Innovation isn’t as big a leap as you think.
Walking the walk along the innovation pathway.
Helping companies on their innovation journey is the mission.
I previously discussed my journey as a senior leader in an established Top 20 ASX organisation, and how I moved from a career in e-commerce to investigating the human experience and its effect on company innovation. I had founded a ‘best practice’, award-winning innovation and design function. I assumed that there was an appetite for design and innovation in the wider Australian business world, so in 2016 I established WAVE Design. Our mission was to help other organisations develop their innovation roadmap, build capabilities and reimagine their current offerings. To my surprise, after visiting many companies, I have noticed many leaders are more comfortable 'talking the talk’, but less committed to 'walking the walk' with design and innovation. Let’s take a look at some of the reasons why this may be the case.
Framing the risk-aversion appetite
Australia’s unprecedented growth over several decades, driven by mineral resources, has significantly impacted the risk appetite of company leaders. Leaders feel comfortable with current growth options and don’t see the need to explore more riskier opportunities. Given there are only 2 among the Top 10 largest ASX listed companies that were established after the Second World War, this is telling us a lot about our risk appetite for innovation and entrepreneurship.
There is also a focus on short term business outcomes, with the average CEO tenure in Australia being relatively short. Short term outcomes usually produce minor, incremental improvements, and a bold vision of discovery is missing. Boards are also focused on compliant and safe operation as opposed to experimentation and uncertain environments. As a result, leaders are managing risks by taking “a leap of faith”; an approach where the belief is that pre-determined assumptions built into business cases will be proven, and will deliver projected outcomes.
We all know that rarely happens. So what is the alternative?
To control risk effectively leaders should be more comfortable using a 'leaps of logic' approach. By adopting a process of smaller steps based on real-time evidence they can build more conviction that they are focussed on the right problem, while at the same time reducing the number of assumptions and therefore risk.
It is less risky when we fail on a low fidelity prototype than when we launch a larger offer based on business case assumptions. Yet, I’m often hearing that board directors and senior leaders don’t want to talk about failures. But it’s so important to understand our failures. If we don’t understand failures, we can not learn. It makes me think about what Nokia’s CEO said when the company was acquired by Microsoft: “We haven’t done anything wrong, but somehow we lost”. Small leaps allow us to learn fast and recover quickly from mistakes, leaving us in a better position and more equipped to deal with change.
Our expertise versus customer expectation
Over the years, organisations have accumulated a lot of knowledge and expertise on how to build things. However, with almost the same intensity of building our confidence, we are missing a proper understanding of our customers’ daily life. With that, we create a 'what to build' gap, and we base decisions on our internal conviction created from accumulated internal expertise. You may hear within your organisation the justification "I have 20 years of experience in this" - but how is this relevant if your experience is widely different to the one your customer is having right now? The heart of the problem a company faces when dealing with risk is the mindset of its leader. The key question is therefore: how to change this mindset.
Learn by doing
We believe an effective way for a mindset shift is by applying the strategy - “learn by doing.” When mentioned to leaders, we often hear the retort: “We don't have time for that”. This translates simply to: “We don't see it as a priority”. But it needs to be. To understand the impact leaders want to create for their company, they need to focus on the right problem. They need to go to their customers' homes, talk about their lives, and support abstract thinking and experimentation through prototypes. Only through experiencing firsthand what their customers are living will they develop an appreciation for them and change their mindset. And surprisingly to many, it doesn't take much time, and it is not expensive. It requires courage, prioritisation, persistence and patience.
Just start … but how?
As I mentioned earlier, many leaders talk about innovation, and some use it as a buzzword to sound cool. But that’s usually where it stops. That approach backfires as board members, senior executives, staff, customers, and other stakeholders need more substance than statements. They want to know what the term innovation actually means to their organisation and how it will all work. The problem is many leaders are not clear on where or how to start with innovation.
So let’s take a look…
There are many views on how to start, and I would position them into three options.
Build an innovation roadmap that includes a vision aligned with the overall strategy and identify the key drivers to make it successful.
Choose a problem and solve it using human centred design methods to demonstrate delivery and outcomes.
Start building internal capabilities by training people on human centred design methods through a “learn by doing” approach.
When I mention these three options, some leaders would say that their organisation may not be ready for this. The thing is - it’s always too late to innovate. Whenever you start, you are already behind.
So just start doing it.
This article has been written by Dr Munib Karavdic, CEO of WAVE Design and Conjoint Professor at AGSM/UNSW. Get in touch with Dr. Karavdic here.
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