Innovation strategies are failing us. What are alternatives in forward-thinking that can supplement these now obsolete push/pull strategies?
Growing up, I deeply admired my grandfather’s abilities. He was of a generation that made what they needed. He extended the house my mother grew up in, crafted the doors in it. Fixed what was broken, and enhanced what could work better. He was also one heck of a fisher. On weekend visits, I would see him and one of my uncles walk back into the kitchen—via the back porch he constructed— with the fishing rods in one hand and a bunch of fish in the other. In my eight-year-old schoolboy mind, he held the secrets to everything. I must have overwhelmed him with my questions because he often answered them somewhat cryptically, I spent hours trying to figure out what was so secretive about it. For example, I vividly remember the moment I asked him, “Why are you such a good fisher?” To which he simply replied, “Because I know where the fish are biting.”
Intended or not, Grandpa (Pepe, as my sisters and I called him) offered life advice: know where the fish are biting and fish there. Our consumer and manufacturing industries are looking to do just that; react to customer demand. Industry specialists have a framework for that purpose; it is known as a pull strategy. Analysts categorize and segment consumer populations and build innovations to satisfy their desires. Then, designers build new products when we know there is a demand. Pull strategies give people what they think they want. That is; only what they want now, not what they’ll want next. Pull strategies result in product bloat and feature creep: you make too many things that you can’t sustain and end up with legacy products that don’t do much of anything for anyone.
This is known and understood by those same industry specialists, so there is another framework on hand to avoid the downsides of a pull strategy. It is the opposite motion, known as a push strategy. Driven by new technologies, a manufacturer will make a product that holds that novelty and then market it as the amenity that everyone supposedly wants and needs.
Simply put, a push strategy is to push a product at a customer, while a pull strategy pulls a customer toward a product. Push strategy is a quick way to move a customer from awareness to purchase, while pull strategy is about creating an ongoing relationship with the brand. Both serve a purpose in moving the customer along the journey from awareness to purchase. So companies balance both, with the theory that it should be done carefully and with a thorough understanding of your business, current brand awareness, and target audience. For example, launching a new, unknown product would require more push than an established brand.
The thing is, both push and pull strategies will get a company stuck in the hole of a planning cycle. Because the reality is that customer preferences or attitudes are not consistent, predictable, or stable. These, like every aspect of innovations, are prone to change over time. Pull strategies do not account for any shift in system or demographics, missing out on accommodating any new kinds of behavior or desires. When that happens, you are up for a disruption.
For example, companies like Uber and Airbnb saw an unfilled need in the overlooked, burgeoning sector of millennials who, unlike their boomer elders, don’t aspire to own cars and don’t want to live in big houses. They have currently embraced the on-demand lifestyle. All the major car-rental companies and hoteliers—with their pull strategies—completely missed out on this tremendous shift in behavior. It isn’t just an anomaly: it is a pattern. Kodak should have been in prime position to own the digital photo market, Sony owned portable music, etc. The list can be extended with various other missed opportunities by brands who had the means and the ability to understand the shortcomings of their tactics. Instead, they kept their old antiquated habits.
That habit is to plan. Using only what they assume to know, and the signals they see as the future. The thing is that the future they see is only giving them a present. Rather than the present being able to give them a future. And while they are planning, the world is advancing and the opportunities you are planning for are disappearing. Neither of these approaches is sophisticated enough to keep up with the increasing speed and magnitude that innovation needs to happen in order to be meaningful for our society.
It’s rule number one in the Law of Holes: if you are stuck in one, stop digging.
There are alternative strategies developing in forward- thinking circles, that can supplement these somewhat obsolete push/pull strategies. One such is scenario-planning; a creative strategy that looks at the elements possibly driving the future and then considers all the alternatives and variations to these elements by making stories out of them. In telling these stories, we can start to figure out what these unknown situations might actually look or feel like. And more importantly, what it would all mean for those involved.
There is discovery-driven planning that goes even further than scenario-planning. It comes from the work of Columbia Professor Rita McGrath, who tells us that when things aren’t going exactly as planned, key indicators need to be identified, and then investigated to try to figure out which ones aren’t performing well and determine the causes of those failures. Then, a contingency is planned with some fine-tuning in real time so that these events can be avoided or capitalized on, depending on whether they’re a challenge or an opportunity. Other models are offering alternative approaches to solve the shortcomings of a push-and-pull strategy. But ultimately, it drills down to a cold, hard fact of life: our future cannot be predicted.
Those active in innovation, or the entrepreneurship around it, are equated with the term futurists. As if the new idea or vision that they declare was formed out of a knowledge of what the future needs. Anticipating outcomes is a human trait that has gotten us where we are today. This capacity has become a wavering calculus to derive the world, and evaluate its immensely large, complex systems and structures, with the aim to know where we can tune or modify, and pre-determine our behaviors and attitudes toward it. Somehow, it has us believing that, as humans, we have dominion over the future.
