Pathfinder
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Pathfinder

Stop innovating. Start inventing.

“Innovation” seems to have become a catch-all, endlessly repeated, being dragged out as a response to all of humanity’s problems, big and small. Politicians even bring it out at press conferences, declaring that it shall reform the shortcomings of the state. Everyone who uses it imbues it with whatever best serves their argument, pairing it with a rash of other buzzwords: our novel product, a new service offering, the digital transition…

I’ll stop there.

There are real, important questions in front of us that come from the clash of two eras: the pre- and post-digital worlds. Yet we’ve fallen into a semantic swamp where everyone — startups, corporations, accelerators, incubators, corporate ventures, and particularly consultants who have had a field day with the malleability of the term “innovation” — is simply trying to survive and carve out their new niche in the changed landscape. The only ones who will ultimately pull themselves out of that swamp, however, are those who rely on strong convictions and a fully-acknowledged, radical philosophy.

Because the term “innovation” does still point at a fundamental necessity: how can one best navigate the ongoing revolution that is disrupting every economic value chain in the world?

This revolution isn’t simply “digital”, despite what many would have you believe. It is intellectual.

That which we (as individuals and collectively) are facing isn’t simply questions of optimization, automation, or acceleration, as it was in the early days of computers and automation sciences. It is instead a revolution in our daily habits, causing transformations that are then distilled into the disruption of value chains in our economy.

This revolution isn’t simply about technology or digital tools. It is about how those trends are paired with new lifestyles practiced by Generations Y and Z. These generations have seen their spending power reduced and are making spending decisions based on a new set of humanitarian, social and environmental questions. No matter what happens with the “digital revolution”, these and coming generations won’t live like their grandparents did.

A few examples clearly show the changes. Even with the same education and skills (and sometimes more) as their elders, the younger generations now struggle to become property owners. As such, certain desires such as owning a car may soon become quite rare — and indeed, the median age of a new car buyer has gone from 44 in 1991 to 56 in 2016. Similarly, the hypermarket model is facing growing mistrust of mass consumption and important questions about nutrition and health. Now, we must relativize these trends since, at a global scale, growth in emerging countries could boost the demand for new cars or massive retail stores. Yet even in emerging countries, the idea of “the product is your possession” is giving way to the idea of “the product is a service”.

The key is the ability to access a product, not to own it — I can access mobility, I can access information, I can access culture, I can access a place to live.

As such, the real question hasn’t yet been resolved, and it is a source of worry for large, medium and small corporations. It’s not simply “What is our short-term fate,” but “What strategy can we adopt to align ourselves with these evolutions that we never imagined, let alone prepared for?” Numerous factors have combined to amplify this question, making it central to the agendas of organizations and seeming to require ever larger investments in “innovation” — after all, that’s the kind of thing that generates a reassuring round of press coverage.

Some companies still hope that their sheer size will save them (but size has never made one agile, as is needed now); that their know-how is unique (but that know-how may quickly become obsolete); that they’ll catch up in terms of innovation by making acquisitions (but the best new players have no interest in being bought); that regulations will protect them…

Other established players are coming around, little by little, to the revolution that is being fueled by digital tools. They’re searching for rapid solutions to this intellectual upheaval. And indeed, it would be a mistake to think that many of these companies haven’t always been interested in innovation. Lots of companies are interested in innovation, it is oftentimes a core part of their DNA. Yet their style of innovation is never so radical or disruptive as to put their entire business model in danger.

What’s more, we can’t simply assume that such enterprises will necessarily die off or have their core business disappear during the current disruption, even as we see the results across a wide number of industries. If it happens, it happens. But the worst may not come to pass. What is certain, however, is that these companies need to radically change their positioning, moving away from the previously-dominant, now-weaker center of the value chain. This may even mean a positioning that is more dependant on other companies, oftentimes newly founded, that have rapidly installed themselves as the key players in the industry.

We also shouldn’t assume that every startup is a champion of disruption. Even when they offer a seemingly obvious service with a simple operating model, a clear ability to scale, and global potential, startups have their weaknesses. Their risk of failure is just as high as it is for a traditional enterprise. Because the success of a startup typically rests on the satisfaction of their clients, it suffices for them to slightly lower their quality of service, or to see a general slowdown in their field of innovation, or a set of particularly damaging new regulations, to be fatally wounded.

What strategy can bring established players voluntarily along the path of renewal in order to respond to this intellectual revolution? What should they do after already trying various measures such as creating their own “innovation labs” or internal incubators, investing massive amounts in corporate venture arms…? Many are facing the evidence that while these initiatives are favorably viewed in terms of marketing and communications with investors and stockholders, and while they may give employees the sense that innovative efforts are being made, they have created very little added value on any significant scale. The board is now worried, the market is watching, the executive committee is searching for the means to finally create a truly beneficial rupture.

The first step may be to replace that illusory term “innovation” with the more accurate “invention”. The goal is for each business to invent new business models, not simply to optimize the model that they still see as the base of their profession. This revolution is not a transformation, it is a creation, an invention. As such we need to turn our backs on the temptations of classical transformation efforts sold by armies of consultants for decades, efforts that are really nothing more than improvements on how things already are. That road is simply a way of avoiding the risks and difficulties of invention, risks and difficulties confronted every day by entrepreneurs.

At that point, given the current revolution, invention will mean deciding to launch one or more startups aimed at real problems, using means other than those found within the corporation itself. After all, its resources aren’t properly adapted for such a mission. It will mean allowing the startup(s) to use the real startup operational mode, without any of the protective constraints built into the existing company. It will mean no more pretending.

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