Thursday, March 22, 2012
The New Rules of Innovation
The world economy is about to become a much riskier place as we enter the Age of Disruptive Innovation. As a leader, if you want your organization to flourish rather than perish in these perilous times, you need to answer three key questions:
1) Is your community or country ready to be agile, keeping pace with a world that is moving at double-speed?
2) Is your company really open and networked, and do you know how to be a beacon for good ideas from which your firm can extract value?
3) And most importantly, are you and your colleagues willing to fail, fail, fail and fail again—learning the right lessons quickly and moving on to the next experiment—until you succeed?
Thanks to the democratization of innovation, lots of new kinds of disruptive entrepreneurs from the world over are now able get access to markets, capital and connectivity. That allows them to try out many more wild and crazy ideas than in the past, in effect getting many more shots on goal, making it more likely that a genuinely disruptive force like mobile telephony will emerge again in future.
Over the past few decades, globalization and Googlization have kicked off the first phase of an innovation revolution more profound and powerful than any economic force since the arrival of Europeans on American shores half a millennium ago. This has brought such advances as the World Wide Web, social networking, 24/7 connectivity and global markets. By peering inside the minds of the winners, and plants red flags on the black holes they avoided, you can raise your game. Innovation is evolving from being a fuzzy notion to being a proper discipline, much as the total-quality movement in manufacturing management did a few decades ago. Drawing on the best of the academic and field work in this emerging area, you can learn the new rules that you need to know and develop the skills you need to profit from the shifting global economic order.
There is an urgent need for new solutions to 21st century crises. Cutting-edge innovators are disrupting established business models and upending entire industries at breakneck speed. What is more, greed can do good if the broken rules of capitalism are fixed so that entrepreneurial firms and markets are rewarded for solving socially-important problems.
The very way in which we innovate is being reinvented, with wonderful but often unexpected consequences. If you want to prosper rather than perish in this coming age of disruptive change, you need to master the new rules of global innovation:
1) Innovation is not a zero sum game: China’s rise does not mean America’s decline—but the rising tide will lift your boat only if you patch the holes in your vessel first
2) Think local, act global: Many of this century’s thorniest problems—be that food and water scarcity or health scares—seem like local problems. In fact, they often arise from failures in national and global governance. Creative coalitions, regional approaches, and systems thinking are the way forward.
3) Turn risk into reward through resilience: Leaders must realign incentives for the private sector to build resilience into future infrastructure and supply chains. The key is to shift from brittle, top-down systems to modular, flexible approaches that are more future-proof.
4) Open up and say…Aha!: Ivory towers are so yesterday. Open and networked innovation recognizes that the smartest people in your business no longer work inside your firm.
5) Be the dinosaur that dances: It may be unsexy to be the incumbent firm in an industry undergoing disruption by nimble upstarts, but that is no reason to stand still. Leverage your legacy assets, and ditch outdated business models even if they are profitable today but do not have a future.
6) Elegant frugality trumps conspicuous consumption: The fallout from the great recession is clear. Consumers in developed countries, and not just poor folk in emerging markets, want products and services that offer better value.
7) If at first you don’t succeed—fail, fail again: Transform your attitude to risk-taking so that you celebrate fast failure. It is not easy to fail elegantly.
8) Forget Father—it’s the user who knows best: Bottom-up innovation works much better than the top-down kind. When customers help you create your products and services, the resultant ecosystem gives your firm the edge.
9) Go the whole hog: As the life-cycle costs and “externalities” involved with economic activity get priced into goods and services, systems thinking will beat silos.
10) The path from stagnation to rejuvenation runs through innovation: Easing the middle class squeeze seen in many developed economies will mean improving productivity gains and boosting economic growth. The best way to do this is to invest in the long-term drivers of innovation like education, research and development, and smart infrastructure.
11) Put purpose on par with profits: In the Ideas Economy, money will no longer be a sufficient motivator of talent. Look to emerging business models of social entrepreneurship and hybrid value chains for inspiration.
12) Keep relearning how to learn: Each of us has an innovator trapped inside and today’s innovation revolution promises to be much more democratic than the past—but you cannot rely only on traditional schools, fancy diplomas, and employers any longer. You must constantly work to figure out how innovation is evolving so that you can participate and prosper.
The democratization of innovation, once the preserve of technocratic elites in ivory towers, offers hope that the grand challenges of this new century can indeed be tackled. Ever deeper waves of innovation could, in time, even transform a world of scarcity and conflict into one of abundance and prosperity. That is because as the potential of seven billion innovators-in-waiting is unleashed, mankind will at last be tapping the one natural resource that we have in infinite quantity: human ingenuity.
This article originally appeared on The CEF EcoInnovator.