The future of innovation – beware of the dark side

This is the transcript of a presentation Bettina gave at the International Conference of Engineering Design (CEID) in Copenhagen August 2011

Many thanks for giving me the opportunity to share some of my thoughts on my favourite topic here today; the passion to understand and enable has driven me for the past 20 years.

Innovation on the agenda of most organisations, and when asked, most individuals would agree that innovation is important.

I certainly believe that innovation is critical, and it is also increasingly necessary to take a critical look at the current understanding and application of innovation.

Why so much talk about innovation ?

I guess one of the reasons innovation is talked about so much is that management gurus have been telling us so for a long time.  Whether it is Peter Drucker who said “Marketing and innovation produce results; all the rest are costs”, Tom Peters who said “Innovate or die” and Malcolm Gladwell who said “Innovation—the heart of the knowledge economy.” Innovation is considered to be the only way to compete, and create a future, be it at the organisational or societal level.  Innovation is considered to be essential for growth, the ultimate measure of progress in the West.

Actually, I feel that the way we are talking about growth and innovation are quite similar: both seem to have become an end in themselves rather than being the means to an end.  But are we wanting growth for the sake of it?  Are we wanting innovation for the sake of it?  I believe not – I hope not!  Both are measures for something else that is more difficult to measure otherwise.

I believe that we started using ‘growth’, and GDP and such like, as a measure as it seemed to be an indicator for the improvement of standards of living.  This in turn, so could be argued, is supposed to reflect people’s wellbeing. So therefore I would argue that when we are talking about innovation for growth we are, really, talking about innovating to improve people’s standard of living, and ultimately their wellbeing. The question in today’s world is, should we really be focusing on growth as measure for wellbeing?

Let me quote a few voices against this; the first is over 40 years old when no lesser than Robert F. Kennedy criticised GDP arguing that the “GDP is not measuring that which makes life worthwhile.” A 2007 paper by the European Parliament stated that: “GDP does not properly account for social and environmental costs and benefits. It is also difficult to achieve sustainable decision-making aiming at sustainable progress and wellbeing if welfare is being considered from a purely financial point of view.” 

The third voice I’d like refer to is the current British prime minister, David Cameron, who commented in 2006 that “…there is more to life than making money, arguing that improving people’s happiness is a key challenge for politicians” which is why he promoted replacing GDP with measuring the GWB (general wellbeing) instead.

I also agree with a point raised by one Herman Dalys, author of ‘Beyond Growth [the economics of sustainable development] in which he says, “The concepts ‘growth’ and ‘development’ are not necessarily the same.”  Funny enough, we talk about developing and developed countries, not about growing and grown up countries…  I also rather like Dalys’ statement that “Uneconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made.”

The final and in my view most convincing argument to focus on innovation for wellbeing rather than innovation for growth is the one planet we have.  Given the state of our planet I find it increasingly irresponsible to promote innovation for growth.  It is hard to deny that having one planet and one planet only provides rather unmovable limits for growth.  If on the other hand we talk about innovation for development – of the human race as part of, contributor to and beneficiary of a wider system – or innovation for wellbeing, the only limitations there are arise from the limits of our imagination.  And it is imagination – seeing what others don’t see or in ways that other don’t – possibilities, needs, opportunities – making connections that have not existed before, making real what does not yet exist – that drives innovation.

If we have measured growth because it was relatively easy to measure and seemed appropriate at the time, and if the wellbeing of humankind is really what we are interested in, then we should ask questions about what government and business – we as society – need to do in order to support and encourage innovation for wellbeing. 

My definition of innovation

No conversation about innovation lasts long before the question of ‘what do you mean by it’ comes up. So let me share my take on innovation.  Having thought about innovation, what it means and how it happens (or not) for the past nearly 20 years I have arrived at the following, “Innovation is choosing the path of change to create value.”  In my definition of innovation several things are important to me – in fact I have pondered on every word of it…  First of all, it is a choice, a conscious decision to seek change.  Why is the ‘conscious’ bit so important to me?  Do any of you still engage in new years resolutions?  Have you been involved – in truly successful – organisational change?  Then you will know that it is not easy; it takes a lot of energy, conviction, courage and patience.  Unless you are making a conscious decision to embark on this route you will probably give up half way through… 

I have chosen the word ‘path’ because to me change and innovation are not about reaching an end-point, they are a continuing path, a never ending journey.  Why never ending?  Because the context in which we operate does not stay the same, it changes constantly.  What is right and appropriate today will be out of date tomorrow.  [Let me tell a story to illustrate this. 5 monkeys.]

