Innovations: Designing Against Failure
What causes innovation initiatives to fail?
The answer is many-fold: some point to stakeholders, some to market and customers, — technological and financial matters can also be named as the culprit when things go wrong.
Innovation is indispensable to achieve long-term success in today’s competitive world. As Rita McGrath once said, “innovation is not optional” (2016). The million dollar question is: how to design innovations that succeed? Maybe it is time to take a different, more holistic approach to designing innovations.
We live in a world of mindfulness, work-life balance, we strive for a holistic wellbeing in everything we do. Science calls this the biopsychosocial approach to health and illness, the practice of viewing health issues from a biological, psychological and social perspective as they all impact our health.
To set ground to my model, I will begin with a quick overview of stress and how to manage it from a biopsychosocial perspective.
Stress is genetic and biological by nature; how we inherently deal with stress, what is our brain’s physiological stress response. Psychologically speaking, coping with stress is linked to our personalities and how we’re able to distance ourselves from stressful situations. As for the social aspect, it’s a combination of both the smaller (work, family) and larger (societal and cultural) environments and experiences that surround us and affect our ability to deal with stressful events.
In my proposal, a successful innovation strategy should be approached holistically, as no business can innovate in silos. The optimal biopsychosocial innovation process should be comprised of the following parts:
Organisation as brain & body
The “biological factor” for companies are inherited ‘traits’, such as business strategy, business model, leadership, company culture, resources and capabilities. How organisations design and develop their culture and leadership style affect the health of their business and determine the success of innovation.
Consumers as mind
The “psychological factor” is the collection of characteristics that form the company. A user-centric product, service or organisation is defined by the consumers and their needs, aims and limitations and how it is relevant to the users. If an organisation is truly user-centric, the consumers form the ‘mind’ of the company. A conscious company is shaped by its users, as Marty Neumeier said in his book The Brand Flip (2015), “It’s not what you (organisation) say it is, it’s what they (consumers) say it is”.
Market as environment
The “social factor” is the environment the company is surrounded by; market, competition, trends, pricing, economic aspects, etc. This environment affects the behaviour of the company and frames the general capabilities.
Much like we acknowledge the relationship between mind, body, and environment in our personal lives, the same matrix is useful for complex problem solving in business. Organisations, consumers and markets are linked and function together, hence a successful business or innovation strategy should address all of them particularly.
It is not enough to find an innovative perspective and strategic novelty; it needs to be embedded in the company culture and be relevant from the consumer perspective if you want it to succeed. In other words, establishing a pro-innovation organisational culture is essential for successful innovation ventures. I will next explore the link between organisational culture and innovation with peer reviewed literature.
Team dynamics and conflict
Innovation projects are complex as they are a mix of creativity and intellectual strives, both intangible by nature so there are no guarantees you’ll successfully tap into them. What adds to the complexity is the involvement of different individuals and stakeholders in the process, so the outcome of such interaction between people cannot be predicted (Stacey, 2012).
People usually strive for control in uncertain situations, often becoming risk averse (Argyris, 2010). Oeij described uncertainty with the following dilemma: “Imagine you have to choose between being creative and keep an eye on the wallet, what would you do? You would probably stress what you could manage and control” (Oeij, 2016).
From the team-dynamics perspective, team members can act defensive, frustrated and closed to problem-solving. Complexity and resistance leads to not taking risks. However, conflict can be valuable to build strong teams — as a matter of fact, teams that cannot admit the existence of a conflict show a record of unproductivity and experience feeling stuck in the creative process (Smith, 2008).
To wrap up, certain conflicts are unavoidable in the innovation process, and effective conflict management essential to successful innovation projects.
Organisational culture and innovation
Liisa Välikangas, Professor of Innovation Management at Aalto University School of Business brought up the notion of process-variation at her keynote speech at an event organised by Nordkapp Helsinki. According to Välikangas, organisations are thinking in systems and processes; however, innovation is all about variation. Standardisation cuts innovation as variation, and if we don’t rethink how we think of organisations, observe their behaviour and redesign their operations, we will continue to fail at innovating.
Organisational culture plays a significant role in shaping and motivating behaviour. Establishing and maintaining entrepreneurial practices can support the quest for innovation and renewal.
Leadership is a significant factor in innovation (Schein, 2004). Leaders are responsible for creating and managing a company culture that encourages innovation; a strategic leadership research by Damanpour and Schneider (2006) concluded that leaders influence organisational outcomes by establishing and changing organisational culture, and building the capacity for change and innovation.
