Snakes and ladders: Should Innovation Be An Evolution Or Revolution?

Gaia and Andrew Grant (pictured below) are the authors of The Innovation Race: How to change a culture to change the game. In this opinion piece they argue plenty of great businesses have been ruined by disruption and offer advice to ensure yours isn’t one of them…

Innovation has been studied extensively since economist and political scientist Joseph Schumpeter first suggested its critical role for business in the 1930s.

One thing that has become apparent over those years of study is that the innovation imperative in the technology sector is increasing exponentially. There seems to be a treadmill that has an automatic speed-up setting that can’t be changed, because capitalism requires constantly evolving systems and structures to support it.

And few companies are able to keep up.

The realities of the ‘innovation race’

Only one out of the top five tech companies in 1995, companies that were established at the time of the introduction of the internet, remain in the technological innovation race today.

What’s more, 14 of the world’s 15 most valuable technology brands have disappeared during the two decades since 1995. With the notable exception of Apple, all have been rendered obsolete by more agile competitors.

Many of the top companies researched in Tom Peters’ and Robert H. Waterman’s book In Search of Excellence (1982) and in Jim Collins’ book Good to Great (2001) have not lasted the distance.

Good companies can fail easily when confronted by market and technological change — even the kinds of companies that are known for their ability to innovate and execute well.

A study of Fortune 100 and Global 100 companies between 1955 and 2006 found that almost 90 per cent went through a stall phase at some stage, and fewer than half of those were able to recover sufficiently. Few of the companies that stalled for more than 10 years recovered at all.

Survival at all costs?

Survival in the competitive technological innovation race, it has been found, often depends on radical breakthrough innovations rather than slow evolutionary adaptations. And these disruptive innovations are changing the game.

Throughout history countless technological transitions have dramatically impacted rates of development and established new benchmarks. Think about the switch from horse and buggy to motorcar, from typewriter to computer, from snail mail to email.

Disruptive and breakthrough innovations have emerged as a way of dealing with gaps, yet these forms of rapid innovation can be risky.

Sometimes rapid breakthrough innovations are like a game of snakes and ladders: when you land in the wrong place you can find yourself sliding back to square one, having to start all over again.

Discover a significant new innovation, on the other hand, and you can leap ahead of the competition and scale a fast-track ladder to the top in one swift move. This race generates both great opportunities and great risks, fast winners and losers.

Do or die

The free-to-air and cable TV channels, for example, spent so much time competing against each other that they didn’t even see their new competitors coming. By the time the streaming companies (following the Netflix model) hit the market the customer was begging for these sorts of flexible solutions, and the TV channels were left struggling, often reduced to back-to-back reality TV and sports programs.

Traditionally companies within industries have focused on competing against each other through sustained incremental innovation and haven’t had to worry about anything outside their own particular world. This system can work as long as deep change is not needed.

Disruptive innovation often emerges when an outsider enters a market and defies the established system. Entrant companies have been able to trial radically new ideas and methods by importing them from different industries and applying them in a new situation.

What established companies often fail to see is that customers will go ahead and innovate, with or without their approval, according to their needs.

Beyond haphazard innovations

The challenge is that, just as we need to move beyond the slower but more sustainable incremental innovations that help us to survive, eventually we are going to have to go beyond the sometimes haphazard breakthrough and disruptive innovations that are helping us to get ahead in the game.

We need to progress to what we call transformational innovation: innovation that is fast enough to keep up with the rapid pace of change, yet is also meaningful and sustainable from a social, environmental and commercial perspective.

Gaia Grant and Andrew Grant are the authors of The Innovation Race: How to change a culture to change the game (Wiley August 2016) along with a number of other international bestselling books and resources. As the Directors of Tirian International Consultancy they help to create innovation cultures for a range of international organisations (including Fortune 500 companies and NFPs). The Grants are top-ranking keynote speakers, and Gaia is an HD researcher and guest lecturer at Sydney University Business School. For more information see www.the-innovation-race.com.