All competitive advantage arises from a temporary imbalance between competitors application of knowledge to the business process. There are two consequences to this observation.
First, any organization priding themselves on their status as a ‘learning’ organization can, in time, overcome that competitive knowledge gap. For any organization that finds itself in this predicament, it is unnecessary to seek out additional motivation to change business practices. A strong competitor eating our lunch is a compelling enough reason to force us to seek better ways of doing things. ‘Resistance to change’ always falls before the strength of basic survival instincts.
The second consequence is more subtle, and hence more difficult to impress upon our day-to-day thought processes. All advantage is temporary. Nothing we do today is guaranteed to work effectively tomorrow. More to the point, the greater the advantage, the greater the certainty that competitors are trying to emulate it. Imitation is indeed the sincerest form of flattery, and, in terms of market share, the strongest form of attack.
When we have the advantage, the challenge is to prepare for the inevitable point in time when we’ll lose it. To many, this is counter-intuitive ‘negative’ thinking. To others, it’s merely the primary function of management.
KEEPING THE SPIRIT ALIVE
When we’re falling behind in competition, innovation is easy. We have no choice. Hence the source of the old saying, ‘Necessity is the Mother of Invention’. But when we’re leading the race, innovation is the furthest thing from our minds, because innovation, by its very nature, involves risk. Why risk our position when we’re in the lead?
There’s a peculiar belief today that small startup companies are more innovative than larger, more established companies. In a way, this is true. Small companies do go about things differently. However, they not more innovative because of some grand plan. In a sense their innovation is accidental. They are innovative because they have no choice. To gain market share, they must distinguish themselves from the pack. They are driven by necessity. Unless they make a conscious effort to foster and nourish that creative spirit, it will atrophy as they place a few successes under their belt.
How does one keep the spirit of innovation alive once the immediate and pressing need for something new has passed? How do we keep ourselves on the edge, when success has a tendency to lull us into complacency?
OPPORTUNITIES FOR FAILURE
The single biggest obstacle to innovation in any organization is an irrational fear of failure of any sort. Every failure is seen as a negative. Every project must succeed. Every idea must be a winner. The need for constant success stifles experimentation. Without failed attempts, there is no success.
This would seem to be so obvious that it needs no repetition, yet organizations that go out of their way to create opportunities for failure are rare.
“Opportunities for failure” sounds like business heresy. Yet if you wish to foster innovation throughout your organization, then you must promote the opportunity to fail. When someone comes to management with a new idea, something that’s never been tried before, then the opportunity to fail must exist; otherwise, innovation will wither.
An interesting exercise in any organization would be to track how many ideas are put to the side, regardless of the reasoning, on a daily basis. Comparing that to how many are accepted and tried would also lead to some interesting insights. Is the ratio between the two numbers good or bad? That depends on whether or not you’re satisfied with the level of innovation and competitive advantage you’ve already acquired.
The perception that creating the ‘opportunity to fail’ will promote failure is a short-sighted and temporary illusion. The goal of innovation is always, of course, the success and competitive advantage it brings. The ‘failure’ encountered along the way is merely the cost of doing business.
Peter de Jager is a speaker and consultant on management issues relating to Managing the Future. Contact him at firstname.lastname@example.org.