How can companies build resilient businesses to withstand technological changes? The Innovation Advisory Committee at The Warren Centre has invited leaders in innovation to share their thoughts on resilient businesses, why it’s important to be resilient, and how you can maximise innovation by becoming resilient.
What innovation leaders say
One of the key challenges to companies in the 21st century appears to be the making of appropriate trade-offs between the present and the future. In the present, the effective allocation and exploitation of resources needs to be driven to maximise current markets; well-directed routines underpin these processes. The uncertainty of the future, on the other hand, requires experimentation, exploration of new possible disruptive business models, and the discarding of former well-founded assumptions.
There are a number of successful approaches to managing these trade-offs. Honda established its R&D operations as a distinct business entity from its operational arm to avoid it being caught up in day-to-day manufacturing and sales requirements. In the financial industry, innovation is being pursued through arm’s length fin-tech incubators and start-ups. Some companies form alliances with CSIRO or universities to explore new technological opportunities. The essence is the need to create culturally distinct environments with different objectives and rules-of-play to address the present or the future.
Executive Director, Australian Centre for Innovation
Director, The Warren Centre for Advanced Engineering
Joseph Schumpeter’s force of creative destruction is alive. Management structures and organisational cultures lie on a spectrum with two extremes. Those which conserve power and indefinitely retain old ways rely on an organisation’s existing market strength to preserve status. The other extreme is the new upstart organisation seeking to disrupt. With no current market power, the upstart has nothing to lose and everything to gain. Its new technologies threaten the incumbents. In the middle are companies who deliberately ‘self disrupt’. These middle spectrum organisations continuously sense the external environment, and they constantly evolve through changing conditions –sometimes in incremental steps and sometimes in leaps forward. They never accept stagnation. Social innovation enables technological innovation. There must be a willingness to prune the garden and remove dead wood to allow new growth. Every day, the world changes. In the globalised modern marketplace, diverse new consumer segments are rising to participate in hyperconnected digitally empowered markets. Change is the only constant. Highly innovative companies engage diverse teams and create workspaces with psychological safety. In the eye of the hurricane of change, the most effective and most resilient companies create high-performing teams that draw out the best from each team member inside a haven of trust and shared vulnerability. With an appetite for risk and experimentation, the resilient organisation changes itself from within.
Executive Director, The Warren Centre for Advanced Engineering
Resilient organisations need to eat their greens.
In Australia, we love our “foodie” culture. From snapping hero shots of our meals for social media, to a proliferation of food blogs, reality TV shows, and fad diets – we are obsessed. There is a harsher reality to this obsession however. In its 2014-2015 National Healthy Survey, the ABS found that over 63% of Australians are classified as obese. In response to this issue the Australian Medical Association (AMA) delivered a position statement in 2016 that proposes a broad range of measures to combat obesity from government subsidies for healthy foods, to education programs, and urban planning.
So what does this have to do with building a resilient business? There are several parallels we can draw between the strategies employed for improving our nutritional health and strategies for growing our organisational resilience. A core value of nutritional wellbeing is the ability to be resilient in the face of stress, sickness, and other external factors. Through innovative thinking resilient organisations are likewise able to steer themselves through changing contexts and factors that impact the business. Building resilient organisations, therefore, requires cultivation of an innovation culture.
Changing innovation culture must start with an individual’s sense of responsibility for the current and future state. In the world of nutrition there are numerous professionals, structured programs and services aimed to keep you accountable. However, this external guidance needs to be internalised and owned to have significant benefit in the long run. We must be careful with organisational structures that indicate that “innovation happens over there” or focused events that imply “innovation happens at this time”. Whilst both approaches can have benefits, they must be balanced against a culture where everyone understands it is their responsibility to innovate.
According to the AMA one of the factors that contributes to our nutritional health issues is easy access to quick, energy dense, and nutritionally poor foods. Eating well takes an investment in time, both in planning and in preparation. In a similar way, it’s difficult for innovation to take place when we are operating in an environment that is always looking for the quick fix solution. Innovation takes an intentional investment in time and space. As a creative process, people need to be given the freedom to grapple with the challenges in front of them, to focus, to play, and to experiment.
The best innovations don’t typically occur in isolation, but rather through interaction and deep understanding of the problems stakeholders are facing. The AMA recommends education programs to highlight the key issues that many may not even be aware of, and diverse approaches to solving those issues. Often seeing and experiencing an issue first hand will make the difference in how someone approaches potential solutions. It is vital that problem solvers are directly engaged with the stakeholders they are designing for. This insight coupled with the opportunity to draw on a diverse range of solution thinking creates an environment where valuable innovation is much more likely to occur.
Acknowledging and addressing health issues requires bravery. To seek help and make change, individuals need safe and supportive environments. Likewise, safety and acceptance are important for innovation to thrive in an organisation. Individuals need to feel confident to speak up, have a go, make mistakes, and learn from failures. One of the more visible examples of this is Google’s “moonshot factory” X.company, which makes a practice of celebrating a team’s failure with standing ovations. While such overt displays are not well suited to every organisation, what is invariably true is that people need to be validated as they exercise their innovation muscle.
“An effective response to the obesity crisis will need to be as comprehensive and multi-faceted as the factors that generate and sustain it”, and to build resilient businesses our response needs to be just as multi-faceted. So, how resilient is your organisation? Do individuals feel personally accountable for innovation? Do your teams careen from one firefight to the next? Or do they have space to be creative? Do they see problems first hand, and engage with broad technical networks when coming up with solutions? Is it OK to risk trying something new? We must engage at the individual and the organisational level, to cultivate businesses that norm on innovation and eat just a little more of their greens.
Director of Engineering, Dolby Laboratories
Being innovative not only increases a business’s chance of becoming resilient, it also brings profit. According to Forbes, the top 10 most innovative companies have an average sales growth of over 27%, so there is a tangible reason for action. Resilience ensures a business will not only survive in the new century, but will thrive.
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