Understanding Change: Improve, Innovate, or Create?

Editor’s Note: As complexity in the future operating environment looms increasingly larger, the need to maintain the edge over adversaries is key to multi-domain warfighting solutions. Maintaining this edge requires constant innovation. To many, this means the newest toys, and to many leaders, it means large, rapid improvement without failure. However, there is a spectrum of innovation which includes varying levels of change and risk, as well as solutions not dependent solely on technological upgrades. Multi-domain leaders and organizations must consider these factors as they foster an innovative culture to ensure future success. 


By Jon Farley

Innovation is the word de jour of the business world. Companies promise to provide innovation, and individuals say they can spark innovation, but most could not give a specific definition of their intent. Terms, such as iterative, incremental, and disruptive are tied to innovation to describe the level of impact, but often these are poorly defined and used interchangeably. This article will stress that innovation is not an end in and of itself, but rather a tool that can be used to achieve a desired end. We will address the meaning of innovation, when it is needed, and how best to prepare your organization to achieve it. While there will always be gray area between the boundaries described, this framework provides a baseline for definition and requirements for each process.

 Three Levels of Innovation

There are three basic levels to the progress of an organization and/or product: creation, improvement, and innovation.

Creation is a paradigm shift, an original product. It is a once in a life-cycle moment. Creating a new product requires a fundamental change in user thought and infrastructure to support it. Examples of creation include the telephone, airplane, and computers. As an illustration, the telephone increased global communication from a snail’s pace (even with the telegraph) to instantaneous communication around the world.

Creation requires an incredible investment of resources and original thought and, even with those elements, is rarely successful. The vast majority of creation attempts fail, even though failure is often a pathway to success. It is high risk, but high reward. Creation must be used when improvement and innovation are insufficient for solving a problem.

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Improvement is on the other end of the spectrum. Sometimes called incremental or ‘iterative innovation,’ improvement is the 90% solution, usually a march along the curve. Since the invention of the telephone, subsequent versions made incremental improvements to the original product to include touch tone, wireless, and mobile phones. he smartphone, however, is an example of innovation.

It is important to note that there are some valid reasons to improve, rather than innovate. Improvement generally involves less resources and is more likely to be successful. If the desired change is minor, or the investment of resources and potentially failure cannot be afforded, then improvement is the solution. The ability to accept risk of failure is an important point here. If failure is not acceptable, then improve instead of innovate.

Innovation, elsewhere defined as ‘disruptive innovation,’ is the area between creation and improvement, a moderate change to the baseline that disrupts the market. Innovation happens infrequently, though it is more common than creation. Innovations come into being at the intersection of improvement and creation. Two main avenues of innovation include products and ideas.

Innovative products are generally focused on technology upgrades. As discussed, the first mainstream smartphone, the iPhone, was an innovation. Cellular phones up to that point had incrementally improved, with better screens, more memory and internet capability, while other products – such as Apple’s iPod and iTouch – incrementally changed the mp3 player market. But, the first iPhone changed how the average user interacted with their phone. The iPhone put a computer in every hand, apps at every fingertip, and ended countless arguments with the ability to instantaneously consult Google. It immediately became the standard by which other phones were measured. This product produced a fundamental change in the market, a leap to the next curve.

While the iPhone is a new product that radically upgraded hand-held communications, most innovations are actually ideas that take current (or even dated) products and put them together in new ways. These ideas may use current products to do previous functions better or use them in ways that expand capacity in areas they were never designed for in the first place. In contrast to an innovative product like the iPhone, an example of an innovative idea would be the rise of Uber. Uber did not invent the smartphone or the car, but they paired the two in a way that caught the taxi community off guard. As soon as Uber innovated the idea of on-demand rideshare, they immediately began improving it to make their model work across the globe, competing against the onslaught of other companies that followed.

This highlights another important point. Progress is cyclical. As soon as something is created or innovated, it immediately moves down to the improvement curve again. Even the most innovative ideas and products will be improved upon almost immediately. New creations are rarely a refined product. This is why companies that are ‘innovative’ can stagnate when they rest on their laurels, while others pass them by. Furthermore, an individual innovation, such as fingerprint scanners in a smartphone, blurs the lines between innovation and improvement. While the fingerprint scanner is an innovation, the overall change to the smartphone represents only a step in the march along the improvement curve.

Moreover, with shared information and rapid scientific progress, the time between innovations has decreased. The compression of the innovation cycle means that leaders must be more open to innovation than ever before. It is not a coincidence that certain leaders or companies constantly push the boundaries of innovation. Elon Musk is an example of someone willing to drive innovation. His successes range from creating a new battery for electric cars to improving existing ideas about reusable spacecraft. His companies are open to innovation, have clear desired outputs, and are both willing and financially able to accept the risk of failure.

