overemphasize the effect of environment in innovation. Yes, some people have that special thing that makes them incredibly creative, but even the most talented team will fail if it is surrounded by risk aversion and fear to failure. The good news is that the opposite is also true, everybody has creative potential if the environment is favorable.

There are 3 main environmental states:

  • Unfavorable environment: Only results matter. The motto is “if you fail, you’re fired”.
  • Neutral environment: Failure is accepted. The motto is “it’s okay to make mistakes”.
  • Favorable environment: Trial and error to maximize learning. The motto is “use all available opportunities to learn”
The conditions for innovation are adverse if results are the only important thing. Nobody will risk or try because there is no benefit is doing so. The safe option is doing anything it takes to get the expected results. This, of course, includes cheating, hiding information (especially problems) and the consequence are very slow learning cycles. No innovation is possible.
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Moving from adverse to neutral conditions has a great positive effect: trying is not dangerous anymore. The system has stopped killing people’s initiative and the idea of “doing nothing is better than trying because at least you don’t fail” is no longer valid. However, innovation is not just about trying anything without much thinking, it needs structure. It’s about creating value through learning. Sometimes creating thinking structures is confused with killing ideas, but they are very different things. Thinking structures force you to think, help you design useful tests and speed up learning cycles. Killing ideas is just treating people as if they could not think by themselves: no listening, knowledge is not shared, testing is forbidden.
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Moving from neutral to favorable conditions means promoting structured learning: evaluate risks, understand effort/benefit balance, design experiments that maximize learning, validate ideas with customers, keep the end in mind. Yes, all that means getting results in the most effective way.
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Results are the consequence of innovation, not its enemy.