Finally there is value. Innovation for the sake of it is a waste of resources.  It seems that there are CEOs who stand up in their organisations and say ’we want more innovation’, ‘we need to be more innovative’, and almost leave it at that.  But what if I ask you if you have got a good idea?  What are you to say – unless I give some parameters as to what this good idea is supposed to do or be about.  It seems to me that too many organisations jump onto the innovation bandwagon just because everyone else is doing it.  The carriages called ‘open innovation’ and ‘crowd-sourcing’ are particular popular at the moment.  In my view this is not only not good enough but positively a waste of scarce resources, including engagement and good will of employees.  Innovation is a means to an end, not the end itself, and hence I need to understand why exactly I want innovation, and what I want to achieve through it.

While there is plenty evidence that innovative organisations are not only doing economically better than less innovative companies, and seem to be able to attract best talent, acting on that knowledge still seems to be a challenge as return of investment in innovation is notoriously difficult to measure. 

Trusting that investment in innovation is the right choice somehow reminds me of a short story by Franz Kafka which goes as follows: “The Departure: I ordered my horse to be brought from the stables. The servant did not understand me. I went to the stables myself, saddled my horse, and mounted. In the distance I heard the sound of a trumpet; I asked him what it meant. He knew nothing and had heard nothing. At the gate he stopped me and asked: “Where is the master going?” “I do not know,” I said, “only away from here, only away from here of here. Always away from here, this is the only way I can reach my goal.” “So you know your goal?” he asked. “Yes,” I replied, “I’ve just said. Away from of here—that is my goal.”  “ You have no food”, he said. “I don’t need any, said I, the journey is so long that I will die of starvation should I not get any on my way.  No food supply can save me.  It is really fortunate that this is a truly incredible journey.“

For me committing to creating an innovative organisation has the same qualities that are encapsulated in Kafka’s short story: being characterised simultaneously by certainty and ambiguity; certainty about the need or desire to take action, ambiguity about which path to choose, what exactly the results will be, how exactly we will get there, who we will need on the journey.  More often than not there is ambiguity about more than one of those aspects.

The degree of uncertainty and ambiguity that are invariably part of innovation – if they are not you are probably not talking about innovation – do not sit well with many of those leading organisations today: those who have risen to the top because they delivered against organisational necessities such as cost cutting and efficiency drives.  If someone’s preference and strength is around the management of costs and efficiencies, how do you think they are going to react to someone approaching them with the following, ‘I have this fantastic idea for an electronic device that is not much bigger than a cigarette box and which allows people to listen to music on the go.  I am not quite sure how we are going to realise it, in fact, nor am I sure who the target market will be – but I truly think it is a fantastic idea.’ 

Would the Sony Walkman or i-pod have stood a chance in your organisation?

What questions are being asked in your organisation when decision about which projects to take forward are being made?  Return on investment, market size, contribution to top line, to bottom line?

Impact on brand value?

Impact on society and environment?

The Dark Side of Innovation

I some times wonder how many organisations ask that last question, about impact on society and environment…  and this is why I think it is becoming increasingly important to start a conversation about “The Dark Side of Innovation.” Questions we should start to ask include,

(1) Do we have too much innovation?

(2) Do we have the right kind of innovation?

(3) Do we have responsible innovation?

According to Karl Eric Sveiby’s contribution to our book ‘The Future of Innovation’ (in which  my lovely friend and colleague Anna Trifilova and myself are mapping out a journey into a future of innovation), there is a pro-innovation bias: only 0.2 % of innovation studies look at the indirect consequences of innovation.

