How to Master the ABCs of Innovation

Too few companies are being innovative about how they innovate. They are buying fish, not learning how to fish.

January 13, 2017

Innovation is an imperative. Fortune 500 CEOs cited dealing with the rapid pace of technological change as their “single biggest challenge." Another global survey of board members and senior executives identified the speed of disruptive innovation as one of the highest risks facing their organizations. Innovation is also the source of great opportunity. More than half of CEOs in a PWC global survey ranked R&D and innovation as generating the greatest return.

Yet, the intense attention on innovation often misses a key element. Many companies are paying attention to immediate challenges and opportunities, including six technological disruptions that might make or break many companies. In my experience, however, too few are being innovative in how they innovate. This is the difference between buying fish and learning how to fish.

Douglas Engelbart, the noted engineer and inventor, captured the critical difference when he wrote: “The key to the long-term viability of an organization is to get better and better at improving itself.”

To understand why, take a look at Englebart’s framework for the “ABCs of Organizational Improvement.” Every organization has an “A” process, which includes its core activities, such as product development, manufacturing, distribution, marketing, sales, etc. The A process is all about execution—carrying out today’s strategy and business model as well as possible.

Innovation is often thought of as the “B” process, which is to improve the organization’s ability to perform A. This includes improving through hiring and training, introducing new tools, adopting process improvements, etc. Effective organizations have systematic B processes for continuous improvement using methods like knowledge management, business process reengineering and Six Sigma. The B process is responsible for making the A process faster, better, cheaper and more profitable.

In Engelbart’s model, there also needs to be a “C” process. The C focuses on improving the B process; it improves how we improve. It is the “C” process that is too often missing or haphazard. The C process should systematically explore both the content and process of improving the A and B processes. This includes adapting and adopting better tools and methods for continuous improvement, such as customer co-creation, open innovation, agile development and cloud computing.

The C process also provides license and resources to think big—to go beyond the incremental and consider the full range of possible futures for the organization. It explores doomsday scenarios that might drive the company out of business. And, rather than just looking for incrementally faster, better or cheaper innovations, the C process dares to dream big. It gives responsible license to start from a clean sheet of paper to explore truly disruptive innovation opportunities.

C process thinking led Xerox to create Xerox PARC and, as a result, invent laser printing and many aspects of the personal, networked computing. It also led Apple to the iPhone and Google to driverless cars. The lack of a robust C process contributed to Kodak’s failure; Kodak resisted, for decades, thinking about digital photography as more than an incremental extension to its A process business built on film, paper and chemicals.

To use a racing analogy, the A process is the position of the racer. The B process determines the speed at which the racer is moving. The C process determines the acceleration, or the rate at which the racer’s speed is changing. (In math terms, the B process determines the first derivative, and the C process sets the second derivative.)

In the long game of business, a slow leader will lose to a faster competitor. The fastest competitor will be the one with the greatest sustained acceleration. As you consider the innovation challenges to your core business, do you have a systematic B process? Just as important, do you have a systematic C process?