Innovation is the Wrong Answer

From buzzword to societal renewal

It was a cold night but warm as toast inside the old furniture factory – a most unlikely venue that almost defied detection even with my GPS navigator urging me to stop. You have reached your destination, she insisted. I looked around in vain for the alley and eventually spotted a small, barely noticeable dark blue doorway cut into the bricks.  

Within minutes I was sitting at a long red gum table along with nine strangers, eating pizza dished up piping hot from an oven just meters away, fidgeting with small pieces of lego 'aimed at stimulating the imagination' and jotting not-so-memorable remarks on the paper table-cloth with an assortment of coloured pens.

Or at least that is what most of the others were doing. I listened, trying not to appear aloof, grumble too much, or bark improprieties as the conversation veered off course and restarted, over and over, in a somewhat arbitrary fashion. This kind of discussion did not augur well for a productive evening, I mused.

An incongruous assortment of people, we had gathered on that chilly Autumn night to discuss innovation. More explicitly we had been convened with the explicit purpose of giving advice to the state Minister for Innovation and Small Business on where to invest $62 million. Not that the Minister had actually sought our advice, I later discovered.

As the evening wore on and the conversation became more animated I began to reflect on the futility of the task. For a start we had no working definition of what we meant when we talked about innovation. Was it something entrepreneurs uniquely tackled? Did it require creativity or inspiration? Was it a process, or the outcome of a process? Was it synonymous with continuous improvement? Was money a necessary part of the equation? Did it have anything at all to do with generating value?

To all intents and purposes we were conversing from a platform of willful ignorance. Not that this deterred us. After all, the extrinsic motive to stay at the table was a steady supply of delicious pizza and wine rather than the topic itself. As the evening wore on we skated across many shiny surfaces. As for conclusions? There were none.

Innovation seems to be a term that defies a single universal definition. It does mean different things to different people, and varies from one situation to another - often quite significantly.

In the Business Dictionary it is described as the process of translating an original idea or invention into a product or service that creates value, for which customers will pay a premium. Well it is the business dictionary after all! The same source maintains that to qualify as an innovation an idea must be replicable at an economical cost and must satisfy a particular need. Immediately the financial imperative rears its stultifying head yet again, a notion so ingrained that it overwhelms almost all other opinions.

The profoundly ingrained and sacred nature of 'economics first' is reflected in a recent publication by the British Academy in its Future of the Corporation. Investigating the purpose of business in society, the best they could come up with was a definition that reinforces profitability at the core of human enterprise. These weasel words, wrapped around a non-sequitur, would urge business to profitably solve the problems of people and planet, but not profit from creating problems.

Such 'sleight of mouth' instantly implies that a business should not try to solve any problems it cannot justify from an economic point of view (that is most of the great moral dilemmas of our age) while failing to recognize that a majority of the problems facing humanity have been caused by business behaving as it does - putting profits before people. It also implies that innovation, too, should be targeted at gaps in the market, novel gadgets, technology upgrades and other amusing toys.

In Silicon Valley the term innovation has come to mean technological invention. In China it most often refers to political and financial reform, whereas in Japan it means striving for continuous incremental improvement. And at business schools around the world I am convinced it simply means taking common sense and rebranding it as a new management product.

In Australian management circles the word innovation came into prominence in the late 1970’s through an influential report published by McKinsey & Co. Using a 2 x 2 matrix in which productive value was plotted against the degree of originality, the authors classified three levels of innovation:

  1. The most basic level was product innovation – implying improvements to an existing design of a product or service. Originality and value were minimal.

  2. The second level was process innovation – defined as one or more advances in the quality, cost, or efficiency of an activity needed to produce a product. This level of innovation evidently generated greater value but also required more ingenuity.

  3. The third and most prized level of innovation occurred within the domain of management. Management innovation ranged from advances in the protocols of managing and organizing resources, right the way through to reinvention of business models.

