Tagging 2015 as the UAE’s ‘Year of Innovation’ has undoubtedly created much hype and excitement. Many organisations have responded by flaunting their chief innovation officers, while others boast about the launch of high-profile innovation strategies, programmes and events.
Eager for headlines, companies have become proactive in showcasing their innovative initiatives. The second ‘Abu Dhabi Innovation Survey’, published by the Department of Economic Development — Abu Dhabi, shows that more than half of the surveyed firms introduced new innovations over the period 2008-11.
Taking into consideration the fact that many financial innovations played roles in the subprime mortgage crisis of 2007-09, it is fitting to ask whether all innovations are good. If they are not, how can organisations be certain they are innovating for the right reasons?
It is becoming more obvious than ever that innovation has become an overrated goal for many organisations; our libraries are loaded with books prescribing magical recipes promising just a few steps to achieve innovation.
Time has come to start treating innovation as a solemn process for value creation, rather than a done deal that offers a glamorous upshot on its own. Successful innovations must bring about a change that results in value creation — be it an increase in sales, customer satisfaction or problem solving.
To judge whether the innovations introduced by Abu Dhabi firms were truly good or bad, future surveys must delve into the impact of such initiatives. Even here, it would be unfair to label an innovation as bad; it could still be part of the process of experimentation and learning-by-doing.
Many innovations go through a roller-coaster experience and could fail in the short-term, but may add to each other incrementally to help build successful big-picture improvements. Tolerance of failure is often regarded as the Silicon Valley’s greatest strength.
The iPhone, for example, was built on the foundations of many failed ideas.
Quite often, making innovation succeed in the marketplace is easier said than done because it is more of an art than a science. Every year, thousands of new and fascinating products are introduced and pulled from shelves just a few months after their release.
Studies show that up to 90 per cent of innovations fail, and the resulting costs of such failures have been estimated at $100 billion for Fortune 500 companies alone (according to US-based innovation consultancy, Strategyn). That is why innovation should be viewed as a delicate endeavour whose success depends on many external and organisation factors in any given context.
Besides external factors — which include marketplace considerations — organisations should realise that without having the capability to successfully implement innovations with the aim of generating new value, good ideas can often wither on the vine.
It is also important to note that innovation entails change, often resulting in winners and losers in an innovating organisation. Managers should err on the side of caution when pursuing innovation.
Telling their organisation, “It’s time to roll up sleeves and innovate”, without creating and communicating a vision, or enabling a supportive environment may generate scepticism.
Innovations should not just be encouraged; the innovating organisation must also create structures in the form of incentives/awards. As a result, staff will not oppose potentially positive innovations that might have a negative impact on certain people, or parts, of an organisation.
Eventually, the pursuit of innovation will become synonymous with a prevailing risk-taking culture that inspires the leadership and encourages openness and ownership of both trendy and out-of-the-box ideas … even if they are ultimately found to be half-baked.
In this way, innovation can help organisations become relevant. But, if we take for granted the importance of creating a pro-innovation environment, is it right to assume that ‘more innovative ideas are always better’?
The short answer to that mantra is a resounding ‘No’. Beyond a certain threshold, simply pushing out more new ideas can become counterproductive.
Depending on the maturity of a firm, and the industry it belongs to, pushing disruptive innovations at the expense of making incremental improvements on routine activities may actually diminish rather than create value.
The cost of failed innovations is often dire. So questions of rationale, implementation and meaningful impact are more important than a concern with having either too few or too many innovations.
Achieving the right balance is one of the most important roles for senior management.
More often than not, success will be around the corner for those who focus on empowering a dynamic environment, which is conducive to consorted creativity, rather than slackly parachuting breakthrough innovations into their organisations.
This is not trivial because most successful innovations turn out to be merely adaptations and incremental improvements on existing products and services. A survey of 116 new technologies in the hard-disk industry — mentioned in the best-seller ‘The Innovator’s Dilemma’ — reports a 100 per cent success rate for firms that are concerned with sustaining continuous innovations, as opposed to those taking up disruptive ones.
Indeed, the sheer excitement and rivalry surrounding the ‘Year of Innovation’ have led many organisations to stare down the barrel of a gun. Here, managers are reminded not to jump that gun so that they do not end up shooting themselves in the foot.
The writer is Senior Research Fellow at INSEAD Innovation & Policy Initiative.
