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'Innovation' - it’s a four-syllable word that’s found a home everywhere from the minds of the most inspiring people of our time to the powerpoints of the most monotonous corporate drones known to mankind. Cliche would be an understatement. As amusing as it may be to scrutinize some of the least innovative people on the face of this planet recite innovation as their central dogma, we have to realize that it’s quite unfortunate that the word innovation has lost every trace of it's original intention.
Real, consistent innovation isn’t about trying one or two new things on an annual occasion. Real innovation is about questioning anything and everything. It’s about experimenting at every moment. It's about taking risks. This is the type of innovation that we are lacking in society. It's also the type of innovation that allows the most successful companies of our time to thrive.
Innovation is the difference between life and death for every company. If you’re not innovating consistently, you will fail. To avoid this, you must understand what real innovation is - and how you can make use of it.
Let’s begin by exploring the semantics of innovation. The dictionary definition of 'innovate' is “to do something in a new way”. Emphasis on ‘new’. ‘New’ means taking a risk, because it is impossible to know what will happen when trying something new.
The issue with every other corporate drone preaching of innovation is that they aren’t willing to take real risks. They aren’t willing to experiment. The fact is, most companies in our time are doing most things the same way. This phenomenon may be an example of “Social Proof”, a term coined by Robert Cialdini in his book Influence. Social proof is the idea that people (and companies run by people) often look around and see what others are doing instead of doing things their own way.
Just because everyone else (or every other company) is doing something, doesn’t mean it’s the best way to do it. Unfortunately, our psychology says otherwise and pushes us to follow what others are doing to avoid risk. Because of this, companies rarely question commonplace practices. They rarely innovate, if at all - especially with the ideas that are the most grounded in society.
We live in a society where challenging the norm, and innovating consistently is a rare phenomenon because people want to avoid risk. The issue is, this logic is flawed. No company can survive without continuously innovating - even when it means continuously taking a risk.
To understand why, we have to explore the “state of nature” when it comes to competition. Imagine five identical companies selling identical products with identical marketing. There is no differentiating factor between these hypothetical companies. Because of this, in theory, the market is split equally between them. Now, let’s say this market can only support one of them. If no company innovates, and they remain entirely identical, all five of them will die out. In the case in which one company innovates and differentiates itself, even if it fails to grab a larger portion of the market in turn, the other four will still die out with it. The fact is, the only way in this situation that a company would survive and grow is if one of them innovates, differentiates, and it works. They escape the competition. Their competitors fail.
This model can in theory be used to describe competition in real industries. If everyone is generally doing the same thing, there is no opportunity for growth, and this leads to companies failing. When a company innovates, they stand a chance of escaping competition and avoiding failure. Even in markets that can support multiple operations, when any company innovates and it works, they consume the rest of the market, and all the un-innovative competitors eventually die out. Companies that have innovated once and consumed the previous generation could still theoretically fall if they don't consistently innovate - at any point a different, more innovative company could catch up and wipe them out.
It is a risk to innovate, but it’s an even greater risk to not.
If I’m not speaking your language yet, let me show you an example. It was the late 90s, and Steve Jobs had returned to Apple. This was a time where most companies were adding as many products to their lineup as they could, simply because that was the norm. Within weeks of being there, he decided to slash nearly the entire product line, leaving just four products. He had to take a serious risk. Most people at the time would have called him crazy. Apple is now valued at two trillion dollars. If they hadn’t taken that risk, their excessive product line would likely have killed them. Instead of doing what everyone else in the industry was doing, they did something different. The point is, it was a risk to innovate, but it was an even greater risk to not.
Just about every successful company of our time has had to innovate and will have to keep innovating to stay alive and escape competition. Consistent innovation is imperative.
“I don’t innovate and my business is doing fine.”. That’s a common counter to the claim that continuous innovation is what defines a successful business. As delightful as it may sound, that statement is unfortunately a lie.
Companies that aren’t innovating are sitting ducks - even if they haven’t been knocked out yet. By lacking in innovation, they are failing to differentiate themselves from competitors. This means they are constantly competing nose to nose. At any moment, their competitors could wipe them out if they take a risk that works and boosts them ahead.
An example of this would be Tesla and traditional automakers. The rest of the auto market wasn’t innovating seriously - everyone was in tight competition. Sure, these companies were surviving, but they weren’t growing. Tesla took a risk by trying something new. All the pre-existing automakers that weren’t taking innovation seriously quickly fell behind.
Tesla is now worth more than Ford, GM, Volkswagen, and Honda. Combined. By failing to innovate, any company will fall, whether it’s now or later.
The key to continued innovations is consistent experimentation. If you’re not always experimenting, then you will be failing to innovate at a pace that will allow you to differentiate and escape competition. If you fail to escape competition, your company will die. It’s remarkably straightforward.
Experimentation means going out of your way to try new ideas even if they’re risky. What you have to realize is that while there is an inherent risk in trying something new, there’s an even greater risk of long term failure when you don’t.
If some ideas don’t pan out, and you’re sure of it, you can move on from them. They won’t kill your business. It may lead to a small cost, but in turn, you’ll gain new insights that you would have never gained before. However, if you’re constantly innovating, at some point, things will start to work - and when things start to work, you’ll get a taste of the rewards that innovating and differentiating can offer.
One of the most important aspects of continued experimentation is questioning everything. In business, this means questioning every decision that you make, especially the ones that seem the most obvious. Try asking yourself: “Can I do this better?”, or "Is there another way?". If you come up with something, try it - even if it seems crazy. The more innovation, the more differentiation, the better.
I’ll leave you with one last thing. Think of experimentation and innovation as the manifestation of evolution in business.
In nature, species evolve when modifications occur in individuals. These individuals are different from the rest of the population, and these modifications are risky - often they have negative effects. However, sometimes, these modifications work out. When they do - the individuals that have them dominate, and populate the next generation, driving the species forward.
By innovating, we are doing the same thing. When we take a risk and try something new, we are driving society forward.