Yet we routinely fail to predict the important stuff, even with the use of sophisticated algorithms that chew through impossibly large volumes of data to offer dozens upon dozens of pattern-based simulations. It says less about the methodologies of foresight and more about our tragic aspiration to know the unknown. The future simply cannot be predicted. If a future is known, it is by default no longer a future. If we claim to know just how a change will occur, it is no longer a change. As they say, change is the only constant. Models do some leg work and help limit the unwanted outcomes that could happen. But the real world is rife with non-linearity, countering the logic of a data pattern. Like stock market crashes, riots, and earthquakes, discontinuities warp linear projections with sudden disruptions that often defy prediction.
For millennia, we’ve grappled with unpredictability pretty well. All things considered, we are the dominant species because of our innate talent to adapt and survive. But our societies are vastly different now. Here’s a creative experiment for you; take a typical man, an average Joe of sorts, on a given street in the year 1900 and then drop him, Back to the Future-style, into the 1950s. Then take someone from the 1950s and move him into the present day. Who would experience the greater change?
The answer will seem fairly obvious; if a person from the turn of the 20th century was to be time-warped into the 1950s, they’d be baffled and in awe of the numerous technological wonders. He would see streets and highways jammed with sleek cars, trucks, and buses. In the cities, immense skyscrapers would line the horizon, and inside, elevators would whisk him up. Gigantic bridges would span rivers where once only ferries could cross. There would be flying machines overhead, carrying people across continents and oceans in a matter of hours rather than days or weeks. Visiting a home, this time-traveler would enter a strange new environment filled with appliances powered by electricity: sounds and moving images on a device called television, musical programs and news bulletins from a box known as radio. He would see refrigerators to keep things cold, washing machines to clean his clothes, and a contraption that makes him able to dial up other people and have a conversation with them, even if they lived in another town, state, or country; a telephone.
The house’s garden would be an area of relaxation, with perhaps a flower bed, and almost certainly a lawn. But no more need for a vegetable patch because this concept called “supermarket” offers an array of technologically enhanced foods, year round. Things like instant coffee and frozen vegetables. Life itself would be dramatically extended. Many once-fatal ailments are now prevented with an injection or cured with a pill. The newness of this time-traveler’s physical surroundings should be profoundly disorienting for him.
I would, however, imagine that someone from the 1950s would have little trouble navigating the physical landscape of today. Ours is the age of boundless technological wonders, but I think that our second time-traveler would find himself in a world not all that different from the one he came from.
He would still drive a car to work, although he could opt to have himself driven. If he took the train, it would likely be on the same line leaving from the same station as it did back in the 1950s. He could probably board a more modern airplane at the same airport, too. He would still live in a suburban house, though a bigger one. His television would have more channels, color pictures, and bigger, flatter screens. He could still catch some of his favorite 1950s shows on reruns. With just a few exceptions, such as the Internet, CD and DVD players, the cash machine, and wireless phones and entertainment systems that slip into his pocket, he would be familiar with almost all current-day technology. I would, in fact, not be surprised if our time-traveller is rather disappointed by the pace of progress. “Why haven’t we conquered outer space?” “Where are all the robots?” “Why can’t my car fly?”It’s fair to say that, on the basis of big, obvious technological changes alone, the 1900-to-1950s traveler would experience the greater shift, whereas the other might easily conclude that we’d spent the second half of the twentieth century doing little more than iterating on the great innovations that had so transformed its first half.
However, the longer they stayed in their new homes, the more each time-traveler would become aware of the subtler dimensions of change. Each would begin to notice their respective society’s changed norms and values. They would notice the different ways in which everyday people live and work. And when taking in account the effort of adjusting to the social structures and the rhythms and patterns of daily life, it would be our second time-traveler who would likely be much more disoriented.
Because someone living the early 1900s would find the social world of the 1950s remarkably similar to his own. If our traveler worked in a factory, he would come to find much of the same divisions of labor, the same hierarchical systems of control. If he worked in an office setting, he’d work within the same bureaucracy, and have the same climb up the corporate ladder. He would deliver a 9–5 working day wearing a suit and tie, and his colleagues and management would mostly be white and male. If there were women in his workplace, they would be secretaries. He would almost never interact professionally with someone of another race. He would marry young, have children quickly thereafter, stay married to the same person, and probably work for the same company for the rest of his life. In his leisure time, his recreational activities would be much the same as they were in 1900: taking in a baseball game or a boxing match, maybe playing a round of golf. He would join the clubs and civic groups befitting his socioeconomic class, observe the same social distinctions, and fully expect his children to do likewise. He would find himself living the life of the “company man.”
