Innovation – Finance – Technology


Radical innovation requires discipline


One of the hardest activities in both startups and established companies is radical innovation. While incremental innovation is all about improving the existing, radical innovation is often related to coming up with the next big thing.

There have been many approaches to radical innovation over the years, and while there is no definitive answer to the best approach to this field, experimentation is an often-used methodology when exploring new business areas. However, without some basic ground rules and proper discipline, too many of those experiments never evolve from the idea phase. Even worse, many ideas are being kept on artificial life support for way too long. The latter outcome ties up valuable resources and management attention without really providing any business value.

From my perspective, one common pitfall in this process is that many innovation experiments are designed to verify a hypothesis rather than falsify it.

Incumbents should take lessons from the academic community and scientific practices, where most experiments are designed to falsify the hypothesis. Since an idea process often encourages people to think outside the box and look for unconventional solutions, it is often hard to shift one’s mindset to disprove the initial idea before investing too much in something that does not have the desired effects. This is the major issue for both startups as well as incumbents, as most people want to do the experiment that shows this is worth pursuing.

This shift in mindset requires discipline in order to execute as well as decisions based on facts rather than gut feel. In this process data is your best friend. Have sound hypothesis from the start and collect corresponding data to test your hypothesis.

In order to extract value from your innovation process, incumbents should take a lesson from the academic community and look for the killer experiment. The killer experiment is meant to “kill” a project before significant resources are put into developing and perfecting the idea. Albert Einstein once said: No amount of experimentation can ever prove me right, but a single experiment can prove me wrong. In order to properly test your innovation experiment that is the necessary mindset.

It has been said many times over, but cannot be exaggerated enough, when attempting to innovate, be prepared to kill your darlings.

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