August 29, 2014, by Kelly Cookson
Crisis, opportunity and understanding innovation
Article by Paul Kirkham, researcher in the field of entrepreneurial creativity at Nottingham University Business School.
“Only a crisis – actual or perceived – produces real change.” So wrote Milton Friedman, economist and Nobel Prize winner, in his highly influential Capitalism and Freedom, first published more than 50 years ago.
This is, of course, palpable nonsense. Witness the smartphone and its sweeping transformation of both the developed and the undeveloped worlds. There was no communications crisis before the smartphone came along. Sometimes the driving force of change is opportunity.
Crisis does produce change, though, if only because crises tend to be situations in which staying the same is not a viable option. And it is all too easy to conclude that we live in a state of near-permanent crisis, so extraordinary has the sheer pace of change become.
Whether it is right to say healthcare is in crisis is a matter of fierce debate and not a topic on which we might usefully dwell here. But what is beyond dispute is that healthcare cannot afford to stand still. Whether as a result of crisis, opportunity or both, it is – and always has been – an arena ripe for innovation.
There was a time when innovation was not a particularly popular concept. The very idea of doing things differently seems to have been treated with suspicion for most of human history. Most people were content to do more or less exactly as their parents had done.
Innovation is everywhere but perhaps not understood
We have come a long way since those dark days. By the 20th century innovation was seen as the driving force of economic development, a bright hope, something to be nurtured rather than resisted. Nowadays innovation is everywhere, with the word itself omnipresent. We even have a government department dedicated to it.
Yet a recent Accenture survey of organisations with revenues exceeding $100m highlights a worrying dichotomy. On the one hand, no less than 93 per cent of executives consider the ability to innovate as crucial to their company’s long-term success; on the other, less than 18 per cent believe their innovation strategy delivers a competitive advantage.
This presents a challenge for those of us in the innovation business. It suggests innovation is not very well understood and that efforts to embrace and channel it might be not just misdirected but counterproductive.
How to define innovation?
First and foremost, then, how might we best define “innovation”? How do we distinguish it from, say, “discovery”, “creativity”, “invention” and other ostensibly interchangeable terms covering the general notion of bringing value by doing things differently?
Perhaps the neatest answer is to view innovation as the successful exploitation of new ideas. In other words, innovation is the process that carries ideas into actions – irrespective of whether those ideas take the form of services, technologies, businesses, means of organising or even ways of thinking. The bringing of value and the doing differently represent the essence of innovation.
Naturally, in searching for examples and inspiration it is tempting to look around and see what others are doing. A popular initial response is to cast an envious glance towards an acknowledged innovator and wonder: “Why can’t we be more like that?” But this is not necessarily wise.
Who is an innovation role model?
What if, for instance, we were to choose as our role-model the firm that Fortune magazine named as America’s Most Innovative Company for six years running? It operated a ruthless system of “rank and yank”: the top performers were rewarded handsomely, while the rest were encouraged to take their talents elsewhere. Sounds impressive, eh? The company was Enron, whose shareholders lost $74bn and whose president was jailed for 24 years.
Google and Apple are habitually proclaimed the most innovative organisations around. Their product ranges and share prices would appear to support this belief. Yet legend has it that their approaches are wholly dissimilar. Whereas Google employees reportedly sit around in dungarees and drink smoothies, Apple’s workforce is said to do precisely what is commanded from on high.
So for every company that is innovative in one way there is another that achieves comparable success completely differently. For every open-desk policy there is a skunkworks. For every gold-plated service there is a service that is being stripped to its essentials. Should innovation be in-house or open-source? Should a firm be deemed innovative on the strength of how many patents it holds? How can we measure innovations that are trade secrets? And how can we discern which organisations are truly innovative and which are one-trick ponies whose triumphs will prove short-lived?
Perhaps we should reframe our proposed rule of thumb. Rather than contemplating what we should imitate, we might give more thought to what we ought to avoid.
What prevents innovation?
By way of illustration, let us examine the barriers to innovation. Research carried out as part of the executive education programme at Nottingham University Business School highlights an uncanny consensus in this regard. Frequently cited factors include initiative overload, non-engagement, short-termism, inflexibility, risk-aversion, micromanagement, lack of time, lack of freedom and lack of budget. Many people working within the health service will recognise a good number of these hurdles.
Initiative overload might well be the most familiar of all. It is without doubt among the most alarming and self-defeating. In healthcare and elsewhere there are numerous stories of initiatives being superseded before they have even been implemented. For “No more back to normal” read “Here we go again”.
This sort of desperate thrashing around may seem an inexorable corollary of a world of ceaseless change, but it betrays a basic misunderstanding of the nature of innovation. Novelty for its own sake is no better – and no more effective – than paying lip-service to revolution while in fact perpetuating an environment characterised by muddled inertia.
Organisations that fail to realise this tend towards caution. They reward certainty and punish failure. Some might have lost sight of their raison d’etre, especially if they have multiple divisions whose metrics are far removed from the real bottom line. Some might even be nearing the threshold beyond which renewal is no longer feasible.
One solution is to identify and prepare for the crisis points at which innovation becomes inevitable. Another is to be aware of, seize on and maximise the myriad opportunities that too often go unremarked and unexploited. We ignore at our peril the possibilities offered by external disruption, new technologies and emerging trends or markets.
Above all, we should keep asking two fundamental questions that frame innovation’s potential role as succinctly as one could wish:
• What can we do better?
• What can we do differently?
Organisations that are disinclined to confront these critical concerns not only find themselves in genuine crisis soon enough: they are very, very lucky if they escape from it.
From an article originally published in Clinical Career magazine.
Paul Kirkham is co-deviser of the Ingenuity problem-solving process at its Haydn Green Institute for Innovation and Entrepreneurship. The Ingenuity process is expounded in the book Ingenuity in Practice (Kirkham, Mosey, Binks 2011) and also in an expanded version Ingenuity (2013).