In contrast, our second time-traveller is going to be rattled by the dizzying social and cultural changes that have happened between his 1950s and today. At work, he would find a new dress code, a new schedule, and new rules. He would see office workers dressed like folks relaxing on the weekend in jeans and open-necked shirts and be shocked to learn that some of them occupy positions of authority. People at the office would seemingly come and go as they pleased. Quite a few have these incomprehensible piercings and tattoos. Women and even non-whites would be managers, leaders, or clients. Individuality and self-expression would be valued over conformity. His working environment would be packed with people who seem principled, and political correctness is a new variable for him. He cannot even smoke unless in the parking lot. Attitudes and expressions he had never thought about would cause repeated offence. He would continually suffer the painful feeling of not knowing how to behave.
This time-traveler would see different ethnic groups in greater numbers than he could ever have imagined—Asian, Indian, Afro and Latin Americans, and others—mingling in ways he likely would find inappropriate. Especially the mixed-race couples and same-sex couples. People would seem to be always working and yet never working when they were supposed to. They would strike him as lazy and yet obsessed with exercise. They would seem career-conscious yet fickle—why doesn’t anybody stay with a company more than three years? What happened to the ladies’ clubs and bowling leagues? Why doesn’t everybody go to church? Even though the physical surroundings would be relatively familiar, the feel of the place would be bewilderingly different.
Although the first time-traveller had to adjust to some drastic technological changes, it is the second who experiences the deeper, more pervasive transformation. It is the second who has been thrust into a time when lifestyles and worldviews are most assuredly changing—a time when the old order has broken down, when flux and uncertainty themselves seem to be part of the everyday norm. Where the predictions of the future were giving us flying cars and robots, what seemed to have been less understood or anticipated is the change of the fabric of society and the different ecosystems that would emerge.
Systems are complex interactions of interdependent parts that give rise to emergent and often-unexpected behaviors. If you, like me, have ever kept an aquarium, you have a sense for the delicate equilibrium necessary to a healthy aquatic system. Add a new fish or trim too much of the plants, and you can suddenly veer into an ecosystem crash. Small changes can have large results, so you have to be very deliberate in how you manage the tank. Meaningful analysis requires careful scoping: what to include and what to dismiss. Typically, we think in terms of linear cause and effect. Add too much salt to your aquarium and things start to die. Not enough, and you have the same result. You could plot this relationship as a straight line: salt concentration vs. number of living fish. But that is only of relevance in a closed system. One with defined boundaries and conditions. That is not our world today. We have open systems that interplay. Much like how one ecosystem, a coral reef, interacts with another system; a saltwater ocean. In a saltwater reef, many actors participate in the ecosystem. Corals build reefs that harbor diverse species. Snails and crabs clean detritus. Sea plants filter the water and lower nitrogen. Fish eat algae and organisms, excreting waste that raises nitrogen levels. In this type of living system, changes can quickly propagate across interdependent actors toward a sudden tipping point. Not enough fish can allow algae to bloom and kill off the corals that support reef health, leading to an ecosystem crash. But so can nutrient flows from farming along rivers that dump into coastal waters, or changes to water temperature from regional warming trends. In complex, inter-dependent ecosystems, changes can happen suddenly when equilibrium is pushed to its edges. Such systems are considered non-linear. They take little changes and turn them into large effects. The butterfly wing effect, in other words. Designing an innovation opportunity means understanding the system itself, the people who use it, and the external landscape in which that system exists.
So how do we come to terms with all this complexity and nonlinearity? With a few cognitive shifts. The first one is to forego any hope of ever really predicting outcomes. Foresight and planning for innovation should be an exercise in probability and never prediction. Believing otherwise is a set-up for failure. Having abandoned the hope of prediction in favor of probability, the next cognitive shift requires that we embrace uncertainty and use scenarios to build resilience and agility into our ideas and our innovations. Like building a back porch or upgrading your home, smart organizations use scenarios to guide their innovation through adversity and discontinuities. Typically, these take the form of a positive linear scenario, business as usual with steady growth. With the positive non-linear scenario, things get way more optimized much more quickly than expected. Then there is the negative linear scenario; things get steadily worse. And lastly, a negative non-linear scenario; the system crashes into chaos.
The third shift requires that we learn to think in terms of systems rather than parts. One of the most underrated skills, in my opinion, is systems-thinking; thinking beyond the visible edges; and wrapping our heads around non-linearity, while understanding where impacts and shifts may happen. Not to predict these, but to understand the likelihood of what influences and alters something else. If that’s too hard, we can offload the effort to machines. Computing helps the models edge closer to offering more probability of likely outcomes.
As has been said, you may not be able to predict the future, but you can build it. The best way to manage the vast probability field is to collapse it into a reality of your own construction. Foresight and futurism are activist pursuits. For all our focus on futurism as being about the future, it’s actually a lens on the present, a snapshot of the way we deal with time itself and how we prioritize our actions. A strategic forecast will challenge us to act proactively. Systems-thinking calls to the heart and spirit with visions of how things might come to pass if our will is strong enough, or too weak.
In times of global change and shifting paradigms, all organizations should be embracing systems-thinking to evolve and adapt in the dynamic environment. But that first requires senior executives to recognize and understand when they are stuck so that they can stop digging the hole of obsolete strategies.