Exploiting Change

In his book, Ignorance: How it drives science, biochemist Stuart Firestein starts by quoting an old proverb, “It is very difficult to find a black cat in a dark room,” and adds “especially when there is no cat.”

Firestein notes that the pursuit of science appears to non-scientists as a very rational and systematic approach to discovery. In actuality, it’s much more like that old proverb than walking down a well-lighted path. The truth is that scientists have to explore many false paths and grope around in the dark room, hoping to find that black cat. But the dark room can be huge, and even endless, and there is no guarantee that there is even a cat in there.

I find that many things about business are very similar. We don’t know ahead of time if our new product ideas will work. Will customers respond the way we anticipate? Will competitors beat us to the punch? Will we be able to deliver on our promises? We can make assumptions about all of this, but that is just what they are, assumptions.

As I pointed out in my book, Brilliant Manoeuvres, assumptions must be validated and tested. Military strategy and tactics provide one model of the application of trial and error to discovery and success. But science also provides a useful model and template. As pointed out by philosopher Karl Popper, science is really a series of conjectures and refutations about the nature of the world and how it works. For instance, in physics, theorists propose new models of the world and experimentalists test them. Theories and hypotheses that have little or no empirical validation are cast aside in favour of those with experimental evidence. This process continues over and over until progress is achieved in understanding reality.

The same process applies in business. Innovation, whether new products and services, new markets, or new internal processes, is nothing but a form of conjecture about what will work in the real world of business. The marketplace is the crucible of experimentation that seeks empirical evidence to demonstrate that the conjecture is correct. Correct business models and innovations are successful to the extent that customers accept them.

Call it a form of un-natural selection. Companies and entrepreneurs put forth ideas based on their understanding of the market and competition, and then they are proved by the test of business success.

To carry this analogy further, businesses must apply the basic principles of innovation and trial and error experimentation.

•    A mechanism to generate new ideas. These can be innovative products and services, or they can also be new ways of viewing the market. For instance, before Henry Ford imagined the Model T, he was driven by the vision of automobiles for every average American family. Prior to the Model T, cars were hand-made toys for the rich. Henry Ford’s innovations explored new manufacturing techniques in order to make his car available to a market that up to then had been essentially ignored.

•    This generation mechanism must be wide-ranging and non-censoring. The perfect model for this is of course brainstorming, where you simply throw out ideas without initial regard for their apparent reasonability or feasibility. In fact, the more ideas appear initially irrational or unfeasible, the better they might be at disrupting the status quo, both internally and externally.

•    Good ideas can (and should) come from all levels and areas of the business. As an example, customer service agents and field service representatives often know more about customer concerns and suggestions for improvements than anyone else in the company. Sales people usually know what the competition is doing. Suppliers and distributors can often provide advance warning of changes in the marketplace and competition. These sources of ideas must be nurtured, encouraged and exploited.

•    Innovations can be external and internal. By this I mean that good ideas don’t just translate directly into new or improved products, services, or markets. It can be someone suggesting a new internal procedure that saves time and money. Or a production manager who finds a potential new supplier at lower cost for equivalent quality. In other words, everything is subject to innovation.

•    Selection should be reality based. Too often ideas are rejected or put out of bounds because ‘that’s not how we do things around here,’ or ‘that’s never worked before,’ or even, ‘because I said so.’ The latter is probably the worst one, but I’ve observed this type of innovation selection by fiat and nothing is more stultifying of growth and continuous improvement. The only truly effective selection mechanism is successful implementation in the external and internal competitive and organizational marketplace.

This is why I advocate trial and error in innovation and change management. No one can predict the future, what will work or not, before it is actually tried. For this reason, we need to find ways to try different ideas and approaches while managing the associated risk. What have you tried lately that is new and innovative?

© Alcera Consulting Inc. 2013. We encourage the sharing of this information and forwarding of this email with attribution. All other rights reserved.