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Innovation – We need chaotic but smart!

Innovation

Innovation at any level is a challenging task. In some cases it is almost impossible!

The current debate about innovation is a welcome relief from the appalling political diatribe, which has permeated the Australian political culture over recent years.

While we pride ourselves on our innovative history –we spend a lot of time avoiding the challenge of innovation at every level.

Innovation in its essence requires substantial disruption and that means change. What we know is Innovation at a “Nation Building” level is very difficult be it in National Infrastructure Initiatives or Social Policy Initiatives.

If we talk about Nation Building infrastructure innovation in Australia:

We have known forever that Australia is the driest continent on earth and there has been little innovation in water/water storage in my lifetime – the Snowy Mountains project started before I was born. Ord River and the Burdekin Dam are the only substantive projects I can remember. Maybe there are others? During the last drought, there was a mad scramble to build desalination plants most of which are now “white elephants!”

Why is it we have not been innovative in the area of water storage and use over the past 50 years?

Major infrastructure projects – Sydney Airport; Very Fast Train; Road Melbourne to Darwin; East West Link in Melbourne; all of these projects have met with forces against that are greater than the forces for!

Our capacity to “reform” which is another form of innovation is missing.

There are very few among us who like change and or/ Innovation especially when it affects us directly –our values or our physical well-being.

Dare I say in many cases we do not even want to be challenged –a major road system in our suburb, a dam in our region an airport in our geographic area. You might remember the GST debates over 10 years, the work choices debate and the current debates about Government revenue raising, marriage, climate change, coal, and water. There are positions for and positions against – and in Australia an advanced democracy it is about the politics of 51%.

At a business level where the principles are very similar but the actual dynamics are different. It is about a commercial imperative. Competitive advantage, market position, and profitably are the key. A major question is how long does it take for a product to get traction in the market and then when is it profitable.

If it is a major innovation it takes huge commitment and energy over many years. In some cases getting the support within the business is a major challenge. It is often difficult to convince the existing management system to give it “fresh air”. The established system has a mortgage over resources.

In business Innovation is multi layered:

  • Product Innovation: Incremental and new
  • Business Model Innovation: incremental and new
  • Productivity

Obviously incremental improvements are more manageable but to go down the track of new products, new business models and major productivity breakthrough requires COURAGE! commitment and a very long time horizon.

In addition the launch of new products/services is no easy task – we know the story: Early Adaptors are 2.5% only –the rest take time!

In the IT market innovative products and businesses emerge more quickly – but in the same vein some disappear very quickly – who remembers Web Crawler, Blackberry. The current Australian darling Atlassian has taken at least 10 years to reach its current revered status. (And well done to them it is a wonderful achievement). Sustaining it will be the next big opportunity.

In every sphere when Innovation or major change is launched it creates its own resistance. In some cases rabid and irrational resistance! Check out the debates about Uber around the world – consumers are positive BUT taxi companies?

It is a very human characteristic. Intrinsically we enjoy the easy option – the path of least resistance, which is to stay safe in the status quo and or a comfortable belief!

We want to control our own lives and God help anyone who wants to change it!

Our whole business culture, in fact the Australian way is about lifestyle and egalitarianism. To stand out and or to be seriously innovative is almost out of order. A reasonable market share in Australia is a good result.

Building a business especially if it is a major innovation is the long hard (and at times) lonely grind. It is not for the faint hearted. There are no easy steps in fact often the closer you get the further it seems to be away!

I remember reading a story that Peter Drucker is reported to have told:

If you have a person in the business with a great idea – the first thing you do is take resources away. The second thing you do is take more resources away. The third thing you do is take even more resources away. If then the person is still standing – give them all the resources they need because the person who is standing is a “mono maniac with a mission”.

This is what it takes to be a genuine innovator.

There is a reason the Venture Capital Industry talks about the Valley of Death- the time when innovations are likely to fail through lack of funds.

The success rate of venture capital investment is estimated to be only 1 in 4. (they may review up to 200 before investing in the 4!)

It is all a function of learning and adapting – and how quickly we can do it.

It is a time consuming process. In a commercial market products new or otherwise rarely get 100% of a market. On the other hand if they are not profitable they are eliminated quickly.

Apple commands a relatively small market share as an operating platform but it is very profitable.

In the context of the current debate it is interesting to reflect on what innovation we are really talking about and how really happens.

It might also be useful to think about the role Government might play.

Innovation in Business requires radical thinking, courage.commitment and a very long time horizon – maybe if our Government could set an example it would be a good start. Producing another Innovation statement creates the perception that something is happening. Given the previous 65 reports we know that is not the case.

I leave you with the following thought!

Carlson’s Law:

Innovation that happens from the top down tends to be orderly but dumb. Innovation that happens from the bottom up tends to be chaotic but smart.

That Used to be us’: What went wrong with America-and how it can come back; Thomas L Friedman and Michael Mandelbaum.2011

 

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