Chapter 1: The current organisation innovation imperatives
This post is part of a blog series on “In what ways can Organisation(s) benefit from open innovation through challenge-based design sprint? ”( A thesis study on SprintHacks 2016, Singapore )
Part 1: What is innovation?
Depending on the context and disciplines, innovation can be defined subjectively. Thus there is no one single definition for it. Innovation Union, a European Union 2020 Initiative, described innovation as new changes that speed up and improve the way we conceive, develop, produce and access new products, industrial processes and services. (Europa.eu, 2017)
Corporate’s growth imperative leads to innovator’s dilemma
Almost every new business represents an innovation of some sort, whether it is a new product or service, or whether it relates to the delivery or manufacture of a product (Kuratko and Hodgetts, 1998). The associated “New Innovation Changes” follow a Diffusion process by which innovations are communicated over time among the members of a social system, as shown in Figure 1 (Rogers, 2005). In addressing the uncertainties involved in the diffusion process, the role of information (knowledge, persuasion, or a decision to adopt) and uncertainty influence the gradient of different S-shaped curves of adapter distribution (Figure 1) reflecting the rate of adoption (ROA) for different innovations. (Lewis and Churchill, 1983)
Over a prolonged period of time, the company must grow and pass through all stages of development or die in the attempt (op.cit.) to progress further up the five stages of the growth curve (Figure 2) and begin to shift its innovation transformation from Exploration, [architectural innovation pursues search, discovery, autonomy, and educating new fundamental changes of some component or elements of an organisation (Tushman and O’Reilly III)] towards Exploitation. In the midst of that transformation, the company’s innovation would take off rapidly with early adopters with sufficient size and product-market penetration through stage two and three of the growth model, as shown in Figure 2. At this stage, the key decision-makers of the company may need to decide whether to keep the company stable and profitable or proceed into the Exploitation stage, where the organisation’s emphasis placed on operational efficiency on Business-As-Usual (BAU) activities and any incremental improvements may need to decrease so that entrepreneurial exploration for new innovation can be prized. (op.cit.)
To further exploit the company’s accomplishments for upwards growth, strategic planning may be employed to address forthcoming needs. While operational planning issues transit into a form of budget, the company structures are slowly de-centralised to be micro-managed by newly recruited managerial/functional individuals, reasonably separated by the original management that pioneered the early exploratory entrepreneurial growth that has now reached the pivotal moments of the company’s life. With new cash capital injections and systematic organisational procedures designed and in place for incremental growth through acquisitions or maintenance of the status quote, if successful, it can rise into a bigger business; otherwise, it will reverse its growth back to the survival stage or even fail.
As large organisations enter into its maturity stage , they reach the S-curve’s Point of Inflection and lose their flexibility of responses and entrepreneurial spirit; they begin to struggle to balance their organisational ambidexterity [an ability to simultaneously pursue to compete in both exploration, where mature markets place an emphasis on flexibility and autonomy, and experimentation and exploitation of markets that demand aforementioned attribute agendas (O’Reilly III and Tushman, 2013)]. Organisation’s face innovator’s dilemma (Christensen, 1997) between sustaining/exploitation (to make better products that can be sold for more money to attractive customers) and disruptive/exploration (to commercialise a simpler, more convenient product that sells for less money and appeals to a new or unattractive customer set) innovations. Both of these pose challenges to the current innovation imperatives.