Does good business practice hurt innovation?

I was just listening to a passionate TED talk about innovation. Carl Bass is making a case to break the rules.

In business I have seen the calls for Innovation in every strategic session. The day after all of that is forgotten when normal business practice set back in. In particular if something goes wrong! “Don’t you have standard operating procedures for this, Frank?” is the second question in those circumstances. For the record “When is the problem fixed?” is the first.

Wikipedia says:

“A best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark.”

and follows with

“Best practices are used to maintain quality as an alternative to mandatory legislated standards and can be based on self-assessment or benchmarking. Best practice is a feature of accredited management standards such as ISO 9000 and ISO 14001.”

Best practices or standard operating procedures are actually excellent business tools. They ensure things get done consistently well and in a predictable manner. However, that thinking is not the thinking we need for Innovation. Innovation is a disruption of the current best practice and replacing it with something better. Best business practices wouldn’t have given us planes or automobiles. Best business practices would have concentrated on horse care, better cartridges, convenient changing stations, and so on. Innovation called for risk taking. Try something new, try something different. Edison didn’t invent the light bulb with the first attempt, it took him multiple thousands. Every time he learned something and every time the design got better until it replaced the gas lamps.

Good management practice includes risk management. There is no management discipline that doesn’t contain risk management and project management is probably the best example:

  • Avoidance – Avoid the risk partially or in whole
  • Reduction – Employing methods to reduce the negative impacts of risks
  • Sharing – Sharing/outsourcing the risk component to a third party, which is better equipped to handle such risks
  • Retention Acceptance of the risk, normally in cases where the gains from the risk component are far higher than the negative impacts of the risk

Best Management practice is to mitigate risks in the above order.

Innovation takes a different step. It steps outside the current processes and takes a fresh view, asking

  • “what need are we trying to satisfy?”,
  • “what tools and processes exist?”,
  • “what hinders changing this?”
  • and finally “what if we do it this way?”

You break the rules and while you are prototyping and exploring you take risks. Do it differently. Learn and persist.

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