Designing for an unpredictable future

As we sit on the cusp of a fourth industrial revolution, the potential of any Industrial Strategy should be transformative, but won’t be without a fundamentally new approach to innovation.

Automation, robotics, machine learning and biotechnology are promising a fourth industrial revolution that will transform transport, medicine, healthcare, communication, and extend human capabilities in remarkable ways. But these advances also promise to disrupt the labour market and give all the new jobs to algorithms. As Anne-Marie Slaughter, President of New America points out it is the wildly varying predictions about our future that are driving the debate and leaving us unable to act. She says “we need to stop waiting and start addressing changes that we can already see happening around us.”

But do we know how to act swiftly and with competence in rapidly changing times? Uschi Schreiber of consultancy firm EY says “The challenge for government, business and society is to find new ways of thinking and acting as our world is disrupted by technology and innovation.” And it is not just technology that disrupts — political instability and social change are creating a fundamentally unpredictable operating environments—so in order to foster innovation-led growth amid this uncertainty, governments need to see social change as stimulus and take a bold approach that looks to the wider system and then tests ways to make change happen in real time.

An upcoming RSA report contests that the Industrial Strategy provides this opportunity for boldness, but only if it goes “beyond the obvious economic vanguards and the high viz jackets and hard hats. It must be relevant to the service sector too; not just about induced consumer wants, but driven by real social challenges; not just focused on product innovations but service innovations too.”

A human centred innovation revolution

For the fourth industrial revolution to be “empowering and human-centred, rather than divisive and dehumanizing” as Klaus Schwab hopes, we must think deeply about the social challenges we face, while innovating fast and busting out of old models of change. At the RSA we see the approach needed as a process of ‘thinking like a system and acting like an entrepreneur’ which allows for both deep thinking and rapid action. This method tracks with the Design Council Double Diamond model and explores complex problems through systemic analysis, then acting in live pilots or prototyped in safe-fail environments.

In recent years we have seen a surge of this kind of design thinking in business and a drive in governments to apply design principles to policy. An insurgency of Innovation Labs have sprung up like Sitra in Finland, Mindlab in Denmark, 18F in the US, and Policy Lab in the UK. Experimentation, prototyping, and openness underpin this way of operating which puts users first and brings in agile methods from tech and design communities to innovate in new ways. To encourage this, public institutions and charitable foundations have opened up challenge prizes to stimulate markets and promote design-led innovation. Social impact investment funds and incentives like the industrial strategy challenge fund in the UK now seek to drive innovation further.

Understanding barriers to change

Our problem now is not a deficit of creative ideas or lack entrepreneurialism — businesses and social entrepreneurs have grasped design thinking readily — it is rather the barriers to the diffusion of that creativity and the old school understanding of how new innovations and technologies scale. We still lean on the innovation adoption curve developed by E.M. Rogers back in 1962 that shows the pathway of an idea or product as it diffuses through a social system. It has become so ingrained in our understanding of innovation adoption that when we talk about scaling or diffusion it is this path that we depend on. So while we are readily applying design thinking to the development of innovations, we still see scale as predictable pathway — which nowadays is simply a linear fallacy that looks like this:

The reality is that the diffusion of innovations — particularly emerging technologies and or those addressing complex social challenges — are far from predictable and markets aren’t as clearly defined as they once were. As the Gartner Hype cycle and McKinsey’s analysis shows, the pattern of diffusion is evermore complex and impossible to predict and innovations can take decades to scale — especially into complex institutions like health services.

In 2009, Harvard professors Robert Kegan and Lisa Laskow Lahey came up with the concept of Immunity to Change. It said that when individuals try to make a change — perhaps weight loss or a career change — they are inevitably confronted by a range of powerful forces that combine to reject the change. We see parallels with this immune response in the diffusion of innovations into institutions and markets. This institutional “immunity to change” arises when market or institutional norms form a barrier to entry or scaling (also known as “the chasm” as defined by Geoffrey Moore).

These barriers to change present the reasons “why not” — and vary wildly depending on what the innovation is that is trying to scale (let’s say a citizen-focused social enterprise solution or a new technology which fundamentally changes ways of working like a driverless cars). The difference between this and the chasm is that complex systemic barriers are at play and hard to map: they range from the hard reasons why not — the regulatory frameworks that don’t exist yet or the procurement binds that prevent access to markets — to the soft and messy business of human behaviour and power dynamics. The result is often the failure of the innovation to gain traction in the market: the system immune response.

So the real entrepreneurialism we need is in spotting the hacks or the social moments that will permeate the hard barriers to change. The workarounds, the methods that defy regulatory boundaries, the cultural shifts — these are the hacks that provide routes to scale. And as Matthew Taylor recently wrote, it is the entrepreneurial confidence we need to seize to try these hacks out, he says: “The stretch target for policy is innovation; creating the confidence to try things out and the culture and systems which mean failure can be tolerated and learnt from quickly.”

For the industrial strategy to take flight, understanding and taking action on the real barriers to change is what might just lead to breakthroughs in adoption and scale of innovation. At the RSA, we seek to avoid the narrowness and path dependency of so many unsuccessful models of change. Understanding the dynamics of the system and then seeking opportunities to act entrepreneurially should help would-be innovators avoid the institutional immunity to change.

If we are to create the new R&D-intensive, export-orientated UK companies that are needed to rebalance the economy and generate more high value employment opportunities, a good start would be to look to those parts of the system that both provide both the greatest opportunity and challenge to making innovation last. So that is the focus of our next blog. It may sound paradoxical, but procurement might just be the most exciting opportunity facing government innovators. Watch this space for the next installment that outlines why…

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