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Innovation is About Placing the Right Bets

May 29, 2018

A lot of people think about innovation only in terms of the next iPhone, Airbnb, or Uber. In reality, innovation is simply creating something new that has value. Value can be a new product, process, customer experience, or business model. We think about innovation across three dimensions: operational, strategic, and disruptive. To adapt to the increasing pace of change, your organization should place the right bets along each dimension.

Operationally, you should place bets on those things that help you continue to operate as efficiently and effectively as you can. Many organizations tend to have a hoarding complex when it comes to rules, policies, and procedures. They add without subtracting. As a result, they end up with a mishmash of ineffective, outdated, and misunderstood rules, policies, processes, and assumptions. Avoid this trap. Adopt a regular process of elimination by purposefully having a “What if?” session designed to answer: “What if we could kill one process or step? Which one would make us better?” Caution: Don’t spend all of your creative energy on operational innovation, or you’ll be super effective in the wrong business.

Strategically, you should place bets on those things that provide a competitive advantage. Think about the jobs your clients need done both today and in the future. Then, think about whether the clients are overserved, right-served, or underserved in those areas. This might help you discover areas in which you could develop new solutions to address critical open space. Caution: It’s not all about keeping up with your current competitors; new ones can arrive out of nowhere and disrupt you.

You should also place bets on those things that might be ripe for disrupting your industry. These are things about which most people would say “That’s never going to happen.” One thing is certain: If we don’t take the time to disrupt ourselves, we will, without a doubt, be disrupted. Caution: Don’t avoid these bets just because you don’t have the know-how to execute on them. Find the experts or buy the capability.

The real key is to create the right balance of innovation investments across all three dimensions. Otherwise, your competitors will leave you in the dust.