If it ain’t broke, why fix it?
All this focus on innovation in the media (and my blog too, apparently) seems to suggest that we should all drop whatever we are doing and starting innovating immediately. So is innovating at all times effective? Scott Anthony at Forbes doesn’t think so, and I quite resoundingly agree.
In “Balancing Disruptive Innovation”, Anthony explores the importance of the timing of innovation, and looks at examples such as Getty Images and Seagate. A single sentence of his summed up the argument perfectly: “The paradox is that when companies need to act differently, they can’t, and when they can act differently, they don’t need to.” It is this argument which differentiates the successful innovators, which are few and far between, from all the others. Most companies try to innovate only when they are faced with major problems and once their business model no longer works. By the time the companies realize that they need to revamp their process, it is often far too late. Innovation isn’t a quick fix to a problem, but is often treated as one. Instead, it is a long term solution, one which requires both a great deal of foresight and time to implement. It is this nature of innovation which brings out the paradox proposed by Anthony. Most people live by the rule “If it ain’t broke, don’t fix it” Such a rule will have to go out of the window if innovation is to be implemented effectively. Only when the company is performing well will it have the resources as well as the time to undergo any drastic changes to their business model. This is a “risk” which few are willing to take as why would anybody in their right mind change something which is doing well? My answer: to negate problems and protect the firm’s interests further down the road, be it in five, ten or even twenty years. Many companies are also focused on short term results, with managers being compensated for performance. As innovation isn’t the ideal way to boost immediate numbers and show high margins, decision makers are not incentivized to make those tough calls.
While companies have started to compensate managers in the form of stock in order to ensure that the manager acts in the long term interest of the company, they still do not incentivize the adoption of innovation. The perception of innovation will have to change from being a temporary fix to being a necessity, and there should be no barriers to its implementation.
So how do you incentivize someone to adopt innovation at the right time? Companies tend to use quantitative measures to gauge performance of a manager. Unfortunately, the long-term nature of innovation, as well as its less-than-obvious effect on the company, means that it is hard to separate the role innovation plays from the other operations of the company. A company could, however, set up a management team that studies successful innovators and identifies the incentives these innovators used The company could then adopt a similar system within their own firm.
Picture courtesy of: http://www.whatagreatidea.com/art/antbroke.gif
