Tag: innovation

entrepreneurship, innovation, Management

Innovation: why the distinction between exploration and exploitation is problematic

In the field of innovation, the distinction between exploration and exploitation is universal. It is clear, it seems obvious, and it has become gospel in the world of innovation. Yet it is counter-productive, as it rests on questionable assumptions. It illustrates how the way we formulate a problem, i.e. our mental model, determines our ability to solve it. The wrong mental model locks us in, while the right one opens up possibilities. It’s time to let go the exploration/exploitation distinction.

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decision making, entrepreneurship, innovation

Why you need to be (a little) conservative to innovate and change the world

How does great innovation truly happen? This question often kicks off discussions on innovation, with many expecting the classic tale of a visionary entrepreneur sparking a revolution. However, this idealized notion of a sudden “big bang” innovation can be problematic, leading to either a sense of resignation or a rush into monumental projects that often yield little. In reality, even disruptive innovation typically progresses incrementally, building upon past efforts and grounded in existing conditions.

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innovation, Management

Why asking a innovation unit to be more disruptive is not a good idea

That innovation units created within large organizations have a difficult life is not new. Most of them disappear after three years on average, because after the euphoric start, they fail to become part of the life of the organization. But those that survive are not out of the woods yet, because they are caught between a top management that demands “more disruption” and an organization that, through its budgetary and control processes, removes any chance for a disruptive project to see the light of day. Getting out of this difficult situation requires being very clear about what “disruptive” means, and understanding the real nature of innovation.

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innovation

Immunity to change: When rational commitments prevent innovation

There is a paradox in the field of innovation: everyone is in favor of it, I never meet a manager who explains to me that he does not want to innovate, quite the contrary; They all want to innovate. And yet in most companies, innovation is blocked. An important cause of this paradox lies in a conflict of commitment between the present and the future. Let’s look at it in more detail.

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Case studies, Theory

Nespresso: when the simplicity of the product hides the complexity of the innovation process

One of my favorite questions when I teach innovation is to ask participants how long it took for Nestlé to succeed with their Nespresso coffee machine. So what’s your answer? One year? Five year? Well no. The answer is 21 years! Based on a technology licensed from the Battelle Institute by Nestlé in… 1974, Nespresso only became profitable in 1995 after much ups and downs. 21 years were needed to make a success of the Nespresso innovation.

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Theory

Innovation is first and foremost about reducing costs

It is often assumed that innovation is about bringing new offerings or methods to the market. In business, there would be a noble side, that of innovation, and a less noble one, that of managing operations. Nothing could be further from the truth. One of the most fundamental aspects of the free market system lies in its ability to reduce costs, and therefore prices.

In his monumental piece "Capitalism, Socialism and Democracy", still an essential read sixty years later, Schumpeter explains that innovation is not the capitalist system's distinguishing feature: other civilizations or political systems have been innovative in sime areas as well (think of space technologies in the former USSR or Law in ancient Rome). The real distinguishing feature of the system is its inherent ability to democratize innovation by making available new products to the masses. This is achieved both through its ability to organize efficiently but also and more importantly through the ability to decrease costs. In other words, the symbol of capitalism and innovation is not so much the start-up as Wal-Mart, the low-cost supermarket that saves Americans' mostly low-income customers about $50 billion a year. For these customers who struggle to make ends meet, it's something.

Schumpeter thus summarized the argument:"The capitalist engine is first and last an engine of mass production which unavoidably also means production for the masses… It is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars and so on that are the typical achievements of capitalist production, and not as a rule improvements that would mean much to the rich man. Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort. . . . the capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses." (source)

Unlike what The Economist explains in their must-read article "The Silence of the Mammon", I don't think defending this system in the name of this formidable wealth creation and affordability is defensive or smacks appeasement. On the contrary, it's a perfectly valid argument as it does not pretend to bestow other responsibilities to this system than it is supposed to have.

Case studies

Innovation Nokia style – How did Nokia become the leader in mobile phones?

How did Nokia become a leader of the mobile phone industry in the 90s ?

It’s really hard to see favorable predispositions for a Finnish group initially specialized in mining and forest exploitation, although Nokia already had activities in the radio phones back in the 60s.

It seems that one of the thing which triggered its astonishing success as a mass-market mobile phone producer goes back to a mission carried out by Gary Hamel, the famous strategy guru. To boost the Finnish company creativity,  Hamel suggested that teams of Nokia senior managers be sent in three rather special places : Venice Beach in California, King’s Road in London, and the Tokyo night club area…(probably for the greatest delight of the managers, who we rather think of as more used to the polar circle…) Why? Because it was thought that in these areas, trend setters in the use of high technology could be found. The creative spark is not always hidden in a 250 page Gartner Group report, nor in series of endless internal brainstorming meetings… Sometimes, it’s more productive to live as real customers, in remote places ; the creative spark is there, right under your nose. It’s after these “learning expeditions” that Nokia understood that mobile phones had gone beyond their utilitarian purpose, and that they had become “fashion accessories”.