Innovation Muscle.

We’re used to building focused organizations on certain industry knowledge. Viewingcompanies as IT companies, telcos, or the financial industry, and so forth. However, today ElonMusk, Jeff Bezos, or Richard Branson come into the game and they have no industry they arefocusing on. They disrupt the whole idea of an “industry” because they approach business froma completely different point of view. Rather than industry knowledge and expertise only, whatthese companies are doing well is that they have a different approach to how they build theorganizational innovation muscle with a cross-industry expertise in mind.

So how does this non-specific “innovation muscle” work? If we can learn from the giantcorporations of today, then we can continually grow and innovate. The magic is anchored onlearning a harnessing data almost in real-time. These companies like Uber or Amazon are notindustry-based, but data-based. Safety, efficacy, and efficiency, are the three most importantand interdependent facets of any innovation. They can only be supported by measurable,observable, and repeatable facts. In one word “data.” For those that are familiar with CrossFit,I’ll offer an analogy. I tend to use this analogy, because I’ve been a fan of CrossFit for years andthere’s a lot to learn from it’s approach to fitness, regardless of what various fitness expertsthink. Like Crossfit, the approach is one of constantly varied, functional innovation done at ahigh intensity (high stakes and high risk). Meaning that the risk appetite is higher than intraditional organizations. But constantly varied is the key.

Traditional businesses like Walmart, Exxon mobile, or Ford would never constantly varyat high intensity because they are risk-averse by nature and myopically focused on theirindustry. Like a basketball player who focuses only on training to shoot at the hoop and nothingelse because they want to compete with other basketball players. Similarly, Walmart haspushed itself into a corner because they operate on such tight margins that mean room for erroris minimal and every major downtime or major failure in shifting the company strategy, wouldput them out of business because competition will take them out. You corner yourself becauseyou are running on a treadmill and if you sidestep you fall. However, Amazon has pivoted manytimes, and spun-off or acquired and grew huge businesses like AWS and Wholefoods. TeslaMotors is not a car manufacturer, it’s a data company that knows more about your drivingbehaviors, through telemetry, than you do. Uber is ride hailing, food delivery, payments, andmany other businesses. Uber-like companies in Asia like Grab and GoJek are moving into socalled “super-app” space where they are becoming a one-stop-shop for all your needs. You cangrab a ride, order food or groceries, and in some markets even use the app to borrow moneythrough micro-loaning facilities and have it delivered to you when and where you need it. Theseorganizations are all building their functional muscle and performing their innovation (training) ina varied and intense way, constantly looking for new ways to serve their customers andinnovate on their offerings, looking for adjacent markets to enter

Let me describe intensity versus not intense. The traditional way is to put in some moneyand focus on creating a separate innovation lab or a “training in that lab”. In this case, theinnovation is dead in the water because it never touches the core business of the company. The ideas conceived in the lab are always a satellite to the core company. In a sense, the innovationlab is like the conceptual brain that I usually use as example in my talks and in my upcomingbook. It’s not based in the real world. Compare to a millionaire wanting to become fit andbuilding a gym, bringing top athletes and fitness coaches to work out at the gym, and comes towatch trainings few times a week, hoping he/she will get fit by joining a session for a fewminutes and observing the remaining time, with no real, fundamental change to the core lifestyleand behaviours.

I’d like to offer a few analogies here, the first is the planet and the satellite. A sub-optimalacquisition arrangement. Where a planet is the parent organization and the satellite is the smallagile company being acquired. The planet is the core and the satellites are orbiting the planet. Ifthe satellites get too close they’ll get attracted like a magnet and be crushed by the planet. Inbusiness, this would be like the large corporation completely absorbing the acquired entity,usually killing the essence of what made the acquired company succesful and in most caseswriting off the investment. Whereas, if they’re too far away from the planet they drift off into thevast space. In a business setting, this would mean that the satellites (or child companies) aresold off or grown so irrelevant to the parent company that they run on their own without any formof support or synergy between the two. The balance needs to be constantly there. In thisexample, the satellite will never be able to change the main planet because it's alwayssubmissive to the forces of the mother planet. Hence satelite approach is mostly flawed if we’retrying to achieve fundamental core change to the mother company.

The second, and preferable analogy is that of a large drone carrier. Where the dronecarrier (mothership) is the parent organization that fuels support and maintains the drones. Asthey take off do survailance, delivery or repair work. Coming back to refuel and get help,support, guidance, and navigation, leveraging the power of the mother ship.

In the first example, the mother planet will never move an inch. The acquisition of thesatellite is fruitless and amounts to nothing. In the second example, the drone carrier is inservice of the drones while doing its own thing that can be totally unrelated, just leveraging thesame facility. Adjusting to what it needs to become to better support the drones based on theentirety of the situation. For this reason, I’m more optimistic about a recent phenomenon in theinnovation & startup space that focuses on venture studios as the perfect way to helpsupply/build, support these new ventures, and partner with large corporations to leverage on thecore synergies, rather than expect the corporations to build, scale, and manage/run newventures, even through innovation labs, that’s again a satelite approach.