Innovation and lateral thinking in business
An article in the Wall Street Journal called “How non-technology firms are trying to mimic startups” looks at how some companies are setting up innovation laboratories with different structures and policies to those in the rest of the business with the aim of exploring trends and developments that could unleash some kind of disruption.
This is something that fits in with my ideas about lateral thinking or isomorphism, the latter being the process whereby companies tend to adapt to the norms of their environment, and how this steadily makes it more difficult for them to innovate. Obviously, part of isomorphism is simply the search for efficiency: all banks end up like banks in the same way that all universities end up like other universities, simply because the procedures, work flows and skills they use are the most logical for the task in hand.
But other sources of isomorphism, such as rules, standardization or incorporating people from other companies in the same industry end up making all companies alike, diluting any hope of innovation under the mantra of “we do things like this because things have always been done like this.” But at some point, an innovator comes along and breaks the rules, does something differently, ignoring the established procedures, and generates disruption.
For an established, reasonably well-run company the idea of setting up an innovation laboratory where the key elements of the business are questioned, that’s in touch with the latest disruptive trends, and that operates outside traditional parameters might seem like a waste of resources and an expense that will be difficult to justify.
That said, we are increasingly finding that companies are discovering disruptive processes too late, and then instead of taking them up, desperately try to ignore them, making matters worse in the process.
The big banks all know that block chain is a technology able to generate a significant level of disruption in their activities, but all innovation related to this technology is located in startups and companies that have nothing to do with traditional banking. As long as traditional banking tries to innovate in this way it will be constrained by its tacit acceptance of many of the questions that these startups decide to ignore and that they have converted into the differentiation motor of their value proposal.
In short, there is no point in traditional companies copying what startups do, if only because the mortality rate among startups is dramatically higher than established businesses. But they should learn to incorporate some aspects of the innovation processes that characterize these companies. All they need to do is look at Google and its new organizational structure.
Companies interested in how to create structures and processes to facilitate innovation along the lines mentioned above should know that this is precisely what I am teaching on my current innovation course at IE Business School: I’m always interested in case studies.
(En español, aquí)
