Wednesday, January 6, 2016

Five Innovation Dilemmas in Running a Digital Organization

Innovation is one of the core activities of the digital revolution and societal progress.

Generally speaking, innovation is how to transform the novel idea to achieve its business value. Innovation at the digital age is coming at seemly a much faster pace, more change, and more potential disruption, with a broader scope, scale, and impact on the business’s surviving and thriving. Therefore, it's more challenging to manage innovation successfully, innovation leaders and managers have to deal with the following dilemmas to achieve a long-term business result.

Efficiency vs. Innovation:  At many organizations, in pursuit of operational excellence, there is such an emphasis on efficiency rather than innovation or creativity. Companies are focusing on improving margins by reducing the bottom-line cost rather than increasing the top-line growth. The improving bottom line takes little creativity and risk, while working on the top-line takes risk and creativity, as it is not a sure thing. Does that mean efficiency killing innovation? Efficiency and innovation just have to learn to live and function together. The greater the efficiency of an organization, the greater the need is for creativity to maintain high performance in the long run. Efficiency will extract the maximum benefit from a new idea. If an organization is inefficient, it will be inefficient with new ideas as well. Many process innovations will be concerned with increasing and optimizing efficiency and maintaining existing skills and linkages. However, an obsession with the rigidity of efficiency stunts the innovation creation process. Innovation is fluid and should not be straight-jacketed. Efficiency may easily destroy the seed of innovation which is not quite ready to be analyzed for its profit margin. It is the art of balance and continuity regardless of the emphasis. "Efficiency and creativity complement, not oppose, one another." - Edward de Bono

Standardization vs. Innovation: Standardization is inside-the-box, and innovation is outside-the-box. Hence, organizations indeed need both, and in fact, cannot realistically exist without a healthy balance of both. That balance, ought to actually be strongly in favor of standardization at the vast majority of the time! Think 80:20 rule here, although the golden ratio may vary based on the culture, capability and overall maturity of the organization. Consider the continuum between innovation and standardization. The business should always be open to, conscious of, and feel empowered to act upon-Out of the box thinking. It is very much a "consciousness" thing, imagine yourself rising above that continuum, and looking down upon the balance between the two. What you've just done is to raise your consciousness of that balance, and that, in and of itself, makes a world of difference.

Prioritization vs. Innovation: A company has finite resources to apply to get the best yield possible to meet a stakeholder expectation. So there’re always some constraints for businesses to explore the new opportunities or deploy the new ideas, therefore, evaluation and prioritization are taken place to leverage resources in project or innovation management. Does it mean such prioritization process will stifle the creativity? In general, prioritization increases creativity and does not decrease it. But the term has a different semantic connotation, and each situation is different, so there is always going to be lots of different opinions. If you prioritize across all projects, you know which projects should get that extra increment of analysis and design effort. Creativity typically comes from having some resources that you can apply to problem-solving. Prioritization brings transparency to the organization, creating internal competition among new ideas and projects. Prioritization forces people to be more creative, to come up with better ideas because now they know that their ideas will be discussed at the board level, and if chosen, they will be followed closely. In addition, prioritization helps to focus on the strategy of the organization, which has huge benefits in terms of execution. Prioritization provides a framework for focusing on creativity. It's only if the actual work is micromanaged and regulated to the point where resources are not able to create, and then creativity becomes stifled. Prioritization is also the process and method that one communicates either top down or bottom up and impact how a creative approach, idea, or project is received in an organization.

Complexity vs. Innovation: In business, complexity both drives innovation and also hinders it. When a business becomes overly complex and people get frustrated and annoyed by not being able to accomplish things easily, this drives the search for simpler concepts and methods, which is the need to take the innovative initiative. Also, over-complexity in a business may be hiding simple and innovative ways to achieve things because the people involved just don't get the time to step back from the complexity and hence, they continue to follow the old routine to do the things, lack of the out of box creativity. An overly complex process can easily stifle innovation as organizations get locked into huge processes around building extensive business cases. There are also needed complexities such as design complexity that competitors cannot imitate easily, or the collaboration complexity that makes people more productive and business more agile to adapt to the changes. Usually, innovation either through need seeker or technology driver is the key factor to weave such complexity in order.

Agility vs. Innovation: Agile is really a means to realize value: Agile is emerged as leadership philosophy and principle to manage projects and to run the digital business today. Agile is neither a product-oriented philosophy nor an innovation-centric philosophy; Agile is a system development philosophy that assumes your customers and stakeholders know what's best for the product and for the consumer. It means agile could either stimulate or stifle innovation. Agile stifles innovation when stakeholders dictate "how" and not get "why" and "what": When a team in agile gets "how" in the format of a user story, they tend to look only in one direction. But when they get "what" or "why" in the form of the user story (store the accepted/not accepted value), they can think of the optimal solution, and they can be creative and innovative at the same time. Agile is a fantastic way of working to involve everyone in the process of creation and delivery. The team does the analysis and design themselves rather than depend on a 'designer.' If this doesn't result in increased creativity, then what does? Creativity and innovation are more a function of motivation and latitude. A motivated team will be creative and will innovate, but the team must have the latitude. The organization must allow for learning, experimentation, and failure. That means you cannot run at maximum capacity. All structure and business processes tend to funnel creativity in a specified direction; Agile is no different in this regard. The spirit of creativity and innovation will be more influenced by mindset, culture, and processes or behaviors around the teams rather than whether Agile itself is used or not.

Innovation is one of the core activities of the digital revolution and societal progress. That’s why innovation is more important than ever whereas technology becomes more advanced. By dealing with these innovation dilemmas seamlessly, the flow of innovation will have reached a new level, a level that can address the business challenges at VUCA digital dynamic, and innovation brings new energy, forces you to be at your best at all times, it is the air we breathe, the water we drink, and it’s the natural element to keep business grow and mature.


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