According to Johannessen et al. (1999), innovative organisations are proactive, risk-taking, creating commitment and initiating change.
An innovation-positive company culture focuses on the willingness and ability to cope with uncertainty and is dedicated to improving the communication and decision-making process. It regards changes in the environment as a challenge, not a threat, and aims to develop a leadership style that helps employees to feel commitment and ownership to their projects and thrive in a cooperative mindset with focusing on creative and innovative activities (Szczepańska-Woszczyna, 2015).
Organisations are social systems and characterised by instability. Embracing uncertainty opens the doors to advances in innovation (Block, 2015).
The quest to master the art of coping with uncertainty has a significant role in ensuring the success of the innovation; designing resilient organisations has become a prominent subject among managerial literature and academic researches of late.
Designing for Strategic Resilience
Organisations prepare for the unfortunate happenings and try to develop routines to cope with unforeseeable adverse events. Academics study the threats by the depth of causes and patterns to suggest coping strategies. (Boin et al., 2005; Drennan and McConnell, 2007).
One of these strategic aspects is the concept and study of a resilient organisation. Strategic resilience is about foreseeing and adjusting to secular trends that can weaken the core business. A resilient organisation has the ability identify and change before the threat and the cause of the change becomes evident. Resilience offers the promise of an intuitively credible and obtainable strategy to deal with various types of adversity. Managerial literature suggests that resilient organisation will maintain high-level performance even when threats, uncertainty and pressure arise (Boin & van Eeten, 2013).
Hamel and Välikangas (2003) identified four challenges that an organisation has to master to become resilient: cognitive, strategic, political and ideological. In the cognitive challenge, a company must be free of arrogance and denial, and aware of the effect of change on their current state of success. Being resilient requires tackling strategy challenges; applying a broad range of strategic thinking that takes into account different options and alternatives.
Hamel and Välikangas argued that the political challenge is to develop a broad scale of breakout experiments with the required capital and expertise. Regarding the ideological challenge, a resilient company must optimise renewal as opportunity-driven instead of crisis-driven and episodic.
“For many companies, the future is less unknowable than it is unthinkable, less inscrutable than unpalatable.” (Hamel&Välikangas, 2003)
Innovation Resilient Behaviour
Regarding innovation, Oeij (2016) described the matter of Innovation Resilient Behaviour (IRB). IRB is a collection of team capabilities that proactively prevent critical issues and bounce back from ineffective courses when working towards an innovation goal in the organisation.
IRB is formed by certain team behaviours that are obtained from the practice of High-Reliability Organisations (Oeij, 2016; Weick & Sutcliffe, 2006).
“IRB-teams are alert to track small failures, resist oversimplification, remain sensitive to team level and organisation-as-a-whole interactions, resilient and defer to expertise to get the best, not the highest in rank” (Oeij, 2016).
IRB is team behaviour, and it is both a thinking and feeling based capability. Mindful infrastructure is the organisational process of designing and running successful innovation projects, it enables innovation resilient behaviour. Four characteristics form the presence of mindful infrastructure:
- psychological safety,
- team learning behaviour as an ongoing process
- team voice
- complexity leadership which means connecting opposing goals by the leaders (Oeij, 2016)
As an example to innovation, ambivalence is the motive to be innovative and cost-effective simultaneously, i.e., conflict of interest between the objectives of the marketing department and the research department. Ambiguity implies that leadership must identify situation specific roles that need to address situation specific aims. The style of the leadership might differ, sometimes encouraging collaboration and creativity, at times to establish control and competition, however, leaders must find synergy in both motivation of team members and support structures, accountability and boundary spanning (Burke et al., 2006).
Outliers and strategic novelty
According to Välikangas and Gibbert (2016), outliers can provide valuable insights for strategists regardless of particular industries, as they are the frontiers of “not-yet-formed or to-be-challenged industries”. Välikangas and Gibbert identified a three-step learning process on seeking out lessons from outlier organisations to identify strategic novelty. According to this theory, the mindset of studying the already known average and growing examples has to be challenged. Instead, it needs to focus on finding potential in serendipity and discovering information that lies beyond experience.
- WOW — identify strategic novelty
- SO WHAT — find the relevance and significance for the company
- OOMPH — amplification strategies to achieve outsized (strategic novelty serves to amplify the results of the business model)
In summary, traditional strategy is being challenged by industry shifts and the appearance of disruptive strategic innovations while there is a significant need to understand and prevent innovation failures. To develop successful and holistic innovation strategies, organisations need to redesign their structure and operations and encourage a pro-innovative organisational culture and resilient behaviour.