Everyone talks about innovation, but how does it really happen? And what is the difference between authentic innovation and a pastiche of innovation that doesn’t power true transformation or change? As we all know, managing and operating an organization has many underlying parts that come together to create the whole system. A startup has the agility and flexibility to innovate and pivot as its size is small, focused and often committed to solving a particular problem. Once it becomes successful and grows, it requires, like every mature organization, the infrastructure to support finance, human resources, product management, communications, marketing, and the like. Creating and managing innovation within a more complex organization has to evolve from a startup mindset.
Success stories abound on how startups embed innovation and disrupt, but what is not widely reported is how they build a system dependent on processes and culture over time as they grow. Ongoing innovation becomes as complex a task for startups as faced by mature organizations. Ironically, mature organizations seek to emulate what they believe is successful, making assumptions that their smaller, more agile counterparts know something they don’t. What results is the attempt to adopt startup innovation strategies and tactics with an immediate, closed-loop approach that segregates the innovators from the rest of the organization. Although mature organizations think they can act like startups, they majorly miss the point that startups exist in a very different context, culture, and system. What happens? Innovation may surely start in a closed-loop but will only succeed in catalyzing transformation if it gets incorporated into the larger organizational system — and the system itself understands how it will be changed. Otherwise, innovation becomes a square peg that cannot fit into a round hole.
We’ve noticed that there is a growing amount of surface noise about innovation that is more posturing and positioning than the real deal that begets true change and transformation as organizations seek to respond and adapt to the dynamically changing marketplace. This veneer of innovation is referred to as “innovation theater.”
Innovation Theater Decoded
According to Alex Moazed, entrepreneur, author and CEO of Applico — and amended by 2040: Innovation theater is any innovation initiative that is done to signal that innovation is happening (somewhere in the organization) but that doesn’t have significant business impact or connectedness to the organizational system. These initiatives are often accompanied by large press releases with little tangible detail.
Innovation theater then becomes a closed-loop effort that is taken on to please internal desires for a particular change, be responsive to shareholder criticism or in recognition of a much larger problem whose solution seems elusive or too complex.
The leadership perspective, even aspiration, is that a closed-loop innovation structure will protect the rest of the mature, larger system by limiting risk. If it is successful, the innovation will serve as inspiration and “proof” that the organization can innovate, serving as the jumping-off point for change across the organizational system.
If there is doubt that an organization can innovate, change and/or transform, an experiment in isolation doesn’t remove the doubt, produce “proof,” or address the organizational aptitude to embrace innovative practices. The faulty premise here is that achievement of innovation will be able to inspire, move and disrupt the organization from point A to point Z when ignoring all the points in between.
An innovation theater approach doesn’t take into account processes, policies and the human element that must come together to support how the current work will evolve, catalyzed by the innovation. Further, it results in ignoring the need for transition management and setting forth how the innovation would be assimilated, plus how the organizational system would change and evolve in response to the innovation.
Innovation theater is often conceived and manifested in decisions made at upper levels of the organization, encased as a single-focused strategy without the context of how the organization operationally and functionally meets its purpose (producing product, serving customers).
Steve Blank describes innovation theater in the Harvard Business Review as the temptation for “large organizations to focus on checking all the boxes in their top-down processes rather than improving the results — what they actually make, how they serve customers, and the prescribed means they take to achieve those ends.” He adds, “As organizations get larger, they start to value the importance of process over the product.” Over time as organizations grow, they become risk-averse, seeking to protect and ensure that organizational performance continues as expected and required via established and ingrained processes while appearing to beget innovation capability.
Innovation cannot happen if the inter-relationships and co-dependencies of the parts of a mature organizational system are overlooked, purposely avoided, or considered outside of the scope, focus or intent of the innovation. In this case, an organization has no choice but to work around the new innovation system. The result is a binary system with each part revolving around the other but always remaining separate. Opposed to leading, managing and operating one organization, the human system now must manage two.
