I define radical innovation as a serendipitous result of many self-organizing, interdependent employees learning from profuse experiments to produce 10x improvements. This kind of innovation involves a cultural shift and accompanying changes in HR and leadership practices. The increasing complexity of today’s business world makes the old industrial era model obsolete. Leaders now must up their game to successfully navigate this business environment, which calls for adaptability (versus efficiency), speed (versus perfect execution), networked (versus siloed) team structure and pattern recognition (versus technical depth), with the primary management goal of accelerating learning.
These are some of the steps organizations must take to survive in today’s increasingly more complex business environment:
- Radical Innovation Is Serendipitous.
Radical innovation is an accidental result of many employees practicing self-organization, learning from lots of trial-and-error experiments. It cannot be planned.
Radical innovation cannot be planned or choreographed; it can only be fostered and nurtured. Putting someone in charge of an “innovation” department, allocating some budget, and tasking that person with managing the innovation pipeline can only yield incremental innovation, such as packaging innovation or line extension. To maximize chances of radical innovation, the kind that produces 10x improvements, individuals with differentiated, unique expertise, skill sets, and perspectives must be forged in solid connection as a coherent team.
- Radical Innovation Requires Self-Organization.
Gone are the days of command and control. The speed with which this new, fast-changing environment is producing new information has exceeded the speed at which traditional bureaucratic hierarchy can send information up and down its chain of command. As a result, there has been a decoupling of information, power and responsibility. Information resides with frontline employees, but power and responsibility reside with top managers. Hence, employees cannot take action in a timely fashion, which creates inefficiency and ineffective decision-making, a deadly situation in this fast-changing, complex world. Decisions must be pushed down to the edges of the organization so that all employees have a voice in the decision-making process.
- Radical Innovation Is a Result of Profuse Fearless Experimentation and Learning.
It simply does not come about in an atmosphere where people don’t feel safe or connected. On the foundation of safety and connection, leaders need to allow employees to correct errors when they read signals from the environment and adapt accordingly (this is how I define learning). Allowing employees to experiment and fail powers good decisions and is a sufficient and necessary condition for radical innovation. Learning is essential for radical innovation, but failure is required for learning, which means failure is required for radical innovation. To resolve this apparent conflict, today’s organizations must provide a culture of safe risk-taking, rapid feedback loops, and a vehicle to build collective intelligence from failure.
- Radical Innovation Requires Psychological Safety and Connection.
In this rapidly changing, complex business environment, innovation is the only way to survive, and rapid learning is the best way to produce innovation. Neuroscience dictates that learning cannot happen unless one feels safe and connected with other first. A cultural shift for organizations to facilitate innovation is the new management mandate, which calls for deep team connection and the psychological safety necessary to experiment (and fail). Deep team connection is essential because connection and secure attachment increases resilience, which is required in the face of profuse experiments and inevitable failures.
An important aspect of a leader’s job is to create a culture and environment where innovation can happen where people feel psychologically safe and deeply connected. This is what General Stanley McChrystal attributes to how the Navy Seals instantly and instinctively sensed what each other was thinking and acted as one organism on a mission to rescue Captain Phillips.
- Radical Innovation Germinates for a Long Time.
Radical innovation surfaces at the critical inflection point when momentum has become large enough (as some would say, “self-organized criticality”). It happens when many self-organizing employees experiment profusely and learn – to see how best to adapt to the environment and to adjust their behavior iteratively using simple rules. The iterative adaptation, based on the results of these experimentation, builds the momentum, often well below the radar, which has a long germination time. The employees take cues from the environment in an open feedback system. Radical innovation is a result of employees co-evolving with their business environment in an open, transparent system where information for feedback and adaptation flows without friction.
These long-term initiatives can take a back burner if companies are just focused on quarterly results. While attending only to the short term, they run the risk of someone else’s radical innovation making them irrelevant. Therefore, structuring an incentive plan that incorporates long-term results are encouraged, such as implementing a five-year rolling average. Once manifested, radical innovation sustains for a relatively long period until the next radical innovation redefines industry dynamics, starting the process all over again.
- Radical Innovation Builds on Good Enough Solutions.
In the process of this constant adaptation to signals from the environment, employees use simple rules (i.e., “If A, then do B”) to speed reaction time, rather than executing with perfect accuracy, because permanent change happens as a result of growth of variances or errors from imperfect execution. As such, speed to generate meaningful variances from iterations of trials is more important for radical innovation than perfection.
As an example, the Agile software development approach, in an effort to embrace complexity, facilitates learning through rapid iterations, continuous integration, and failing quickly. In this sense, perfection is an enemy of radical innovation.
- Winning requires coevolution, not crushing competition.
We operate at the edge of chaos when we coevolve with the environment through loose structure, simple rules, and flexibility that allow for innovation and learning from rapid iterations of feedback. Because we are all part of nested systems, when one component of the system changes, the rest of the system is affected by the change and responds by changing itself. Coevolution is what makes it possible to create a platform of radical innovation upon which others can build their incremental innovation, which is the source of new sustainable competitive advantage. When we grow together with the environment as a system, whether it be a couple in a family, a team in an organization, an organization in society, or a nation in the world, we reach a higher level of complexity. The zero-sum game model of crushing the competition becomes limiting and outdated when you make the pie larger.
Because collective intelligence can be better implemented in an open architecture than in a proprietary one that could incur a switching cost for conversion or create artificial friction in the information flow, companies operating in an open environment gain more traction faster. Agents in an open system exchange information and resources to coevolve with the environment, creating a vibrant ecosystem. Red Hat in software development, the Linux operating system, the Android mobile operating system, the OpenStack cloud computing platform, and the R software environment for statistical analysis are all examples of this trend.
In conclusion, demystifying these myths about innovation can help leaders harness negative complexity, such as a stock market crash, an uncontrollable epidemic, a subprime mortgage crisis, or a competitor starting a garage business that wipes out your business model, to catalyze radical innovation that can redefine the industry for decades to come. They are contrary to conventional wisdom that has made many organizations successful in the past but that was then and this is now. The digital tidal wave of the 21st century has changed the rules of the game in such a profound way to cross the inflection point of complexity. Any organism that doesn’t change as quickly as the environment becomes extinct. Harness these principles or risk becoming obsolete.
Written by Dr. Sunnie Giles, the author of “The New Science of Radical Innovation” and founder of Quantum Leadership for Radical Innovation®, a program based on her breakthrough research, which transforms leaders and organizations into ones fit to deliver radical innovation. She has an MBA from the University of Chicago Booth School of Business, PhD from Brigham Young University, is a TEDx speaker on radical innovation and a regular Forbes contributor on leadership for radical innovation.
For more information, please visit: http://sunniegiles.com