These four trends will drive new ideas and innovations in business.
BY PAUL SCHOEMAKER SENIOR RESEARCH FELLOW AND FORMER DIRECTOR OF RESEARCH AT THE MACK INSTITUTE AT WHARTON
When the world changes at a breathtaking speed, innovation becomes an organization's most important weapon. History provides some important lessons on how to wield this weapon in the future.
Summary
This article highlights the fact that the innovation process itself is changing "from the outside in", as well as other important trends.
Firstly, when thinking about the future of innovation, it is instructive to look backwards, as it shows that significant innovations have taken place in the innovation process itself. Secondly, companies have moved from inside-out innovation, where companies draw on core strengths to conquer adjacencies and open up innovation.
For example, P&G is an excellent case of this profound trend. In the past, almost all innovation came from P&G; now most innovations originate from outside, using an approach called "connect and develop". This trend will continue with a few more highlighted below.
Quantum Innovation
First and foremost, Google's approach is an excellent example of "quantum innovation", which is defined as out-of-the-box thinking that disrupts competitors and even the company itself. The paradigm shift underlying innovations almost never fits into the current business model and organizational structure.
First, it starts with a very broad sense of purpose and audacious goals, like Google's desire to organize the world's knowledge or Tesla's desire to make electric cars commonplace. This is what entrepreneurs like Richard Branson (Virgin), Elon Musk (SpaceX and Telsa), Sarah Blakey (Spanx) and John Mackey (WholeFoods) excel at.
The Cancer Treatment Center of America is also doing this, rethinking the world of cancer care, with the patient first in everything that happens.
New organizational forms
The traditional 9 to 5, Monday to Friday work environment is giving way to many new organizational forms. While we now see virtual companies; internal and external networking partnerships (think Uber and Airbnb); and companies creating new startups.
Other new forms include ambidextrous organizations, which can focus on existing products and at the same time accompany the creation of new products or markets, and front-to-back companies, which put the customer at the center of all their activities.
Finally, there are "sensitivity and response" companies, such as Zara, a retailer that quickly translates fashion trends into a shipment of new products twice a week. In short, this flood of innovation in organizational forms will continue to be fueled by technology and new approaches to work-life balance.
Reverse Innovation
Primarily, globalization and outsourcing have led to "reverse innovation", since the world is no longer a one-way outsourcing street moving from west to east. While the West still exports many cutting-edge products and services to developing countries (and still generates cheap labor), innovations in emerging markets are now also coming back to the West.
This is happening with Brazil, China and India in fields as diverse as biofuels, IT and medicine. New approaches to making cheap artificial hips in India, for example, are making their way back to the US and Europe.
Moreover, reverse innovation often means frugal innovation, which is welcome in a world where access to capital, land, labor and natural resources has become a pressing strategic business issue linked to sustainability.
Harvesting mistakes
Many discoveries have arisen from a sequence of mistakes or failures. Definitely, not all mistakes are bad; many are portals to discovery. Adopting a more tolerant mindset about mistakes paves the way for testing new processes and projects, even those that may not initially seem promising.
From the same point of view, many successful innovations don't happen until they are nurtured at an early stage and endure many setbacks, failures and adjustments. As the founder of Honda observed, "success is a 99% failure".
Instead of expecting brilliant mistakes to occur by chance, cutting-edge companies can actually encourage deliberate mistakes, defined as testing beyond their belief system - just to see. Such experiments cannot be justified using rational cost-benefit analysis. Therefore, they require leaders and a culture that sees mistakes as a gateway to discovery.
How to innovate for the future
When the world is changing at breakneck speed, innovation becomes an organization's most important weapon. History offers some important lessons on how to wield this weapon in the future:
- The world is a big place: don't just limit yourself to innovation within your company.
- Aim high: otherwise, incremental innovation can cause you to miss out on innovative opportunities.
- Try out new organizational structures that are agile and horizontal.
- Practice economic innovation and learn from the bottom of the pyramid as well as the top.
- See mistakes as portals of discovery: every failure has a positive learning side.
- Cultivate leaders who thrive on uncertainty, take the long view and champion change.
