OBSERVATIONS FROM THE FINTECH SNARK TANK
They say that the only things certain in life are death and taxes. They need to add management fads to the list.
Like other management trends (i.e., fads) before it—like reengineering, knowledge management, and Big Data, to name a few—innovation is the management fad du jour, having created a thriving industry dedicated to its pursuit.
The mere mention of the word innovation conjures images of groundbreaking ideas, disruptive technologies, and market-shaking transformations. It has become the Holy Grail of the business world, promising salvation from obsolescence and irrelevance.
Promise and reality are two different things, however.
Igniting The Innovation Craze
Innovation has taken center stage in boardrooms and executive suites. Companies strive to showcase their innovation prowess, clinging to the belief that it is the magic wand that will secure their future success.
Like previous management fads, the innovation craze started with good ideas.
In his seminal book, The Innovator’s Dilemma, Clayton Christensen introduced the concept of disruptive innovation, illustrating how smaller, nimble companies can overthrow industry giants.
This notion ignited a frenzy of organizations scrambling to disrupt themselves before someone else did.
Jumping On The Innovation Bandwagon
The reality, however, is that true disruptive innovation is rare, and most organizations do not face imminent disruption.
In search of disruptive innovation—or disruption prevention—many companies engaged in “innovation theater.” They appointed Chief Innovation Officers, created digital transformation teams, and put on a show of innovative activities to impress stakeholders, little of which impacted—let alone improved—the core business.
Why the shortfall? Successful innovation requires: 1) a supportive infrastructure; 2) a culture that embraces experimentation and failure, and 3) an organization-wide commitment to change.
Companies that didn’t already have those three things—that is, most companies—couldn’t build and establish them overnight, but that didn’t deter a lot of organizations from expecting miracles from their newly formed innovation teams.
The Rise of Incrementalism
The singular focus on innovation over the past few years has always been misguided.
At a recent banking industry conference, Square co-founder Jim McKelvey explained that true innovation is rare and that what most companies call innovation is really just copying stuff that’s already out there. It’s “innovation” to the company, but it isn’t innovation to the industry.
Innovation has been reduced to a series of small, incremental steps rather than giant leaps forward. Organizations fixate on optimization rather than revolution. While these incremental improvements may contribute to short-term gains, they lack the transformative power required to address the complex challenges of our time.
The Death of Innovation
Why is now the beginning of the end for the innovation fad?
- The decline in risk-taking. As the prevailing mood in many industries has changed post-pandemic to a risk-averse environment, experimentation and exploration are getting stifled. Fear of failure and the pressure to deliver immediate results have led to a culture that favors safe, predictable initiatives over bold and disruptive ideas.
- The legacy burden. Companies burdened by legacy systems, bureaucracy, and outdated mindsets find it increasingly difficult to foster innovation. Coming up with innovative ideas is the easy part—developing them, integrating them into existing applications, and then operationalizing them into ongoing business processes is proving to be too much for many firms.
- The emergence of Generative AI. This is the straw breaking the innovation camel’s back. It may seem odd that an innovation like ChatGPT would depress the overall innovation fad, but that’s exactly what is happening. Companies who have—for the most part—been pretending to innovate now face the prospect that the new technology provides them with opportunities to achieve new levels of productivity.
It’s Time For the Next Management Fad
If innovation is dying as the management fad du jour, then what’s next?
If I knew the answer to that, I’d quit my job, write a book, and make millions from speaking engagements.
But I don’t know, so I’ll pontificate on what the next management fad should be: The creativity imperative.
Why the creativity imperative?
- With a new, emerging technology (generative AI) at hand, the key imperative for organizations to succeed and thrive isn’t to “innovate” but to find ways to “utilize” the new technology. The shift is from a focus on organizational change (i.e., innovation) to a focus on individual change (i.e., how people get their job done).
- The relentless focus on automation (or digitization) over the past 20+ years has eliminated many jobs and positions, and created processes—some called “customer journeys”—that are supposed to dictate and guide how things get done. The problem, however, is that when exceptions and problems arise, many employees are unable to find a script to deal with the situation.
The common thread in these two points is the need for creativity—individual, not corporate creativity—to adapt the new technology and to “get the job done.”
Paradoxically, the post-pandemic reality is that, in many companies, the people who knew how to get stuff done are gone. From retail interactions to call center contacts to bank branch transactions, the employees “manning the booth” often have less experience doing what they do than the customers themselves.
The paradox is that the former employees—the experienced ones—were those most resistant to change, both from a technological and cultural perspective. With the barriers to innovation no longer in place, innovation efforts might be better positioned for success, but at this point, it’s too late.
Innovation Will Live On—But Not As a Management Fad
Proclaiming the end of the innovation fad will be met with ardent disagreement. What else would you expect from consultants, tech companies, and Chief Innovation Officers who owe their livelihoods to the fad?
But all management fads come to an end, and we’re at the beginning of the end of the innovation fad.
And I’m also aware that there will be some who will say “oh come on—innovation, creativity, they’re both the same thing!”
I disagree. The focus on innovation has been on creating something new. The focus on creativity will be about doing things differently.
Like the management fads before it, key elements of the innovation fad will become incorporated into management habits. Reengineering brought a process improvement focus to management and both the knowledge management and Big Data fads left a focus on the importance of data collection and management.
The innovation fad will leave its lasting mark on management for some time to come. But it’s time to move on.
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