Innovation Urgency is for Underdogs
Successful innovation is driven by an deep urgency, by companies in poor competitive positions, where changing the rules is the only way to survive.
On Feb. 7th there was a great article on ESPN about the evolution of innovation in baseball entitled: “Welcome to a small-market team’s worst nightmare”. The article discusses how small market MLB teams have fueled innovation in the sport, only to be copied by the bigger teams with deeper pockets over time, forcing the small market teams to reinvent their approach again.
Innovation has a cycle: A small-market team, forced by financial restrictions to be creative, and free to be weird because of lowered expectations, tries something new… But teams don’t get to play baseball games secretly. If an innovation works, it spreads, often first to the midmarket teams but eventually, always, to the rich teams.
One of such innovations in baseball was popularized in the 2011 movie Moneyball, which described how one small market team, the Oakland Athletics, used sports analytics to discover undervalued players and build a success team on a small budget. This approach, once considered radical and cutting-edge, is now standard practice across all major league teams, with every team managing their own player analytics departments.
Small market teams are driven to experiment, to stray from the norm, to be innovative in their approach because they have no other way to compete in the market. The Yankees will always be able to outbid the Athletics on players based on existing practices, thus the Athletics must figure out a different way to win, bidding on players that the Yankees don’t want, which changes the rules of the game.
But this is more than a story about baseball.
I believe this same rule applies in the private sector at large — companies that succeed at innovation are those that are forced to try new things because their available choices are limited; they cannot win playing according to the existing rules. It is innovate or die.
For example, consider your average startup. All the odds are stacked against them: they have limited funds, limited resources, limited team, limited market reach and no brand awareness. And yet they must compete, sometimes head-on, with global corporations in global markets. They have to do something different. It is innovate or die.
But this is not just a story about startups vs. corporations.
This is also true for smaller competitors in red ocean market spaces. They don’t have the unlimited war chest of the big boys, and their existing market share, while still profitable at the moment, is slowly being threatened by new entrants attempting new innovative approaches. It is not enough just to follow the leader; they need to be pushing the edge of what’s possible. It is innovate or die.
And consider even large corporations who are stuck in declining markets, the big fish in shrinking ponds. They are used to being in a dominant, profitable position for many years but the writing is on the wall, they must discover new markets and new business models or they will quickly become obsolete, another failure story taught in MBA courses. It is innovate or die.
Innovation Urgency vs. Innovation Theater
- Startups
- Small Competitors
- Large Corporations in Declining Markets
All of these are “small market teams”, they have an innovation urgency, a fundamental need to experiment, to try something new and hopefully secure a win. Moreover, unlike baseball teams, these companies are not protected by the Collective Bargaining Agreement, rather they are subject directly to competitive market forces where only the strong survive and the weak go bankrupt. While small market baseball teams can lose year after year, season after season, with little repercussions, companies that do the same will simply cease to exist.
On the other hand, large companies in stable or growing markets tend to also spend money on innovation, or rather “innovation theater”, but actually put very little of their business on the line. They love talking about their innovation efforts on news shows, setting up innovation departments or shiny innovation centers, running popular open innovation programs, etc.; they even love launching innovation projects and attending the requisite innovation award ceremonies. But in actuality, they don’t want to rock the boat, because the money is flowing in, bonuses are being paid, and shareholders are happy. Innovation is not necessary.
But there is a difference between urgency and desperation. Urgency is a recognition of the imperative for action, and taking structured steps to address that imperative. Desperation is a last ditch effort, a last breath where you put all your money into a single pot hoping to strike gold.
What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence. Whereas companies that are making bets all along, even big bets, but not bet-the-company bets, prevail. I don’t believe in bet-the-company bets. That’s when you’re desperate. That’s the last thing you can do.
- Jeff Bezos, Amazon Founder
Urgency is about taking bets, big bets, that can push the company forward because you realize you can’t win another other way. But it also means leaving room for failure, and having the wherewithal to try and try again.
In entrepreneurship, initial discussions on the validity of a business idea always centers on the concept of vitamin (nice-to-have) vs. pain reliever (pain killer). The same discussion can be applied here. Innovation in “small market teams” is a pain killer and thus there is an urgency that is felt, from the CEO down to the line worker: we must do better, we must think differently, we must innovate or die. Innovation in “large market teams” is a nice-to-have; everyone is doing it so let’s not miss out type of theater, but is never actually part of the core business, it is never actually critical to the company’s success.
Innovate or Die.
In your company, is innovation an urgency or just theater?
Make Innovation Work
Core Strateji is a strategy consulting firm that specializes in supporting leading companies to transform into ambidextrous organizations. Are you ready to move your innovation activities forward?
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