These first weeks of 2021 have underscored key questions worldwide with particular vividness, notably a renewed focus on innovation in its many forms.
The global pandemic has refocused debate and practice on the how of #buildbackbetter and what some are calling ‘The Great Reset’: We face in every country and each community the challenge to rethink how we live, work, and convene together. Companies, public agencies and civil society organisations are grappling with basic shifts in how they deliver on their agreed purposes.
In these times, senior leaders are again thinking through innovation for the long-term, what many in Silicon Valley call the 'Long Now'.
The Long Now is a stance and a mindset that argues for the impact of what we do today, to build capacity for or to constrain the much longer term. Managing boards and directors across sectors seek briefings on innovation and ‘what works’. The word ‘innovation’ itself is a keyword these days, a cultural meme that catches aspiration, challenge, and the search for new value. And, too often, these efforts are disappointing in practice, both in terms of resource expended and value realised.
We present here four innovation precepts, a digest of recent research and practice in innovation strategy. Our invitation is for you to consider these precepts in the context of your own leadership, to set out terms for discussion and also policy and practice in firms and agencies. The research evidence and practical experiences point to these four critical precepts when embarking on the innovation journey, applicable at the level of the whole organisation (increasingly called ‘business innovation’), at the level of business models, and even at the level of specific services and product offerings.
In William Gibson's words: ‘The future is already here, it is just very unevenly distributed’. In our research and teaching, we engage the Gibson quote. We start from these four points to generate both discussion and insight among the senior executives with whom we work:
Precept 1: Technology is often the enabler of novelty, not the determinant of value
As Schumpeter reminds us, innovation need not be preceded by the term ‘technology’; in other words, technology is often the enabler of novelty, not the determinant of value. The work of innovation then is not to capture the IP, the raw ideas and inventions, but instead to assemble these along with complementary assets, that broad swathe of other technologies, standards, skills, judgment and organisational capabilities that allow the potential of an innovation to be realised in actual value creation.
Precept 2: Innovation involves recombination, bringing together both existing elements and novel components in new contexts and for new purposes
The degree, focus, and impact of value creation varies according to the mix, and how these ideas come to be materialised in routine processes and practices for recurring impact.
Leading for innovation requires noticing, connecting, and combining at all stages.
The wisdom of this precept: Innovation per se is not necessarily about ‘novelty’ on its own, especially not about ‘new to the world’ in the case of most firms and agencies. Instead, novelty may be the starting point; the mantra ‘ideas to impact’ both charts the challenge in the organisation and is a reminder of the linked processes that harness good ideas with capacity and curation.
Precept 3: Systems of activities and their design are the critical tools for those leading on innovation
Important research from others, at London Business School and UC Berkeley, and at Harvard Business School complements our findings. This body of work sketches out the core insight: For efficient, impactful innovation, a firm or agency has to answer three broad questions that together comprise the innovation system:
- Where do the good ideas come from?
- What processes and capabilities enable the organisation to convert those raw ideas in innovation, that is, elements with the potential for impact?
- How to migrate these now mature innovations into existing value chains and ecosystems and/or how to forge bespoke ones to make full use of the innovation?
Precept 4: Implementing on innovation requires a core discipline at the heart of our Oxford strategy approaches
Strategy in principle and practice confirms that critical conversations about the exploit-explore ratio configure the longer-term capacity for core strategic decisions foundational to long-term thriving, especially in turbulent times.
The exploit-explore ratio starts from the current working of the organisation - how and why a firm has been successful to date (and how to continue that). This is the ‘exploit’: The work of making full use of incumbent markets, technologies and capabilities today for value creation.
The ‘explore’ element disciplines that reliance on yesterday’s success with the opportunity-seeking admonition: The conditions that made the organisation successful yesterday may not continue tomorrow and hence the critical work of senior executives is to steward activity that prospects and experiments to invent tomorrow - and then to make that routine and familiar in a recurring cycle, where ‘explore’ comes to be tomorrow’s routine and the process continues.
Leading for innovation requires noticing, connecting, and combining at all stages.
These unsettled times force recognition of the complex interdependencies that shape both value and impact for any firm or agency.
The four precepts are the basis of useful conversations and reflection – and then experiments to learn and change the adjacent possible. The specific conditions in these pandemic times have prompted very general questions about how we currently do things. Our work points not only to what to do differently but also to foreground how to move from ideas to impact.
This work of innovation in times of #BuildBackBetter relies on both science and craft skills.
Importantly and pragmatically, innovation is about recombination to new purposes under changing conditions. It is ‘systems’ work, that requires both recognition of the existing terrain and a willingness to forge new ways forward. It may also involve forgetting prior lessons learned: Incumbent organisations are seldom greenfields.
It is the work of innovation leaders to create those provisional spaces for experimenting, over and over.
Acknowledgements: Great thanks to M Diane Burton, Guillermo Casasnovas, Abrar Chaudhury, Phil Clare, Steve Gotz, Tim Hannigan, Heli Helanummi-Cole, Thomas Hellman, Pinar Ozcan, Anna Waring, and Maria Zubeldia for comments and opportunities along the way. We are fortunate to work with talented, diverse leaders, both in the Oxford corporate programs and in our MBA, EMBA, and Diploma degrees. This post digests comments from our teaching, as a first point of conversation about innovation in these unsettled, turbulent times.
