CHAPTER ONE
Classic innovation theory and current leading-edge thinking
Before we go into the series of chapters covering a wide range of specific business sectors, I hope youâll find it beneficial if I provide a brief overview of some classic âthinkers and doersâ held in immensely high regard in the innovation world.
For those of you well-versed in this area, most â possibly even all â of the people highlighted will be familiar to you, although perhaps not in the context of innovation. But for others, I hope this approach provides a useful guide.
Regarding a common question âwhere does innovation come from?â I interviewed an exceptional thinker, Martin Raymond of the Future Laboratory, who outlined how âinnovation â the product of knowledge and insight â happens in clusters, and shifts in culture come in peaks, or movements, or periods in history. Knowledge, once unleashed, acts like a catalyst firing and flinging other ideas together. Thus âbridge momentsâ are created that enable new levels for new but associated ideas to growâ.
As for those âpeaks, movements or periods in historyâ obvious examples are the Dark Ages, the Renaissance, the Enlightenment, the Modernist Movement, the Consumer Society, the Information Age, the New Economy, the Knowledge Economy and the Creative Economy.
I really like his thinking, and the issue of catalysts and bridge moments are ones that I frequently reference when discussing classic industry examples of innovation, where the equation goes: Insight + Ideas + Impact = Innovation.
As for the importance of this area, the industry legend Peter Drucker aka the âfounder of modern managementâ famously said that âthe two most important functions of a business are innovation and marketing, as they are the only two functions that contribute to profit, while all others are costsâ (Drucker, 2002).
The whole raison dâĂȘtre of innovation is, to put it even more simply, that the person or team responsible âseeks problems to solveâ.
And to provide a simple guide to doing that, I think that Forbes magazine put it neatly when stating that âthe key route is to seek inspiration, combine similar ideas, then solve the problem.â For them, and for so many tasked with innovation, the issue is facing a dilemma of âconfronting chaos, with the aim of creating orderâ (Denning, 2015).
So, as youâll find when reading this book, the themes of insights leading to ideas, which when successfully put into practice prove themselves via the genuine impact they deliver, are referred to time and again across multiple business sectors and areas of life, be they cultural, social, economic or political.
Iâll focus on some of my favourite business innovators in a while, but first would like to highlight a collection of philosophers and visionary thinkers who, I think, provided an array of âinfluential and revolutionaryâ thinking that is entirely relevant, indeed deeply inspirational, to the world of business.
From a marketing perspective, RenĂ© Descartes might be viewed as the âfounding fatherâ of innovation, due to his independent stance and a core belief that when seeking the truth one starts by questioning accepted thinking and established practices.
He essentially asked us to pose the question âhow can we know this for certain?â This is a question that everyone tasked with managing a brand should ask themselves on a regular basis. (As in âyou may believe this, but does the consumer?â) One could argue that good marketers, and particularly researchers, take a âDescartian approachâ to business problems by directly challenging the core beliefs around the âconsumer realityâ of a brand, which are very often based on either outmoded, unrealistic or simply wishful thinking.
The amount of senior company personnel who see things as theyâd like them to be, rather than as they really are, is quite extraordinary.
One of the business buzzwords that any reader of this book will be only too familiar with is âdisruptionâ as itâs one of those terms that, while being âcorrectâ has also become deeply irritating due to its almost continual use.
However, something that never ceases to amaze me is how rarely the âGodfather of Disruptionâ is mentioned. Joseph Schumpeter is, or rather was, a genuinely revolutionary thinker in business terms, with his thinking being as relevant today as it was when he was one of the leading business intellects of his era, and who believed that true innovation is effectively never-ending, and therefore disruption can be an ongoing issue, not a âone-offâ. This is because once an idea has been created, someone else may create a better iteration of it.
He also warned us that innovation is the market introduction of an idea, not just its invention, and this is a vital point that many innovators seem to forget, when assuming that just thinking of a new idea or concept is enough.
And, of course, when one talks about ânever-endingâ innovation, one has to also acknowledge the famous take on that issue highlighted by Clayton Christensen in his book The Innovatorâs Dilemma. In it, he focused on the inbuilt problem that faces a successful company that is doing the âright thingâ by obsessing over their loyal customers to the exclusion of others. The inbuilt problem, or Catch-22 situation if you prefer, is essentially one where companies try simultaneously to both look after their core customers while also trying to be innovative, and yet not be so innovative as to disrupt their own business. Yet if companies donât do this, they can quickly become stale in the eyes of those very consumers or customers. Hence constant iteration, if nothing else, is required.
Another philosopher that Iâll reference is John Locke, who was a great believer in empiricism and observation, ie where knowledge derives from experience. That standpoint is a bastion of the market research world. Iâm a strong believer in his thinking, and believe that Locke might have said, regarding the current context of endless brands proclaiming their (often tenuous) âbrand purposeâ that brand credibility is based on brand experience, not brand stories. That, by the way, is an issue which I explore in more detail, in the chapter on marketing.
The word âtenuousâ is one often used when referring to the world of trend forecasting, where a personal favourite perspective comes from the futurist William Gibson, who noted that âwe have no genuine idea of what the future may hold because our present is too volatile. We have only risk management and the spinning of the given momentâs scenariosâ (Gibson, 2003). Like many people working in research, Iâve long been an admirer of Gibson. This led me to interview him for Dazed and Confused magazine many years ago, regarding his just-published book Pattern Recognition, where that quote arose.
