Tuesday, September 23, 2008

Innovation with a big I or a little i?

I'm mad about the continuing mis-use of the term 'innovation'

By those apparently in the know it is held up as the solution to many business or national productivity woes (we just need an innovation programme), by a lot of people in corporate world there is a cry of 'if only we were more innovative' when getting beaten by the competition. It's a term used by a number of people with their snout in the trough - "if you removed this obstacle or gave me this resource, then I could be more innovative". I am mad because it's never well defined and used so loosely you can't really do anything with it. It's been captured as a 'buzzword' that now makes it less than useless. It's time to change that.

There are a few blogs that I have read recently that start to point to this and what to do about it. Gripnostril in his two blogs (I personally prefer 'Hammer' as the cynical view. Do the opposite of what it suggested here and you'll be on the way) has strong views on how you can make innovation work in a corporate.

SilkCharm also has some views of how it is being addressed by the Australian government. The dissection of the Australian government policy to drive Innovation being published in a document that is DRM locked does remind me that there are good reasons not to move to Australia.

This gets me back to the best conversation I ever had with anyone about Innovation was with a Microsoft SVP in a bar in Seattle about 3 years ago. I always go back to this view when I am being assaulted with 'innovation-speak'.

His view was simple.

There are two types of innovation - innovation with a big I and innovation with a little i. You need to know what it takes to play in each domain, and decide based on your capabilities which one you are going to go after.

Innovation with a little i - this is about doing things differently within the same market. This is about taking stuff that already exists and reconfiguring it in different ways to solve problems customers already know they have.

This fits well under an existing General Management structure and suits large corporates that are fast followers and generally market leaders. They can see what is or isn't working with those who get to market first and apply their organisation's skill and expertise to make it more efficient or tweak it as a result of their scale. He saw Microsoft operating well in this space.

Innovation with a big I - this is about creating new markets. It requires long-sightedness and thinking about the problems customers might have in the future.It requires things that exist and things that don't exist. It requires perserverance and patience and all those things that happen when you start a new venture. It needs investment but not necessarily bucketloads of cash (in fact this kills innovation with a big I). It needs the CEO to drive it. And it needs to recognise when it turns into innovation with a little i (ie get a General Manager to run it then). There are very few innovations with a big i. The iPod only makes it because it created an online music market.

Long story, short - by the time I was being told this MS knew they had been well beaten by Apple on digital music and their initiatives (Windows Media, Plays for Sure, Urge, Zune) were guaranteed losers as they were looking for one hit wonders based on innovation with a little i. They were following, but too late.

MS was in the process of launching Xbox 360 at this stage and realised they were being hammered by Apple in the digital music race it makes me think that perhaps they applied this wisdom to Xbox only.

I have thought about a couple of other conditions that are necessary since this conversation

1. In either case you do need an organisation that is accepting of risk. Risk is lower with innovation with a little i but it's still there. There are no guarantees that you will be a great fast follower (Zune vs iPod a great case study). It's just that the chances are better. If your organisation is risk intolerant it's quite likely that you won't have any innovation - and that's quite ok if that is not important to your business.

2. Innovation only occurs when your customer says it does - that can be when your external customer or external customer. I learned this lesson after spending years driving mobile product 'innovation' that was technology based (mobile video, mobile music etc etc). Customers rated $10 text - a billing plan - as the most innovative thing Telecom had ever done as it solved a problem in a way that worked for them.

3. It's my personal belief that Innovation really flourishes in an environment of scarcity. Really innovative stuff happens when there are resource constraints or desperate market share positions. that's because it requires strong belief and a need to 'lift' Human nature says you don't lift yourself when you're comfortable. Providing a bunch of incentives for innovation is counter-intuitive in my mind. Government and internal corporate programmes have to provide an environment where risks can be taken (and in fact rewarded) and that is much more important than having buckets of cash to throw at a problem.

Next time you are talking about innovation ask yourself this

1. Is this innovation with a little i or a Big I?
2. Have you got the pre-requisites to make it work - how much risk will you really take and what are you prepared to lose, even if it doesn't work?
3. When you are looking at Apple and saying you want to be like them are you thinking about the innovation with a Big I bit (i.e. making the ipod bet with  years in gestation and several years to payoff) or the innovation with a little i bit (MacBook) or the design aesthetic. All very different.
4. When you answer Yes to question 3, think about how Microsoft did the same and still couldn't do it and ask yourself why you'd have a better shot ?
5. The next time you want the government / corporation to fund your next innovation programme - are you making your lack of appetite for risk someone else's problem? The first innovation will be getting started when you have nothing apart from your own skills.


Simon said...

The big I and little i innovations seem to match the schema that Clayton M Christensen uses in the book The Innovator's Dilemma, talking about disruptive or incremental innovation.

I'm currently reading The Game Changers, about how innovation became mainstream at Procter & Gamble... I'm almost up to the part where they talk about how they handle disruptive vs incremental innovation. I'll let you know if it adds to this conversation! :)

Simon said...

One more thing ... I strongly agree with you that innovation thrives when resources are scarce. That's why the advertising industry is struggling to understand social media; you can't buy it.