Exploitation versus exploration
Innovation isn’t magic; it’s the ability to culturally transform an organization, including the right resources. The key is to explore. Exploration involves dedicating people and resources to investigate and experiment in areas, approaches, sectors, and paths that don’t necessarily guarantee an immediate return. Yes, this generates tension because while we’re exploring, we’re not exploiting the established service model. We’re not limited to performing tasks considered useful.
It’s a significant challenge to commit time and resources to the pursuit of innovation, knowing that every euro is valuable and must be justified. Being innovative means venturing into unknown territories without certainty of the results. However, we can’t generate good ideas if we don’t allow ourselves to have many, even if some of them turn out to be failures. Therefore, to innovate, we must dare to play, accepting uncertainty as a path to knowledge and improvement through practice.
And why is exploring crucial? We live in a world where demand isn’t saturated. On the contrary, there’s an oversupply that can lead users to seek solutions elsewhere, neglecting our own proposals. Although it may be hard to believe, excellence, relevance, and quality of our information access services are no longer sufficient. There are competitors, especially in those sectors where we haven’t reached non-users yet. A non-user is someone who is unaware of the usefulness of our services to meet their needs. Don’t we want to reach them?
In summary, we explore to retain our users and expand our horizons to those who still don’t know us. To enrich our exploration, we’ll address two approaches: understanding and addressing the needs and challenges of (non) users, both internally and externally.
Non-users: Where does it hurt them?
When we talk about the pain points of non-users, we refer to the problems they want to solve and the goals they strive for. If we identify them, the next question is how we can provide solutions or create opportunities.
Under this approach, we propose to capture problems and opportunities with an example:
Firstly, we identify the tasks, actions, and activities that they perform in their daily lives. For example, a professional who specializes in designing teapots. They need inspiration from images of such objects and cannot visit all the places that may have such images, whether it’s in design magazines or elsewhere.
Secondly, we identify how and how we cannot support the professional’s tasks. Where do we become ineffective for them? We cannot assign people to search for teapot images within the resources of our institution and others, but we have the sources where they could find them, such as magazines, engravings, or others.
Thirdly, we break down all the tasks performed by the (non) user and identify points that can be digitized in the medium term. There is technology that allows us to locate objects in digitized images automatically.
Fourthly, we analyze the technological implications, including legal limitations, and the impact on our institutions. We build a use case that allows us to see if we can address the needs of these types of (non) users.
If we believe we should invest in this type of service with this technology, we attempt to carry out a proof of concept with teapots, and based on the results, we iterate to improve. We may also discover that it doesn’t make sense, and therefore, we can abandon the service.
Essentially, we are doing the same thing as any startup: putting the user at the center, discovering pain points, and determining our interest in addressing them with a technological foundation. It is also implied that with this exploration model, we aim to launch services to make mistakes and correct ourselves quickly to achieve better results.
Innovation from Within: Open Innovation
Open innovation is the biggest leap an organization can take. On the one hand, it can involve the entire team. On the other hand, it means that the entire team is mature enough to understand that they are competing, and in every competition, some come first, and others do not. And this point is not something we are accustomed to in our work units.
The implications of this way of innovating are both economic, as everyone explores, and social, as ‘winner takes all.’ Leadership must be clear about this path. So much for caution. From a much more positive perspective, leadership should also know that opting for these types of dynamics has a transformative effect in the medium and long term, allowing for the acceleration of disruptive innovation processes. The results are usually good, very good!
How should such initiatives be developed? Let’s aim for the maximum, and then each one chooses how far they want to go:
Leadership initiates a call, typically on ambitious issues: market disruption, identification of services and trends for (non) users, user retention through new forms and attraction channels, or the incorporation of new technologies to become much more efficient or improve service. These issues have a technological aspect in which technology should play a leading role.
- The call has rules: participation guidelines, time commitment, rewards for winners, a format for collecting initiatives, and a committee to evaluate proposals.
- The call is launched, and a registration and team formation period is provided. Working alone is not allowed because innovation is not a one-person journey.
- One week is given for the submission of ideas, initiatives, or others to the committee. They validate which ones proceed to the next phase and which do not. Ideas not selected are placed in a panel and archived. Perhaps now was not their moment, but who knows in the future.
- Working groups are given three or four weeks to prototype in low fidelity, meaning prototypes with few resources and not much definition, in three areas: technology, market analysis, and necessary resources. The goal is to put ideas into black and white and understand the feasibility of what has emerged.
- A second presentation is made to the committee, and it decides whether to invest resources or not. In the case of a negative decision, we return to that panel of ideas with a broader understanding.
- Resources should be invested, not only for exploration but also for the exploitation of those valid proposals that you wish to continue with.
As you can see, we are talking about a complete process that lasts between 1.5 to 2 months. The time typically allocated to teams is approximately 20% of their workday unless they are eliminated. Teams that do not make the cut do not continue. Therefore, it’s easy to do the math. If we have 10 teams of 4 people each, and only 3 make it to the development phase, during this period, we will have 12 people working.
What is the profitability of these initiatives? The expected return is that if we achieve 10 ideas, services, or products that pass the initial stage, 6 may fail, 3 will have some degree of success, and 1 will become the new growth engine for the organization.
Innovation from the Outside: Frontier Innovation
Frontier innovation is the term used to describe the type of innovation that seeks to overcome the main barriers faced by organizations. The day-to-day routines, work dynamics, and departments that claim to have a problem for every solution. We all have the usual suspects who, clinging to routine, hinder our progress. Therefore, we seek innovation outside the organization with entirely different approaches that can be integrated into our services. We are talking about companies with disruptive services that can solve problems that we may not know where to begin or may not have even anticipated, but will affect us in the future. These are startups.
Startups are organizations with scalable business models, focused on a value proposition that offers a disruptive response to the market, with a high technological component. They are typically early-stage organizations with little history, featuring a completely disruptive innovation model, aiming to overcome various barriers, and capable of growing if they can acquire enough customers.
Conclusion
In conclusion, disruptive innovation is the key to digital transformation in organizations. It involves exploring new possibilities, breaking barriers, and seeking unconventional solutions. It means putting the user at the center, identifying their pain points and challenges, and developing innovative proposals that create a positive impact on their lives.
It’s a challenging path, but also filled with opportunities to make a difference and lead the transformation in our organization. Let’s not be afraid to explore, experiment, and bring our boldest ideas to life!
Author
Lluís Vicente
Head of Consulting & iX