Relationships Between Levels of Innovation

innovation pic 2The three levels of innovation are particularly useful when examining how products or organizations change over time. The creation of the telephone represented a great leap in communications technology, which could be depicted by a shift to the creation curve that represents the fundamental shift in user engagement, thought, and infrastructure. Over time (more quickly today, as previously discussed), the innovation becomes the baseline, from which three levels of innovation can occur. Subsequent improvements to the telephone were more subtle over time (improvement) until the innovation of the iPhone, which is depicted as a shift to a new innovation curve. The iPhone changed the way we communicate, just not to the same extent as the creation of the original telephone.

Below is a framework for innovation, using SpaceX as an example. This is meant to be a collection of important points to consider rather than a specific formula to be followed. If nothing else, history has taught us that innovation cannot be formulated, but must be cultivated. This framework is simply a baseline.


So how do we innovate?

1) Recognize the void

Identify a problem that needs a solution. If the problem only requires improvement, then improve. If improvement is not sufficient, then innovate. If the solution requires a paradigm shift, then dig deep, accept the risk of failure, and create.

2) Identify the desired output

Why does the current system or product not work? What refinement is required? The desired output should be laser focused, as visionless innovation can waste valuable resources and time. Realize that the goal may change once you begin the innovation process (see #7). This output will rarely be perfect the first time…software will have bugs, hardware will need improvement. However, a 90% solution on time is better than a 100% solution too late.

3) Identify the risk

No project or product should be so large that the organization cannot afford to fail. If the organization cannot afford failure, then move back to improvement or scale down the project. If the organization can afford to fail and the desired output is significant, then continue to innovate or create. Failure is not the end of innovation, it is the path to innovation.

4) Identify a team

Your team must come from varied backgrounds with different points of view. Different points of view are vital to critically analyze a problem and overcome individual and institutional biases. Similar backgrounds lead to similar solutions. Each member must be a group problem solver, as a lone wolf and abrasive personality can kill cooperation. A team must work together and understand the environment, but not be too entrenched in “how the business works.”

5) Provide resources

Innovation cannot succeed without experimentation, which requires resources. But, leaders should provide constraints so their teams will drive towards a cheaper, more marketable solution.

6) Provide outside course corrections

Organizations tend to develop ‘group think’ and create new biases within their group. Periodically, leaders must inject new blood to provide a fresh perspective, while also providing a redirect back to the desired output. Without leadership’s outside perspective, teams may discover a terrific innovation, just not the one desired by the organization. If a team becomes resistant to outside input, they will fail. Teams need an outside perspective to stay on course and meet their desired output.

7) Accept the solution

Organizations cannot be so tied to dogma or doctrine that they are unwilling to change. The “that is how we have always done it” mentality will kill an organization. Doctrine is intended to provide a standardized framework upon which to begin the problem-solving process, not limit creativity. If doctrine needs to be changed, then change it. Additionally, organizations should be open to using an existing product in new and unforeseen ways. An innovative organization accepts outside inputs and new uses for existing tools, and then willingly changes their standard operations to facilitate change.

SpaceX is a company that seems to have figured out a framework that allows it to constantly push the boundaries of innovation, as highlighted in Tom Agan’s article in Harvard Business Review. Examining the framework SpaceX uses demonstrates that it can be applicable to other organizations. [Editor’s Note: numbers in brackets correspond to the points above].

Elon Musk quickly zeroed in on the one area ripe for innovation: cost reduction [1]. He gathered a team with a wide cross-section of expertise… With industry veterans and outsiders, they benefit from past experiences, but are unconstrained by forces and factors that pushed up NASA costs [4/6].” SpaceX knew a long-term business model required reusable rockets and a new rocket engine, rather than just using available, inefficient Russian engines [2]. The ability to invest resources up front created the long-term, sustainable model for SpaceX [5/7].

While each organization will have to adapt the innovation framework to its own circumstances and ideas, SpaceX provides a legitimate example of how to innovate using the framework. By constantly pushing innovation, Musk’s organization is able to stay on the leading edge of its ventures.

Conclusion

Innovation is a tool to achieve a desired end, not an end in and of itself. From the iPhone to SpaceX, innovation carries great risk, but also great reward. Unfortunately, companies can innovate their way into insolvency by not having a desired output or over-investing resources. If a large change is needed, significant resources are available, and failure is acceptable, then innovate or create. Otherwise, look to improve the current product or process until a more substantial change is needed.

LCDR Jon “Tike” Farley is an instructor at the Air Command and Staff College Multi-Domain Operational Strategist Program. He is an F-18 E/F Pilot with over 2,500 hours and multiple deployments to the 5th Fleet AOR, supporting operations in Iraq and Afghanistan. He is a graduate of the United States Naval Academy and Air Command and Staff College.

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Department of Defense or the U.S. Government.

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