Innovation landscape & adaptive cycles – Part 2

In the previous post I’ve investigated the relation between two of the major concepts that I had discussed earlier: the innovation landscape on one hand and the adaptive cycles on the other. I focused on the part of the innovation landscape that is defined by known problems, i.e., the business as usual quadrant and the research quadrant. Together, with some overlap, those two quadrants cover the front–loop of the adaptive cycle. So the relation between the two concepts turned out to be a pretty straightforward.

Before we turn to the other side of the innovation landscape, the area that is defined by unknown or not yet understood problems, it is prudent to first spend a few thoughts on the differences between the two sides of the innovation landscape: what separates the disruptive quadrant and the wicked quadrant on one side from the business as usual quadrant and the research quadrant on the other side?

There’s an “easier” side of the innovation landscape …

Even though the dividing line across the innovation landscape is neither solid nor precisely defined, it still marks a significant difference: in the end, it all boils down to response time. On the “easier” side of the dividing line, for known problems, we can safely assume that society had some time to react in two important ways:

• There are rules, regulations, codes of contact, approaches how to handle such a problem: there are established institutions that provide clear guidance.
• By the same token, society had the time to devise and establish complex adaptive system to address those known problems, to handle, mitigate, and ultimately solve them: think about businesses, corporations, universities, research laboratories for example.

Taking all of that together, you might say that for known problems, society had the time to establish clarity and certainty: somebody is in charge to handle known problems according to some agreed rules. And with the existance of such complex adaptive systems, innovation on the “easier” side of the landscape can be directly depicted within the adaptive cycle. So when the problem itself is known, and only the solution is in doubt, we are well prepared.

… and a “less easy” side

Now, switching over to the “less easy” side of the innovation landscape: it might come across as a simple truism, but it is of fundamental importance to acknowledge that for previously unknown, novel problems society can only react on the fly. There are neither dedicated established rules that provide specific guidance, nor are there established systems in charge of solving those problems: society is hit rather unprepared. Therefore, innovation that solves unknown problems occurs outside the comfort zone of the established rules and systems. Such innovation challenges the old order.

And through that challenge function, innovation for unknown problems is indirectly connected with adaptive cycles. If you think of the adaptive cycle as the depiction of the life rhythm of an established complex adaptive systems, then the innovation (either in the disruptive or the wicked quadrant) presents the trigger that sends the established system into the release phase, it’s the event to causes collapse. Most importantly, such innovation must canibalise established systems to get accesss to the resources required to implement the solution for that novel problem. Let’s investigate the two different quadrants in turn:

In the disruptive quadrant, it’s only necessary to recombine known ideas to arrive at a solution to the novel problem. Such recombination does require a breakdown of parts of the old order (say, a corporation), so that resources can be re-allocated, from the old to an emerging novel system (think of a new start-up business). But because such a novel system is initially small and needs only a limited amount of resources, such partial release and re-allocation of resources can happen fairly quickly. A a result the old system will likely experience only a partial collapse, releasing only a portion of the tied-up resources (in our example, maybe just one branch or one local market is lost). In this situation, the trigger doesn’t last long enough to wreck the entire old system.

In the wicked quadrant, the situation is more challenging, as there are no readily available ideas for potential solutions. Even worse, such circumstance might require considerable investigations, in-depth research and major resources to understand the problem before a solution can be identified, tested and implemented (think for example about a business model that has been successful for decades, but is suddenly subject to environmental regulations it cannot comply with). Innovation in the wicked quadrant therefore is far more time-consuming than in the disruptive quadrant. And that has negative effects for the existing system. As the trigger event endures longer (it takes longer to identify a potential solution), the release phase is extended, so that the existing system is more likely to disintegrate entirely. In that case, all the resources that were previously tied up in and controlled by the old system are released and now freely available to new emerging systems. That can be positive – in the example above, the business model is finally failed, but other, competing business models might receive enough resources to be tested and validated. However, it can be negative as well – if there is still no idea for a potential solution, the underlying problem might actually cascade upward into the next larger cycle to trigger collapse there. That’s when the larger corporation might be called into question, if it is unable to respond to the new regulations with new products that meet the desired standards.

Where does that leave us? Well, it’s a story that reminds me of the nested adaptive cycles and their intertwined connections with other systems: what happens within a system is influenced by its environment. And the collapse of a complex adaptive system can be triggered either by the surrounding larger systems (like a corporation that stops a production line) or by systems that serve different purposes (like environmental regulations challenging the economic viability of a business model). These interconnections are often hidden below the surface, hence their influence and impact comes as a surprise.

Inevitably, the disruptive and the wicked quadrants hold surprises for us. And the more we optimise our existing systems to solve the known problems for us, the less resilient those systems are to external challenges and shocks. That applies to any man-made complex adaptive system, whether it is in the field of technology, of business, or society:  the more we strive for efficiency, the more vulnerable we become. More to follow in an upcoming post …