Organizations simply don’t get started on innovation, says Stanford innovation researcher Christian Seelos. They would evaluate ideas but not have good criteria on how to assess them. Ideas would remain as a topic of discussion and never get off the ground because people are too busy working on routine ones.
Perhaps they pursue bad ideas that generate little value, or stop halfway because they get scared. There are also organizations that stop too late because they don’t know how to experiment or fail smartly, and ends up costing the organization.
Seelos is part of a research team who works with social sector organizations, particularly in developing countries, to make sense of innovation. A frequent observation that he notices is that people even in the same organization have different mental models of what innovation is and what it can or cannot do.
In every organization, there are routine ideas being pursued, such as enhancing quality, mitigating errors, working out costs, or improving customer satisfaction. Organizations rarely think twice about allocating resources to these activities because they make sense and the outcomes and timelines are usually clear. Seelos calls these activities as belonging to the “green zone”, and when pursued can scale the company.
Then there are ideas in the “red zone” that move the organization away from the status quo. These unusual ideas are seen as distractions. Unlike the green zone, organizations tend not to be fit or willing to deal with these ideas.
“We call these activities innovation. They are a departure from business as usual and from existing knowledge and accumulated organizational wisdom,” Seelos said.
The green zone is about creating immediate value whereas the red zone is about creating value in the future. Because the red zone is unpredictable and the failure rate is high, innovation can be very costly to the organization.
On how to become more innovative, Seelos says that rather than thinking about moving into the red zone, which organizations can’t do in reality, a better method would be to push the red zone towards the green zone.
One approach is to adapt the organization so that ideas that seemed like distractions years before can now be productively evaluated and explored. “This requires the governance system that starts with rethinking the role of the board in innovation all the way down to enabling structures for smart experimentation and smart learning,” he said. “You get better at innovation not by moving from the green to the red zone but by adapting your organization so that you can deal with what previously used to be red zone problems more productively.”
In addition, Seelos says that scaling in innovation is important. “If you are not good at scaling, don’t innovate,” he said. The critical component is not innovation.
As one example, Waste Concern in Bangladesh is founded by two engineers who love to create new processes and technologies. They mostly do the innovation part but have partners to do the scaling work. “Although they only work in the red zone they make sure the green zone happens.”
On the other hand, Aravind, a provider of low-cost eye surgeries in India, works almost exclusively in the green zone and is able to provide several hundred thousand surgeries each year. But during the 1990s their model could no longer scale because the price of artificial lenses went up and supplies were limited. So they were forced to innovate and build their own manufacturing plant, which became a radical innovation for the organization and drastically improved their capacity, but not before the hard work to stabilize their plant.
“Scaling is the thing that creates value from innovation. The green zone work is what creates value.”
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