What got us here won’t get us there…

Understanding what holds us back from successful innovation

Amit Kanigsberg
Five Points Ventures

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“What got us here won’t get us there” (WGUHWGUT) is a phrase we should all take to heart, especially in competitive arenas like business. It shows humility and realism, an acceptance that change happens and nothing is immune. Ultimately, it should lead to action and be an inoculant against complacency.

Alas, not so much. In practice, mantras are repeated so often that they quickly enter a communal blind spot. This is a phenomenon I’ve seen multiple times in companies that aim to become more innovative, undertaking transformations big and small.

Though CEOs and other senior execs may believe there are serious competitive threats emerging and are supportive of change agents in their organization using the WGUHWGUT call to action, their companies largely prove incapable of acting on its provocation. The problem, somewhat ironically, is contained in the phrase itself. A company’s successes that have led to its present state form impediments to organizational change and especially innovation ambitions. It’s the two-edged nature of success.

Success generates feedback into a system that asks for “more of the same please.” Rightly so, the system builds controls and structures to do just that. When a company aims to optimize its P&L for an existing line of business, it will necessarily ossify its corporate fibers to resist change just as it gets better and better at delivering that P&L. In other words, a company successfully scales for exactly NOT being innovative.

As it relates to the goal of step-change innovation, this feedback loop selects for skills and functions different than those necessary to create the next thing — that which will meet our customers’ changing needs & expectations and provide the next revenue streams to sustain our companies. However, the success effect goes further to inhibit innovation efforts than this organizational specialization. A mixture of cascading impediments has broad impacts and require new thinking to overcome. Here are a few key examples:

Fit of purpose (what’s the point in getting there?)A company’s articulation of purpose does not sufficiently resonate nor direct the innovation group. Fundamentally, it does not guide decision making that will allow for the autonomy, speed, and market differentiation necessary to create value and remain competitive.

Customer centered intelligence (what will we find there?)An inability to understand the complete customer experience and their pain points leads to a slew of downstream challenges when undertaking innovation projects. Without a continuously evolving knowledge base and single source of truth, new opportunities will be missed, and pivot points will be inaccessible as they are both unsupported by data everyone can agree on.

Agreement on goals (are we there yet?)In the absence of customer understanding, internal competing interests and agendas will dominate. This leads to disagreement on desired outcomes and success measures. In addition, the foundational goal to learn more about the market, inherent to effective innovation practices, is vastly undervalued.

A bias for quantitative measures at the expense of fundamental understanding is an additional problem and impedes governance. “What can’t be measured can’t be managed,” another common corporate mantra, props up this bias. However, “what can be measured can be misunderstood,” and misunderstanding leads to very poor outcomes when exploring the new and unknown.

Governance, process & finance (how are we going to get there in one piece?)Managing innovation projects and their requisite investments is tough for executives without effective venture-based governance and funding. Unfortunately, these models conflict with common planning & budgeting processes and the politics that underpin them — where commitments to fund projects are based on specific definitions of end value and require significant political capital to secure. Predictably, this further undermines an innovation project’s ability to pivot as it validates and invalidates its hypotheses.

Short-term incentives and business & functional silos (why will our people want to get us there?)Misaligned incentives are an especially destructive force. We commonly see employee incentives unable to support mid to long-term goals. They also hinder collaborations that might diminish employees’ incentive metrics as innovation projects often threaten to do. Silos represent a hardening of these incentives into more entrenched organizational structures and norms, and they further inhibit effective collaboration.

Soft & hard skills (do we even have the right people to get us there?)This one can’t be overstated even though it’s an obvious result of a company’s specialization. It’s a huge challenge to overcome. “The skills that got you here won’t get you there” is a scary reality for a CEO to manage. Terms like “two-speed organizations” and “run the business vs change the business” are bandied about, but the core organization is designed to attract, select, and enable very particular employees and partners. HR and Procurement have deep systems optimized to this end, and let’s not even get started on the role of culture.

The most common approach companies take to solve these challenges is concerted organizational transformation. The amount of money wasted on transformational efforts is phenomenal — McKinsey reports that 70% of transformations fail¹. Through hard and expensive lessons, many transformation leaders have realized that real and sustainable change comes when there is a market-oriented goal rather than a general functional improvement, productivity increase or mindset upgrade.

If you introduce a stressor into a system, it will adapt to the extent the constraints of its parts and environment allow. In effective transformation practice, this means selecting a candidate group for transformation that has sufficient pressures acting on it, say a significant market opportunity, that compels the company to provide an expanded environment in which to evolve. If you’re asking a group to dislodge existing processes, leadership modes, cultural norms, and tools, there had better be a clear and sustaining focus to make it stick.

This is more akin to looking outward rather than inward, and when talking about step-change innovation, it provides a great argument for investing in explorative innovation groups — transform your market and your organization will follow.

Unfortunately for groups endeavoring to deliver these kinds of innovation outcomes, the gravity of the core organization is very strong and works at great distances (as gravity does). A skunkworks, R&D group or corporate venture studio will be affected by the impediments outlined above as surely as moons tidally lock into their planetary orbits and metronomes count the same beat when sitting on the same platform.

A minor tangent about metronomes

https://www.youtube.com/watch?v=5v5eBf2KwF8

The Kuramoto Model is a great metaphor for the challenges faced by enterprise innovation and organizational transformation. In this video you can see ‘coupling strength’ in action as 32 metronomes all adopt the same rhythm. If you watch most of the way through, you’ll enjoy seeing the final hold-out metronome assimilated and will hopefully see my point.

Most of this post has been concerned with the forces that inhibit an organization’s ability to access its potential to innovate and more generally adapt to change. In principle, companies should have an unfair advantage to create and benefit from the ‘next thing’. My interest is in learning how to unlock that potential. Following from the analysis here, in subsequent posts I’ll dig into ways we can overcome impediments to successful innovation. For instance, how the false start problem² experienced by many innovation projects can be an effective intervention point. I’ll consider how the Right Start can lead to continual & essential corporate alignment along with an increased ability to pivot, both core success factors in any innovation practice.

In the meantime, we can play with restating the mantra WGUHWGUT into more encouraging terms. Something like “what got us here has given us an opportunity to get there” or “what got us here has created a remarkable store of potential energy for us to be a force for innovative & human positive change in the world.” That last one just rolls off the tongue.

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Amit Kanigsberg
Five Points Ventures

Startup founder, enterprise change & innovation enthusiast. Exploring paths to a more human positive future in a deeply technological world