December 8, 2016

How Innovation Really Works

I went to a lecture last week at Sheffield University, on innovation. Innovation was a subject I studied for a while when I was a student.

The word innovation has become a meaningless corporate buzzword. Everybody claims to know what it is. Few companies actively encourage it. And hardly anyone understands how it works in practice.

The conventional model of innovation that most people know is called the ‘linear model’.

Linnear model of innovation

In the linear model, innovation happens as a result of carefully planned research. Innovation happens in clean, clinical ‘science parks’, where people in labs determine the correct course of action.

Obviously, this is not how innovation works at all.

Innovation comes from the informal exchange of information. Innovation happens when engineers and ‘lay people’ talk to each other, pull things apart, and break stuff. Innovation happens when you exchange knowledge with people who would conventionally be viewed as competitors.

Innovation comes from information, but you cannot go and buy information on the open marketplace. To communicate what information you need, and at what price, would mean that you probably had the information you needed to begin with. To acquire information it has to be exchanged freely in informal networks. You have to freely give away information to freely receive information.

Most entrepreneurs intuitively understand this, but big companies hate it. The idea of company ‘secrets’ flowing willy-nilly through an informal network of competitors, suppliers and collaborators is abhorrent to a big organisation.

In big companies, information is not used for innovation. Rather, information is used to reinforce and preserve existing formal power structures.

According to Peter Drucker, a business only has two basic functions; marketing and innovation. If you want to innovate you cannot behave like a big company. I personally do not worry about giving away all my ‘secrets’, because I don’t have all of the answers and giving away my secrets is never one-way traffic. Giving away information in an informal setting always leads to dialogue, and an exchange of information.

The lecture I saw argued that innovation is still viewed as a linear, technical process, when in fact innovation is a messy, socio-political process. Every innovation comes with a dominant narrative about the ‘benefits’ of the innovation, complete with winners and losers.

This perception of innovations runs counter to how business is conventionally understood. Competition is the dominant discourse of business. In economic theory, the goal is to achieve ‘perfect competition’ in a market. Perfect competition relies of ‘perfect information’, which as we have seen can never exist.

Just yesterday I was talking to a client who is developing a software product for network analysts. The product is innovative because it is open. To start a six-month trial all you have to do it join his community.

Real innovation is powered by communities, communication and dialogue, not by non-disclosure agreements.

Rob Drummond

Rob Drummond runs the Maze Marketing Podcast and Maze Mastery. Rob specialises in content production, ad creation, storytelling and CRM systems. He has two published books, Magnetic Expertise and Simple Story Selling, affordable on Amazon.

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