These four trends will drive new ideas and innovations in business.
BY PAUL SCHOEMAKER SENIOR RESEARCHER AND FORMER RESEARCH DIRECTOR AT THE MACK INSTITUTE, 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.
This article highlights that the innovation process itself is transforming "from the outside in," as well as other important trends.
First, when thinking about the future of innovation, it is instructive to look back, as it shows that significant innovations have occurred in the innovation process itself. Second, companies have moved from inside-out innovation, where companies rely on core strengths to gain adjacencies and open 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 grow". This trend will continue some more highlighted below.
First of all, Google's approach is an excellent example of "quantum innovation," which is defined as a ready-made thought that disrupts competitors and even the company itself. The paradigm shift underlying the innovations almost never fits into the current business model and organization 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 through Friday work environment is giving way to many new organizational forms. While we now see virtual companies; internal and external networked partnerships (think Uber and Airbnb); and companies creating new startups.
Other new forms include ambidextrous organizations, which can focus on existing products while keeping up with 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 Zaraa retailer that quickly translates fashion trends into a shipment of new products twice a week. In short, this flurry of innovation in organizational forms will continue to be fueled by technology and new approaches to work-life balance.
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 coming back to the West as well.
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.
In addition, reverse innovation usually 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.
Many discoveries have arisen from a sequence of mistakes or failures. Definitely, not all mistakes are bad; as many are portals of discovery. Adopting a more forgiving 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 Honda's founder 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 portal of 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 from within your company.
- Aim high: otherwise incremental innovation can cause you to miss innovative opportunities.
- Try out new organizational structures that are agile and horizontal.
- Practice economic innovation and learn from both the bottom of the pyramid and the top.
- See mistakes as portals of discovery: every failure has learning as a positive side.
- Cultivate leaders who thrive on uncertainty, take the long view, and champion change.