By: Chuck Frey
In Roger Martin’s new book, the author writes that the main reason companies find it difficult to realize innovations is that most people in corporations are trained in analytical thinking and focused on reliability and consistency. They are focused on making the “factory” and related processes better, faster, and cheaper to produce existing offerings.
Businesses are organized to be a factory, whether they are product- or service-focused. They are set up to maximize efficiencies and produce the highest profits possible on their existing creations. Nearly all of the people hired to join an existing organization are there to increase the reliability and consistency of the organization.
Roger Martin, Dean of the Rotman Business School, University of Toronto, recently released a new book titled The Design Of Business – Why Design Thinking Is The Next Competitive Advantage. This book does an excellent job of articulating why innovation in corporations seems to be incredibly difficult.
Dr. Martin writes that the main reason companies find it difficult to realize innovations is that most people in corporations are trained in analytical thinking and focused on reliability and consistency. They are focused on making the “factory” and related processes better, faster, and cheaper to produce existing offerings.
The opposite of reliability is a focus on validity. Dr. Martin defines validity as seeking to find the “correct” answer to a complex problem, not the most reliable or predictable, and to find new knowledge that will lead to the development of new markets, new business models, new products, etc.
Businesses are organized to deliver and value consistent results. The main problem that derives from a reliability focus which is based on analytical thinking is that business leaders depend on past activity to make decisions about future direction.
This leads companies into stagnation and a lack of focus on what customers want and need. Competitors that find unmet customers needs and deliver compelling new value will grow and succeed.
Uncovering unmet customers needs and creating new business concepts to meet these needs are often repulsed by existing managers who insist on proof that the new concept will succeed. It is very difficult to predict exactly how a new concept will perform, and this goes directly against the grain of most business people who demand proof that a new concept will succeed in the future.
Unless the CEO of an organization realizes that the conflict between a reliance on past performance must be actively balanced against the uncertainty of future events, a company will not be able to generate the type of organic growth it needs to be healthy. The CEO must take the lead to create an environment that supports the exploration and invention necessary to create new growth opportunities.
The important point to realize is that an organization must be efficient and reliable AND discover new knowledge about their customers at the same time. There is much more to Dr. Martin’s book, and I plan to provide a deeper look at this book in the near future.
In the meantime, keep in mind that if your organization is not actively seeking to discover the answers to complex customer issues in an ever-changing business environment, your competitors and those pesky start-up companies will surely do so. It is vital to the long term success of any organization to balance reliability against validity.