Over the past decade, there has been an explosion in the business press about innovation—how to innovate, how to learn faster so we can innovate, how to get our people to be creative so we can innovate—as businesses navigate an increasingly complex and fast moving environment. This hunger to innovate does not stop with for-profits; innovation fever is alive and well in non-profits, government agencies, schools, and the military.
If you ask most CEOs whether or not they are innovating fast enough, they will say no. It’s one of those issues that keeps leaders up at night in fear of being out-innovated by the competition, whether it be another company, someone else’s military, or the school across the way. Over the past decade they have cajoled, rewarded, threatened, and pleaded their way to innovation.
One solution many pursue is to buy their innovations through mergers and acquisitions. Most of these mergers are nimble little organizations fueled by passionate people focused on changing the world. They don’t operate in a world with too many constraints, or bureaucracy, or controls. They have neither the size or the scale to compete broadly, but they have a great idea and a few valiant souls to drive it. This approach works well until the new organization is eaten by the older one. Controls are put in place along with red tape and old politics, efficiencies and production goes up while ideas go down, and what was once an innovative culture becomes one of permission and order. The innovation dries up and the CEO is up at night again asking, “why can’t we innovate?”
One answer lies in what is best about both large, structured organizations and small, nimble organizations. The reason many organizations can’t innovate is because they are designed for efficiency—like machines where all the cogs fit together to produce a product. Small organizations are designed for flexibility—getting things done and moving ahead are all that matter, and as a result they are messier. The cogs might not fit together well—or they might not have cogs at all. If an organization wants to innovate and be able to scale its product, it will need to do both well—creating messy spaces where people randomly bump into each other, rub antennas and passionately pursue a broad range of ideas, while channeling those ideas into actual products.
Many of our current organizations are built on factory models from the early 1900s—if it was good for Ford in the 1920s, it must be good for us in the 2020s! In order to increase innovation in the future, organizations will have to evolve as well—using loose-tight models where some processes are rigid and other processes are loose, where structures are flat and co-created such as in a holacracy. These new organizational forms require new kinds of leadership, leadership focused on managing tensions but not dictating answers, providing freedom with fences like Harley Davidson in the 1970s. If we are living in a VUCA world, we will need volatile, uncertain, complex, and ambiguous organizations to match it.
If we are courageous, we will evolve as the world evolves , although it is scary to move from a place of control to a place of uncertainty. As we look in the mirror and ask, “Why can’t we innovate?”, like everything in our lives, if we want change, change starts with us. The question shifts from “why can’t the organization innovate?” to “how can I innovate?”