The late Clayton Christensen, Harvard professor and business thought leader, said there were three types of innovation: empowering (which makes costly products available to all), sustaining (replacing older products with newer, better models) and efficiency (which reduce the costs of making existing products). In 2012, he warned that American companies had been overly focused on efficiency for far too long.
“Continuing to measure the efficiency of capital prevents investment in empowering innovations that would create the new growth we need,” he wrote.
Christensen was referring to the American economy, but the principle applies at the micro level to companies at all stages, as well. As business leaders everywhere, across all industries, try to plan for a new year amid the many layers of uncertainty they face, they need to make sure they aren’t hampering long-term growth by keeping their focus only on short-term survival.
In a 2019 Harvard Business Review article “Breaking Down the Barriers to Innovation,” the co-authors identified five common traits among the most consistently innovative organizations. The last two are most relevant to my point. “They recognize that success requires experimentation, rapid iteration and frequent failure. Last, they empower people to take considered risks, voice dissenting opinions and seek needed resources.”
Experimentation, risk and especially failure — these are difficult concepts for many business leaders to condone in the best of times. But they are unavoidable if you’re truly devoted to maintaining a culture of innovation and moving your company forward. What’s more, employees need to know that these are core values at all times.
The HBR article writers cite Tata Group, India’s largest conglomerate, for recognizing its failures alongside its successes. The company’s annual celebration of the previous year’s innovations includes a category called “Dare To Try,” recognizing teams that pursued “novel, daring and seriously attempted ideas that did not achieve the desired results.”
As a Hindu Business Line article explained, “The Tata Group Innovation Forum realized that the way to encourage innovation was to create legends and stories around it, make heroes out of people who had dared to do things differently.”
Heroism will be the last thing most employees are thinking about if all the communication they receive from leadership is about reducing costs, doing more with less and other variations on cutting your way to growth.
“Efficiency … narrows the space for exploration, for wandering and discovery. There is no innovation without waste,” writes Tim Leberecht, a German-American author and entrepreneur. He advocates for strategic inefficiency, which includes, among other things, “allow[ing] for white or even negative space, for breaks, pauses, and (mind)wanderings.” Echoing Christensen, he adds, “Efficiency means doing the same with less. The future, however, belongs to those who can make a difference by doing things differently.”
It takes a long time to build a culture of innovation, but very little time to ruin it. As businesses in every industry face an uncertain future, they need to plan for it accordingly. ●
Bill Nottingham is managing partner of Nottingham Unlimited Ventures