Dealing with unknown problems

Over the past few weeks, I’ve discussed how our innovation endeavour has become too focused on known problems. We have submersed ourselves in the bubble of the known problems to an extent that we are largely unprepared to deal with the unexpected. And that self-imposed myopia creates serious challenges. My argument essentially went through three steps:

  1. our established structures work very well for known problems, but they make us blind for the unknown problems ;
  2. if we were to see the unknown problems, we still wouldn’t allocate the resources necessary to solve them ;
  3. even if we were to see the unknown problems and commit substantial resources in their solution, our mindset would still be too deterministic to tackle our increasingly complex problems fast enough.

All of that makes us vulnerable to unknown problems, which could be either truly novel, like the famous Black Swans, or not (yet) fully understood, such as climate change. These types of problems shape “the tricky half” of the innovation landscape sketched below. They are characteristic for the disruptive and wicked quadrants, which seem to overwhelm us with their speed, complexity, and unexpected twists and turns. They often take us by surprise and leave us in shock, with that distinct feeling of being hit totally unprepared. How can we deal with these types of problems?  How could we escape that bubble of the known problems?

What we need is a more organic and inclusive culture for innovation, with a less deterministic mindset, with better balanced resource allocation, and with more elastic structures. The good news is that we don’t need to dismantle an outfashioned “old” innovation culture and replace it with a radically different “new” culture.

Rather, we should complement what we already have (that still works well for the known problems) so that we realise the unknown problems, allocate appropriate resources, and tackle their solution in a more agile way. And there is already a number of promising examples of what we could. But these fledglings that I’m summarising below need our attention and care to deliver their full potential. We should nurture them, grow them, and apply them widely.

Structures

One of the compelling ideas to rethink our innovation structures is this: let’s employ start-ups to catalyse business growth. Start-ups with their entrepreneurial culture are the exact opposite of established structures, and their view of the problem-scape is refreshingly unconstrained by status-quo considerations. Hence they offer tremendous potential, including their command of technologies, their openness, their focus on action, their customer orientation, and their general spirit of competitiveness. We often seem to believe that start-ups need our help to succeed, and that the return to society is rather small. But the honest truth is that we need them probably even more than they need us. So let’s help them help us.

The other grand idea is the crowd, that internet-enabled, networked, unstructured, far-reaching source of almost everything. Think about citizen science, the makers movement, or open-source software. And add crowd-funding to the mix (kickstarter as one example). I believe we are making progress in thinking outside and beyond traditional organisational stovepipes: we have identified some key lessons and are learning them.

Resources

Of course the crowd is not only something like an unstructured structure, it is also a source of many resources. And not just goods and services. But money, knowledge, and attention as well. And again, we are gradually learning how to employ the crowd to access to useful knowledge and to obtain the right people’s attention for the right types of problems.

Secondly, we need to rethink how we invest our resources in innovation: what types of risk to take, what types of benefit to expect? To tackle this challenge, we need to strike a sound balance between safe bets and high risks, between shorter-term and longer-term benefits. This calls for concepts like innovation portfolio management: reserve the bulk of resources for rather safe bets and returns in the short- to medium-term; but invest a healthy portion of 10% of resources in high risk / high pay-off ideas, in moonshots that result either in epic failure or in grand success. I’ve mentioned Google’s Alphabet as a prime example for this approach.

While that idea is growing roots in the corporate sector, I’d advocate that we should spread it wider to actually achieve innovation portfolio management across society. You might consider society’s support to start-ups might be a case in point for supporting high risk / high payoff ideas. I’d argue that’s a step in the right direction, but still incomplete: in my view, society tends to see investment in start-ups essentially as providing money that will likely be lost (which is just a book-keeping exercise, essentially a write-off). That’s offering money, but without attention. Instead, we’d need conscious engagement between society and start-ups, with full attention, discussing objectives, challenge goals: that way, start-ups and society would influence each other, learn from each other, support each other, and co-evolve. There’s a lot that society can learn from start-ups, not the least an open …

… mindset …

… that accepts challenges as opportunities, viewing change as a positive force.

Another promising example of a shifting mindset is Slush: this event brings together start-ups and investors, founders and funders, in Helsinki each November. The concept is that of a hot spot where problems and ideas for solutions can easily meet. The events draw resources (people, knowledge, attention, and money ) from a broad range of sources, across the globe and across traditional organisations. Going beyond the conventional limitations of a closed innovation mindset with its focus on ownership and control, Slush promotes the concept of open innovation, in which awareness of and access to people and ideas are the increasingly important drivers for progress.

If you are looking for innovative policy instruments to tackle innovation more broadly, you can take some inspiration from the Israel Innovation Authority and its impressive mandate. This organisation supports start-ups as well as mature companies in their innovation endeavour. It nurtures the underpinnings for future innovation, including technological infrastructure and advanced manufacturing. Finally, it promotes international collaboration while keeping a close eye on societal challenges (thereby combining an outside orientation with the continuous look inside). This breadth of tasks illustrates how truly comprehensive policy can stimulate many facets of the innovation supply chain.

Preparing for the (as yet) unknown

Granted, innovation structures, resources, and mindset are something like a Siamese Triplet: distinctly different, yet practically impossible to separate. Still, these categories offer a useful frame to think through some good ideas and examples, around which we could strengthen our innovation culture. Of course this short overview can only offer an initial snapshot. I’m sure that there are many more avenues to explore.

For the future, we must avoid self-complacent arrogance: We simply cannot know everything in advance, we cannot predict, we cannot anticipate everything. Life will throw curveballs, we will be taken by surprise. It’s not a question of ‘Whether or not?‘ It’s only a question of ‘When and how?

The strength of a culture is not in its rigidity, and that’s particularly true for our innovation culture. Pursuing the simple optimisation of ‘the innovation business‘ for efficient resource management will kill you slowly. While that approach would be perfectly suited to handle the known problems, it would crack easily under the pressure of novel problems that were not (and could not have been) factored into the initial design. Strength comes from resilience, the ability to pursue a mission while adapting to changing circumstances. Those changing circumstances are shaped by the unknown problems, and our mission is to get our problems solved today and in the future. For mission success, we need to promote agility and sustainability in our innovation supply chain. And resist the simplistic temptation to perfect our organisations and optimise our processes for the known problems of the past …

Happy to learn your views.

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