Since then, Iâve seen that title used in so many trend presentations around the world (including mine, I must admit) that itâs become an utter clichĂ©. But what Gibson had to say was genuinely interesting and entirely relevant, and had clear links with the Karl Popper school of thought regarding there being no such thing as a certain, predictable future (with the exception of scientific/mathematical prediction) due to events being out of our control in a chaotic world.
Defining innovation and the innovative organization
From the point of view of how weâre currently defining innovation, how to approach it, and what the desired skills are from the perspective of a âperfect innovation teamâ, Iâll now provide a range of examples.
My overall aim is for the reader to be able to swiftly identify a viewpoint or process that they can use on their own âinnovation problemâ.
I believe that one of the most vital things to do is to be crystal clear in recognizing that invention (the creation of a process or device) is markedly different from innovation, which is a process of transforming via iteration, styling or alteration.
Thatâs a crucial distinction and an important one to make clear at the outset of a project, or the laying down of a strategy or indeed job description, as most people tend to say âinnovateâ when they actually mean âinventâ.
So, once weâre clear that we mean âinnovationâ and not âinventionâ it clarifies the parameters for the resulting task from the outset.
When it comes to those parameters, Rebecca Henderson (from MIT) and Kim Clark (from Harvard) devised their âradical innovationâ theory back in the late 1980s, and published a ground-breaking paper in which they described four types of innovation: âIncremental, Modular, Architectural and Radicalâ. Each related to setting out a practical way forward, and the clarity of their thinking was amazingly influential, ie for product development.
Meanwhile, once weâre agreed on an appropriate âinnovation, not inventionâ route, we then need to answer a series of straightforward questions, and must be brutally simple when answering them.
These include: whatâs the insight behind the potential innovation need, what concept does this thinking inspire, what can be expected to alter due to this innovation, what actually could it be, via which route to market can the most powerful effect be made, and how â and when â will a return on investment be proven? With regard to that point, the words of Barry Nalebuff from the Yale School of Management âpeople tend to overestimate the impact of innovation in the short run and underestimate it in the long runâ have echoed down the years. Now, while those are a set of staggeringly obvious questions, unless each one is answered with absolute clarity, then the chances of success weaken.
The first of those questions, about defining the insight behind the innovation, goes right to the heart of producing an innovation that is actually useful and/or desired. Thatâs something that the renowned Philip Kotler focused on when stating that âcompanies last as long as they continue to provide superior customer value. They must be market-driven and customer-driven. In the best cases, they are market driving, by innovationâ (Kotler, 2003).
Being âcustomer-drivenâ means, in my eyes, getting out from the comfort of an office and seeking those customer insights by conducting ethnographic research, ie research conducted in the real-life context of the consumer and the product or service in question.
That was the approach espoused by Douglas Holt (a Professor of Marketing at Harvard Business School) and Douglas Cameron, from the amazing creative outfit CF&P. They suggested that most conventional innovation and strategy models arenât fit for purpose, and that a large number of legacy brands find themselves behaving in a stereotypically orthodox way of doing business, conducting a sort of âcultural mimicryâ.
This is where the cultural researcher comes into their own, and crucially, it helps legacy brands, start-ups and social entrepreneurs to leapfrog competitors into new areas of dynamic growth, or to simply reconnect with existing customers by showing that they both understand and empathize with their âcultural realitiesâ.
A classic example of this is youth culture, and you only have to spend a few minutes subjecting yourself to an array of TV commercials aimed at young people to see some exasperating examples of how not to do it, from a communications-engagement perspective.
But what about the need for, vs the reliability of, trend forecasting? After all, Iâve already highlighted Karl Popper and his âchaos theoryâ regarding the uncertainty of a âpredictable futureâ, along with William Gibson and his thinking about current volatility and pattern recognition.
Surely the answer, or at least a vital element of it, is to take heed of all those âsignals and noisesâ that trend researchers aim to highlight. This point is referenced by Peter Schwartz of the Global Business Network, who talks about companies putting themselves at risk by not giving credence to these events, from a forecasting and scenario planning perspective. He maintains that âwe canât stop disruptions from happening, but we can cope with them far better than we have in the past, if we watch and listen constantlyâ (Schwartz, 2004).
As to the approach researchers should take and the problems that face them, the much-admired futurist Amy Webb is renowned for her viewpoint that âtrends are signpostsâ. In her book The Signals are Talking, she says that ânovelty is the new normal. Itâs about tracking trends across sectors, not just one vertical. If an organization can see over the horizon, itâll be positioned as a first moverâ.
That point about being a âfirst moverâ was identified by Richard Foster from McKinsey, who wrote the highly acclaimed book Innovation: The attackerâs advantage way back in the 1980s. This, he believed, was the strategy needed in order to gain competitive advantage.
He thought there was an endless battle going on in business life between the innovators (or attackers) and those who wanted to maintain their existing advantage (the defenders). He was therefore a real believer in companies changing their mindset from being defence-orientated (ie complacently managing the current situation) to being attack minded (ie focusing on innovation) with research being a key element.
Anyone whoâs had to deal with the deeply frustrating inertia of companies that move at a glacial pace will, no doubt, recognize exactly what ...