Some of the challenges I can see include,

• There is hype around innovation and I believe it creates innovation for the sake of it; I am increasingly challenging managers as to why they want innovation.  What is it supposed to do?  What kind of value is it to create? Why should scarce resources be dedicated to it?  Silence rather than meaningful answers is often the result.
• When innovating we often get too excited about what is possible without asking whether it is also desirable and beneficial from a systems perspective;  most electronic gadgets have more functionality than most of us want – leading to confusion rather than enriching our experience.  It is not for nothing that Apple is so successful: complexity and functionality are invisible to the user, who experiences simplicity.
• We seem to justify doubtful innovations the name of convenience and are enjoying the benefits without considering the ‘true’ costs; think about the waste created by all the convenience food – as well as conveniently packaged food. 
• We live in a paradigm that puts quantity above quality.  Most people rather buy 5 t-shirts that fall apart in a couple of months rather than one that is of beautiful quality, and will last a long time.
• In these times there is, in my view, too much haste and not enough speed – the pace of innovation is too fast.  There are two aspects to it; first, we introduce innovations before we understand the consequences of what we have already done; perhaps GM food when originally introduced falls into this category? And second, the rate at which product improvements are introduced is beyond what consumers can absorb, and surely cannot be the most effective use of resources!

When you are innovating, do you consider the downsides and possible negative implications, and does this influence whether or not you proceed – unless you are in the pharmaceutical or similar industry?

In order to achieve more responsible innovation we need innovation with a conscience;

Just a few thoughts on what we might need for this to happen:

• Irokese wisdom: decisions with their consequences for 7 generations hence; in particular in the energy sector, would our decisions not be different? Look after the world for our children rather than inherit it.
• Taking and accepting responsibility at the individual level; are we not all consumers, and can not each and everyone of us decide how much stuff we accumulate (and here speaks someone who does enjoy her shopping…).  Can we really continue our current trajectory?  I would like to quote Stuart Hart who points out: “Consider, for example, that the average American today consumers 17 times more than his or her Mexican counterpart and 100 of times more than the average Ethiopian. The levels of materials and energy used in the US require massive quantities of raw materials and commodities, sourced increasingly from the traditional economy and produced in emerging economies.  In meeting growing demands….given the scale and speed of development in emerging market….for example, if China came to consume oil at the current US rate, it would need more than 80 million barrels per day – slightly more that the 74 million barrels per day the world now produces.”
• Thinking, understanding, and considering consequences at the systems level; how often do we look at decisions in isolation, rather than asking questions on how the wider system is being affected?
• We need more transparency and openness.  As a consumer I am often uncertain what is better, buy a new car or keep the old one as the old one might produce more emissions, but a new car requires a significant amount of resources…  I believe the internet is a great vehicle for the provision of transparency (though of course here we are facing the challenge of influencing, trustworthiness of sources, and sense-making …)
• What about seriously thinking about the development of new yardsticks for the progress of humanity; one that is based on balancing profit with the needs and wellbeing of people and the planet?  Can the Triple Bottom Line approach at country level replace traditional GDP?
• Another contributor to the FoI proposed a move away from innovation not for the sake of it towards innovation with a ‘who’ and, and more importantly, ‘why’ in mind (Josephine Green, formerly chief provocateur at Philips).

In short, I advocate an approach to innovation where a sense of responsibility goes with the excitement of possibility.

Admittedly, there are some challenges around paradoxes and balances.

We need to embrace paradoxes:

• Simultaneously obesity & food scarcity.
• We need to deal with water scarcity while our planet is covered to 70% in water .
• Most of us are quite uncomfortable to deal with ambiguity and to acknowledge that we need to address our fears when embracing risk; yet fear and risk adversity are the two most powerful adversaries of innovation; both are fundamentally influenced by context.
• A preference for surrounding us with like-minded – when diversity is essential; innovation happens through connecting different bodies of knowledge.
• Individualism & independence vs connectedness & a collaborative spirit
• Embracing complexity while achieving simplicity
• The most difficult of all, Achieving a ‘better’ future for everyone – while having only 1 planet;

We need to balance:

• Balance size to achieve scale and smallness to achieve flexibility;
• Balancing the need to innovate with the need for stability and continuity;
• Balancing the need for speed with getting things right ;
• Balancing globalisation and localisation, something that is particular relevant for food;
• Balancing automation and humanity’s desire to have a profession and contribute.

