incubating innovation

In setting up Project Red Stripe, The Economist unquestionably did the right thing, according to specialists who know a lot more about innovation than I do. Jeneanne Rae and her colleagues analysed sixty recent innovations in the service industry, including in-depth interviews with key team members (How do they do that? I managed to watch one. A bit.) She wrote about her conclusions in Business Week. Her fourth (and ‘specially important’) principle is:

Techniques and structures that counterbalance the forces of risk aversion.

She explains that big enterprises are large because they’re successful and success is a barrier to innovation. Why try something new and risky when what you’re doing now works? If it ain’t broke… (which is the point I was making in Motivations about the group’s eventual decision not to go ahead with the HiSpace idea).

One of the techniques and structures that she proposes to deal with this situation is as follows:
Form a special petri-dish environment where new concepts can grow. Pitney
Bowes has a concept studio designed to explore opportunities far afield from its
existing lines of business. IBM has a similar unit, called ‘EBO’ for Emerging
Business Opportunities. This approach minimises distraction to the ongoing
business and permits concentration of special innovation skills. Successful
projects are then sold back to the business units.
A petri-dish environment is what The Economist got itself with Project Red Stripe. Furthermore, the ubiquitous Dave Pollard
quotes disruptive innovation expert Clayton Christensen describing IBM’s survival in the face of waves of disruption from advances in computer technology as being down to its use of innovation incubator units.

There are two reasons for doing this, according to Christensen:
1. Nurturing innovation requires different skills, different resources, a different benchmark of success, a different management style, less aversion to risk, and a different focus from the mainstream business.

2. Innovation can be a distraction to the mainstream business, threatening the processes and attention to traditional customers that have made the mainstream business successful.
Commenting on Jeneanne Rae’s article, Tom Foale rightly observes:
Demands from existing customers fuels sustaining, not disruptive,
innovation. Disruptive innovation can't be analysed for growth potential because
it creates new markets, so it usually gets filtered out either explicitly (it
doesn't meet growth needs) or through internal pressure for staff to perform.
Most businesses whose development teams have created disruptive innovations let
them go elsewhere -- look at Xerox for an extreme example.
There’s more on this in The Innovator's Dilemma.

So The Economist did the right thing. Whether they did the thing right is what I’m discussing everywhere else in this book.


If it ain’t broke… don’t fix it ~ If it ain’t broke, these days, it probably will be soon enough.


Petri dish: Justin Baeder


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