Should Innovation be driven by Capabilities?

Innovating in services is the escape route from the commodity trap and a solution for growth, giving firms a significant competitive advantage. As they innovate into the future, companies must think beyond their products and move outside their own four walls to innovate. –says Henry Chesbrough’s, author Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era.

I am a firm believer that Standard Work is the 1st step of innovation followed closely by continuous improvement. Detailed in the blog post, The Lean Innovation Engine–Turn the Key. In summary:

• SDCA: Standard Work that creates a CAN-DO attitude and free up time to spark problem solving.
• Applying PDCA, allows you to “see” opportunities for improvement.
• A Continuous Improvement Culture (Kaizen) catalyzes the creation of stimulating habitats, leveraging the resources in your environment.
• These habitats, along with your attitude, influence the culture in your community (The Customer Experience will mimic the Employee Experience).
• The culture allows for EDCA and the BIG “I” of innovation.

So it is our culture that allows for effective innovation. Why do we believe that out of the box thinking drives the innovation engine. Seldom are we short of great ideas. We are short of the capabilities to deliver on the great ideas. But we proceed and make choices on what we need to “innovate” without this understanding.

In the The Lean Startup, we discuss the idea of the Pivot (a way to adapt and adjust before it’s too late). Many pivots may take place not because of improper product/market fit, but because we lack the capabilities of moving forward  with the idea. Even in mature companies, if our capabilities are not matched to the innovation, we may disband the idea (I think that is one of the values that can be derived through Osterwalder and Pigneur’s Business Model Canvas described in the book, Business Model Generation).

In most of my improvement engagements, I start with a current state map of someone’s existing process. We utilize the Business Model Canvas and future state mapping to “design” the new innovation. We will map out the process first, assigning the resources as needed. This normally exposes our weaknesses and highlights the additional training and outside resources that may be needed. We continue down this path, but why?

Should we consider, internalizing more of the “design” process? Would that help us to better understand the solution that we can design for the customer? Would it allow us to better utilize our existing resources? Would it allow us a better chance of delivery? Would it create a better ROI?

We hear a lot about change and change management but is evolutionary change better for us than disruptive change? Can we have disruptive innovation without disruptive internal change? Will we have any innovation implemented without a thorough understanding of our existing capabilities? I wonder.