Finding ways to embrace the paradoxes, and achieve balance, this is what innovation can and should do for us!  This is what should drive and motivate us to embrace innovation – but it also means that we have to develop an understanding of innovation that is somewhat different from the perspectives today.

Innovation – but not as we know it

In what ways do we need to start thinking differently about innovation?

We need to think differently about the ‘what’ we are innovating.  We need to move away from a view of innovation that centres around R&D, technology and patents; it is about innovating around processes and services as well as products; it is innovating around our business models.  Let me emphasise that I am not saying innovation is not about R&D and technology; it clearly is, but it is also about much more, particularly in the context of improving wellbeing.

Let me share an example of where real value has been created through innovation – which would not be captured by looking at technology, R&D or patents.  It stems from a US-based chemical company, specialising in pesticides.  Prior to their innovation the company’s sales people were incentivised to sell as much of the pesticides as possible – the more their sold, the greater the profit – but, one can argue, the worse for the environment. Their innovation lay in a shift of business model: they thought about what their customers really wanted – which was pest-free fields. So that is what they starting selling them! They were guaranteeing pest-free fields – which meant that the pesticide became a cost to them, which meant they were trying to use as little as possible.  Winners all around.  It is this kind of business model innovation, and switches from products to services, that can really make a difference.

So instead of looking to R&D, everyone in an organisations needs to have it on their minds to think about how value – across the triple bottom line (of people, planet, profit) – can be created.

What ever the ‘what’, we can seek incremental, radical, or transformational innovation (the latter of which include discontinuous and disruptive innovation).

We need to think differently in terms of ‘who’ is innovating.

‘Open innovation’, ‘crowd-sourcing’ and user involvement have become key buzzwords; all based on the premise that “not all talented people work for us”.  Companies such as Proctor & Gamble have had great success with soliciting 50% of ideas for new products from the outside; GoldCorp found amazing precious metal resources by making their geographical data – considered by many competitors to be the crown jewels – available online; companies such as Beiersdorf (Nivea) BMW, and Lego are collaborating closely with users in the development of new products.

We need to think differently in terms of ‘why’  we are innovating.

In my view there is no alternative, we need to establish sustainability considerations if not as the starting point so as knock-out criteria for innovation. Given the challenges we are facing as humanity I don’t think we have much of an option but use sustainability as a driver of the innovation agenda.  Companies such as Philips, Marks and Spencer (Plan A) come to mind, and do you know what  Statoil, Johnsons & Johnson and Novozymes share in common?  They were the top 3 in the ‘Most Sustainable Corporations’ league table 2011.

Do you ask questions about sustainability as part of your stage gate process?  Do you do so at the end, to ensure no lawsuits are threatening, or at the outset to drive your innovation agenda? I strongly believer that in the near future using sustainability considerations as driver for innovation will no longer be an order winner  – it will be a qualifier.

We need to think differently about ‘where’ we seek for tools and inspiration.

As for the tools, it is no longer a well kept secret that design – designers, design thinking – provide some great tools and techniques in the context of innovation and we all know companies that have brought design into their core such as Apple, BMW and P&G.

Where do you cast your net when seeking inspiration for innovation? Where do you try things out, develop new concepts and ideas?  Perhaps just two spots that may or may not be on your list.

