Innovation is among the top three priorities for three-quarters of the compa-nies surveyed by BCG in 2021. However, only half of them have been able to take any definitive steps towards it, highlighting what is called the readiness gap in the industry. While a lot has been discussed, debated, and documented about the ways to achieve that elusive elixir of growth that is innovation—from fostering creativity to celebrating failures to supporting open culture—little has been said about the difficulty of being innovative.
Moreover, successful innovation attracts increased attention and hence scruti-ny, which further limits the agility of the firm. For example, Meta’s (formerly Facebook) legal-related accruals in 2021 have increased by about 100 percent over last year. While accountability is an absolute must, increased scrutiny and hence litigation can limit the pace and scope of innovation. This elevated insti-tutional oversight is increasingly becoming an active consideration for emerg-ing startups and unicorns alike, especially in the wake of cases such as Theranos. The recent IPO debacle wherein Paytm lost more than 27 percent of its value on the very first day of its trading, has further added to the growing distrust among stakeholders. It results in the push for stricter security regula-tions by academics and legislators alike—the phenomenon is beautifully cap-tured in the term unicorniphobia coined by Alexander Patt, professor of law at Kansas University.
1) Establishing an innovation-focused leadership that inspires ideation, explo-ration and experimentation. And while failures are an integral part of experi-mentation, the leadership should ensure that they are most often instructive and are not reflective of the underlying incompetency within the system. This underscores the importance of investing in and acquiring the best talent on the market.
2) Moving from exploration to exploitation. Hot streaks are often marked by the transition from the explorative phase to the exploitative phase, suggests Kellogg professor Dashun Wang in one of his recent reports. It is observed that neither exploration nor exploitation individually associates with the hot streaks. It is rather a particular sequence of exploration followed by exploitation that captured the onset of hot streaks.3) Endorsing the idea that innovation need not be disruptive in the Schumpet-erian sense of the word. Innovation can very well be an existing, run-of-the-mill idea as long as it adds novelty and value to the existing business model. Ac-cording to the 2018 OSLO manual by the Organisation for Economic Co-operation and Development (OECD), “the adoption of a new or improved product or business process by a firm, that is part of an enterprise group is an innovation, even if the new or improved product or business process has pre-viously been introduced on the market or brought into use by other firms with-in the same enterprise group."
In conclusion, while there are inherent difficulties in being innovative, they can be successfully managed with proper planning and execution for sustained growth. Shivnarayan Dhuppar and Dyuti Kumat are business innovation researchers with the Centre for Business Innovation at the Indian School of Business.
First Published: Nov 29, 2022, 16:20
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