Influence of Organizational Culture
Innovation theater ensures the culture of an organization remains separate, steady, safe, and unchanged. The culture of any organization, whether public or private, is the result of how it was formed, how its mission and purpose came to be, and how it sees itself maturing and evolving an identity that represents the sum of its parts. An organizational purpose and mission solidify a shared set of principles and values for who does the work and how the work gets done. This solidification ensures the system works as each part and individual in the system understands its relationship, role, and responsibility. Innovation theater can, therefore, upset the balance of a holistic system via its siloed mindset and the culture becomes protectionist and defends the inter-workings of the existing system. This is an antagonistic situation that ensures time and energy are expended on protecting what is, versus what can be as a result of the innovation.
Silver Bullet Perspective
All too often, innovation theater is determined to be the best (or only) course of action to bring innovation into an ingrained culture rooted in its processes as a catalyst for a cultural shift, change or transformation. Innovation theater is perceived as a quick-fix tactic when leadership recognizes that the culture is calcified and will “fight” in moving beyond the existing organizational construct. The process of innovation in isolation appears to be the easiest course of action with the least resistance as the leadership has set the direction via command and control with the expectation that orders will be followed, feeding leadership egos, and pleasing shareholders. Yet this approach has limited if any, results.
The popular mantra of “innovation disruption” made popular by the success of startups, promises leadership that innovation theater is a silver bullet that will ensure enough excitement to make all resistance melt away. Just like it seems for startups who are faced with little if any “risk.”
Context, Risk and Transition
Contrary to the belief that innovation theater promotes organizational safety, it actually increases risk. When innovation theater is used as a mechanism for change and transformation, it limits the organization and its workforce to gain the required experience, knowledge, and comfort to manage change and work differently. It is innovation creation in a vacuum that overlooks context and transition.
Moazed adds, “Innovation often starts off with a shallow focus, and therefore yields only incremental improvements while promising more. A lack of autonomy results from the risk aversion that’s deeply baked into many large enterprises. Many organizations – after scaling up on repeatable, familiar processes and routines – aren’t ready to put their brand and way of life at risk. So, they approach innovation with a tight grip on the reins.”
Innovation Theater Triggers Distractions
Bland explains, “A competitive environment should drive an organization into new forms of organization that can rapidly respond to new threats. Instead, most organizations look to create even more processes. This typically plays out in three ways:
- Often the first plan from leadership for innovation is hiring management consultants who bring out their rote 20th-century playbook. The consultants reorganize the company, often from a functional organization into a matrixed organization. The result is organizational theater. The reorg keeps everyone busy for a year, perhaps providing a new focus on new regions or targets, but in the end, is an inadequate response to the need for rapid innovation for the product.
- At the same time, organizations typically adopt innovation activities (hackathons, design thinking classes, innovation workshops, et al.) that result in innovation theater. These activities seek to shape and build culture by offering alternatives to how work currently gets done, but they don’t win wars, and they rarely deliver shippable/deployable products.
- Finally, organizations realize that the processes and metrics they put in place to optimize execution (procurement, personnel, security, legal, etc.) are obstacles to innovation. Efforts to reform and recast these are well-meaning, but without an overall innovation strategy, it’s like building sandcastles on the beach. The result is process theater.”
At 2040, we help our clients avoid innovation theater by practicing critical thinking that considers the organizational system and culture and how an overall innovation strategy leads to the greatest opportunity to achieve organizational goals. We help them develop models and systems that support an environment and culture that focuses on the long-term and not immediate short-term thinking to achieve goals quickly without holistic consideration of the organization. We help build models to avoid outside external control that is often exerted without collaboration or context.
Innovation theater is a cautionary tale to avoid the temptation of short-term thinking and segregating innovators from the individuals who will be responsible for implementing and operating new ideas, products, and services. In other words, approach innovation and change management systemically with a holistic model to coordinate and network an organization to align on the same page for change and address the need for transition management. Innovation has a high buzz factor and sounds impressive in annual reports. But true innovation is hard work, unglamorous and incremental. When it works, it’s golden. Innovation theater is popular, but a pale shadow of what’s real.
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Onward and upward from the 2040 Team