Innovation: The Knight in Business Transformation

Ankush Chopra, strategic thinker and the author of ‘Dark Side of Innovation’, his first, says business transformation efforts in organizations involve major changes in people, capabilities, structure and technologies, to name a few.

Jul 30th 2013
Ankush Chopra is a strategy expert who has held corporate, consulting, and academic positions in the areas of finance and strategy. He has over 18 years of business experience as a manager, consultant, and business thinker in Asia and America. He is an Assistant Professor of Strategy at Babson College. His book titled 'The Dark Side of Innovation' releases on 1st August, 2013.

Generally speaking, a successful innovation is a great invention marvelously commercialized.

Imagine a car running at 200 kilometers per hour, is heading towards a bridge. Suddenly, the driver realizes that the bridge has a 5 meter hole in it. The car crew needs to rewire the car so that it can make a big jump over the hole. Obviously, making such a fundamental change to a well functioning machine, in a short time, has its own risks. Unless you are Batman and are willing to take them. Moreover, if the change is not made in time, the car may actually fall off the bridge anyway.

The risks that faced the car crew also reflect risks that face leaders managing business transformations. Such efforts involve major changes in people, capabilities, structure and technologies to name a few. If the changes are not well orchestrated, firms may not be able to achieve their goals of transformation. In short, delay in undertaking transformation as well as flawed transformation efforts are two key reasons for a high failure rate.

Let’s take an example. When the camera industry underwent transition from film to digital technology, Canon and Nikon undertook necessary transformation initiatives to become leaders of the industry. On the other hand, Kodak and Polaroid failed in their transformations and thus lost their spot.

Even in India, most of the IT companies were body shops in the initial stages but companies such as Infosys and Wipro transformed themselves to become major competitors on the world stage. They are now trying to transform their businesses to scale up the food chain and compete for the high value business.

Similarly, Procter & Gamble noticed in the mid 90s that the speed of commercializing innovation was becoming a key driver of success. It undertook one of the largest transformations in its business and organization in early 2000s to achieve speed and was successful in doing so.

 Commercializing Innovation

 Generally speaking, a successful innovation is a great invention marvelously commercialized. It is much more than just product innovation. For a CIO, this means generating and supporting those ideas that drive strong business results. These innovations from the CIOs office fall into three categories. First, it includes innovations that optimize the business operations. For example, the use of GPS technologies to improve logistics tracking resulting in lower stock outs and lower missed sales. Second, it includes innovations that either overcome hurdles or generate new competitive advantages for business as usual.

Also Read: Strategy Link to Lead Innovation

For example, creating and linking rich customer databases across all hotels in a worldwide hotel chain to provide consistent and unmatched services to clients. Third, it involves innovations that generate a groundbreaking impact on the business. For example, using big data and analytics to discover and serve unmet customer needs with existing and new products.

Strategy Link to Lead Innovation
Strategy Link to Lead Innovation

Restricting Change

In my view, three barriers prevent change or innovation in organizations. Informative barriers occur due to lack of knowledge. Normative barriers include all sets of norms and ways of doing things that sometimes become restrictive. Finally, cognitive barriers are those that prevent accurate perception and thus prevent change.

Let’s take the same example of the car.  Lack of knowledge of attaching wings or rewiring the car would be an informative barrier. Unwillingness of the crew to make such a change in a moving car because rewiring a moving car was never done before would be a normative barrier. Finally, barriers that prevent the driver from perceiving the hole in the bridge or its size are cognitive barriers.

While informative and normative barriers are easily seen, cognitive barriers are hard to even identify. I found that some kinds of innovations and changes bring along cognitive barriers that prevent companies from undertaking this change. When faced with them, managers and companies find themselves in a difficult situation. Whether they take any action or not, they find themselves going deeper into the quicksand.

This is what happened at Kodak. It saw digital technology and invested billions of dollars over a 20-year period leading up to the time when digital photography became mainstream. It developed a large number of new technologies that were now core digital imaging technologies. In spite of success in developing the key technologies and having all the key patents, Kodak failed to transform itself in time. The reason was cognitive barriers that prevented the organization from moving to the new era.

I have laid emphasis on the cognitive barriers in my book ‘the dark side of innovation’. It shows a rigorous process to anticipate such innovations in any industry. Moreover, it explains how to develop the appropriate response to such innovations. The book is a recipe for generating innovations that CIOs and their CXO peers can use to drive innovation. Moreover, for the CIO’s office, it’s a toolkit that enables driving and envisioning new transformations.

 As told to Shubhra Rishi