As tends to be the case with anything from McKinsey, the report was circulated broadly and received widespread acclaim from the Business Council of Australia, peak industry bodies, and both state and federal governments. Innovation was at last identified as a priority in the battle to regain Australia’s competitive standing – a global ranking that had fallen steadily since the early years of the 20th century - and codified in terms that were eminently practical.

Grants and investments for innovation increased several fold. At the time this was a huge psychological boost. In conjunction with the deployment of new management methods, like Total Quality Management, for example, it assisted in the revitalization of workplace productivity besides shining a new spotlight on the conditions needed for industry viability.

Innovation gave the business community renewed confidence. Happily it also helped address some of the issues of the day, such as the country’s ability to attract and retain skills and expertise, for example, in ways that numerous recommendations in previous reports had failed to do.

That there were significant flaws in the entire proposition did not occur to people in all the euphoria and hype surrounding the Report. Having a roadmap effectively blinded enterprises to any shortcomings. And these were considerable:

  • As individual enterprise was the main target of the Report - the question of innovation at whole-of-industry and whole-of government levels was avoided.

  • Using 'productive' value as one axis automatically locked-in the importance once again of economics, while excluding the potential for other kinds of value, such as social and cultural impact, and environmental advantages, that might accrue, both directly and indirectly, from innovation.

  • The Report assumed, incorrectly, that once defined, innovation would remain a standardized practice. It did not. Unfortunately, even then, the wider world was changing - some technologies and socio-economic systems at an exponential rate. Innovation, too, would need to adapt to dramatically changing conditions if it was to remain relevant. But the need for adaptation was not considered.

  • More seriously, the ontological framing of innovation as a practice exclusively within a business context, combined with the narrow focus on productive value, meant that only first-order change could ever result from the proposals for a resurgence of innovation across Australian society.

  • The most urgently needed innovations had more to do with societal transformation, and the emergencies facing us which, even then, were well known. Second- and third-order change would be needed to address these kinds of systemic failures but the Report chose to gloss over these things.

And that is why we have a situation in today's Australia, and many other countries no doubt, where innovation is lauded yet almost totally misunderstood, even by business. It has become a nonsense word. At best a political slogan - a misnomer for anything that feels new or that breaks with tradition, however trivial.

I am just being pedantic? What does it matter as long as organizations and individuals are focused on inventing with purpose to fulfil a certain need? Therein lies the enigma. Because today we are overwhelmed by innovations that serve no useful purpose, apart from adding to the pile of stuff we want out of addiction, but do not actually need.

Meanwhile the structural changes we so desperately need are considered irrelevant, beyond our abilities, or economically unattractive given high costs and low returns.

The need to transform our thinking regarding all things innovative is belated. So what could innovation mean for us - all of us - in this age of transition between one kind of society and the next? How can innovation best be used to demonstrate human passion and ingenuity at its finest? The answer is not what you think. Because innovation as currently practiced is not the answer.

If we look at the state of our world we can clearly identify systems in various stages of decay. Some are in the process of collapsing – as evidenced in the climate emergency for example. Others have already collapsed and no longer serve humanity as originally intended. An example of the latter would be the coal industry that, zombie-like, refuses to die. Another is the industrial agricultural model that has been taken captive by a few multinational corporations that exist only to pursue their own profitable interests.

Within that scorching context the future role of innovation is societal reinvention and renewal. The renewal of our most life-critical systems - designed in a previous era for a global population of under two billion people. Renewal of the social contract between citizens and the state. Renewal of the covenant we have with each other and with our precious planet. Renewal of the bond that exists between all living species.

This requires us to shift our thinking beyond first-order innovation. To apply ingenuity not just to  plastic gifts in cereals, and the next iPhone upgrade, but to a higher moral purpose. That requires us to think beyond obsolete economic models of growth and competition. It means coming to terms with our pathological fixation on warfare and rivalry. It obliges us to stop our manic plundering of native forests and oceans, and to preserve the wilderness we have not yet destroyed. Above all else it requires a shift in resolve to reinvent a worldview that no longer serves the majority of the human family.