1. Are you aware of what is happening in developing countries?  Have you heard of the expression ‘innovation blow-back’.  If not, I am sure you are aware of the Tata car?  The online Times reported in January “Tata Nano – the world’s cheapest new car is unveiled in India, selling for 100,000 rupees, the equivalent of £1,300) – which is the same price as the DVD player in a Lexus.” Then there is the cataract surgery.  Whereas it is around $5-10k in the US you can have it for Rs 8000 to Rs 35000 which is between $100-400.  No one can assume that this will not have consequences for developed markets.
   CK Prahalad commented in his book “The fortune at the bottom of the pyramid” (p. 57) he  says: “BOP markets are a great source for experimentation in sustainable development. First, resources such as water, energy, and transportation are scarce and expensive. Automotive and two-wheeler manufactures are learning that the BOP customers are very attuned to the total cost of ownership and not just the cost of purchase. The miles per gallon – the efficiency of energy use – is a significant determinant of market success.”
   However, the dark side of innovation is also threatening here. For example, single-serve packaging, for example of shampoo which in its normal size would be unaffordable, is creating a great sales opportunity but also leads to a major environmental problem: more than 13 billion single-serve packages are sold annually in India and this trend is growing rapidly. Although plastic bags appear attractive, they are not biodegradable.
2. Are you looking to nature for inspiration?  Here just two examples,
   1. Shinkansen: the bullet train travelling at over 200 miles per hour, Japan’s Shinkansen
   bullet train is the fastest in the world. however the first design had one small problem: noise. every time the train came out of a tunnel, it would produce an extremely loud bang because of the change in air pressure.  The train’s engineers looked to nature for an answer. They found a similar situation in the kingfisher, which dives from air into water with little splashing. They redesigned the front end of the train using the beak of the kingfisher as a model and were able to create a much quieter train. the redesign also helped the train go even faster and use less energy.
   2. Eastgate Centre: biomimicry can also be used in the design of buildings and architectural infrastructure. the architecture firm Arup modelled the Eastgate Centre office complex after the structure of a termite mound. the reason why  the chose to use termite mounds as inspiration was because of their ability to self-cool. because most of the energy used in buildings is for heating and cooling, finding sustainable ways to regulate temperature is important. this particular building was able to minimise its heating and cooling energy by 90% when compared to building of its size.

We ned to think differently about the ‘how’

In a way, my next point is to some degree already addressed by open innovation, crowd-sourcing and user involvement; however I would like to get a step further and be even more explicit.  The future of innovation will be led by those who are able to tame the competitive spirit.  What I mean by that is, that our mental models are, or at least used to be until quite recently, be based on a competitive frame of mind.  Competition at the individual, team, organisational and national levels – even Europe against Asia and the Americas.  What were the consequence if we challenged that paradigm?   

I was also wondering whether something I am a strong advocate of at the personal level might apply to organisations or even nations?  Starting my own personal journey to understand innovation with the view that everyone ought to be more open to change, more creative and innovative, I have since come to the conclusions that this is not right.  It is the diversity that it needed, the different mindsets, the different perspectives, values and attitudes.  They define who we are, and that is not easy to – and should perhaps not be changed.  We, individuals, organisation?  nations? need  to figure out what we are good at, and contribute it, adding it to the contributions of those who have a different set of strength, values, interests and skills.

But perhaps this is one thought too many right now.

So before my conclusions a few thoughts on some fundamentals that probably challenge some of the current paradigms but that I believe will underlie the creation of a sustainable, worthwhile future, with innovation.

• Information, even ideas are free; the art lies in synthesising and sense making, and what you do with information and ideas that matters.
• Accept and make use of the fact that innovation can truly come from anyone, anywhere. This also means being open, accepting, even seeking diversity (and taming the competitive spirit…).
• We need to learn to understand, think and act in systems.
• Almost a consequence of the last point is that we ought to embrace the thought that, for most things today, there is no one right way, and what is right today may no longer be so tomorrow.

If you buy into this you may want to start looking at quantum physics and complexity theory )rather than traditional management theory or the father of Western thinking, Descartes).

Conclusions

I have started setting out my stall by sharing why I believe it is that we talk so much about innovation – and which dangers I see in it.  I truly believe that the purpose of innovation is the creation of value for mankind and that we need to shift from ‘innovation for growth’ to ‘innovation for wellbeing’.  I also happen to believe that such a shift will carry much inspiration and engagement on a wider front – a fundamental ingredient for successful innovation.  Sustainability has to be the driving force at the outset, not a secondary consideration or a tick box at the end.

With this shift goes a broader understanding of innovation, beyond R&D and technology.  And just because it might be more difficult to measure does not mean that it is less important.

There is one thing without which such shift can never happen: visionary, courage, passionate and emphatic leadership.  Leadership here does not (only) mean government and the business community, nor only business leaders.  It is always too easy to  ask ‘them’ to change, or even talk about ‘we need to change’.  In the end, the only thing we can truly change and that is our own behaviour and actions.  I am all with Mahatma Ghandi who said, “You need to be the change you would like to see in the world.”  Each and everyone of us has to take responsibility for creating a sustainable, worthwhile future, through innovation.