Strategy Masters Series: Maverick Innovation Model
How do you have radical business ideas?
How do you challenge your business before someone else does it for you?
These are questions that have intrigued me for a long while, because they are the essence of the entrepreneur, the start up, as well as the foundation of the incumbent looking to stay in business over time.
It is very hard to do well. Even harder to do repeatedly, systematically.
Why? The Innovators Dilemma
There are two sides to this. On one you have the ‘Innovators Dilemma’, Clay Christensen’s observation that successful organisations often struggle to adopt, or invest adequately in technologies that end up being the very reason for their demise.
The usual suspects given to demonstrate the Innovators dilemma are Blockbuster and Netflix, or Kodak and the new era of Digital photography, because both Blockbuster and Kodak not only knew about the new technologies that significantly contributed to their problems, but in Kodaks case, they had already invested significantly in them (it produced the first consumer-grade digital camera), and with Blockbuster, had earlier been given the opportunity to buy the company that ultimately was the biggest factor in it’s destruction (Netflix’s pitch was for them to be the online service provider for blockbuster).
What makes this particularly perplexing is that these companies are almost always the dominant players in any given market, they are riding high, they have all the resources, attract the best talent. If you didn’t know better, you’d bet on them. If you looked at them at a smaller time scale, over years, you would win that bet, but if you pull back and look at decades, generations, centuries, especially in more volatile industries, you would lose.
You only have to look at the lifespan of companies on the S&P 500* to see this in action: In 1958, the average lifespan of the S&P 500 was 61 years. In 2022 it was under 20. McKinsey predicts by 2027… 75% of current S&P companies won’t be in business.
What’s even more compelling is this was BEFORE Generative AI raised its head. Before a force that is likely to disrupt even very un-volatile industries emerged into our lives.
Why? The founders gamble
On other side lies the start up, the entrepreneur, the disruptive force. The evidence isn't exactly great reading if you are one of those either.
The success rate of start ups has always been low, but the numbers still feel remarkably bad*:
The failure rate for new startups is currently 90%.
10% of new businesses don’t survive the first year.
First-time startup founders have a success rate of 18%.
Whilst some succeed, only a very small group of them are the ones who contribute to the problems of the existing businesses.
Leaders in existing businesses and founders of start ups and scale ups share the same core problem - how to successfully and sustainably come up with better ideas than what currently exists?
For existing businesses, this is about the ability to pressure test themselves. For startups, this is about pressure testing current wisdom to find a new way.
How do you do that? Is there a system that helps stack the cards in your favour?
The Maverick Model
The answer seems to lie in the same approach. One that combines four things:
The powerful, proven ‘Value-lab’ approach from Teppo Felin & Todd Zenger.
Oxford colleague Paulo Savaget’s brilliant ‘Workarounds’ (his book ‘The Four Workarounds’ is a must read for anyone interested in real world strategic creativity). I have taken the liberty of adding a potential 2.0 to one of them, I call it ‘The Psycho-logical Roundabout’ based on Behavioural Science.
Aristotle’s idea of going back to ‘First principles’.
My Conviction Model (if you want a deeper dive you can find links below).
It is a system built of five key elements: 1. Who are you trying to help and what are they trying to do? 2. What are the conventions around how these needs are currently being met and what assumptions underpin them? 3. What are your maverick convictions that are fundamentally different from the current wisdom, from the way things are done? 4. What is your new theory of value? and lastly 5. What are the core convictions that hold it in place that: Lights the fire (emotional resonance) and Lights the fire (functional clarity).
It also has bridges between these that help firstly to find and craft those maverick convictions (looking for workarounds and breaking things down to first principles), defining what the core challenge is to those convictions validity, then deconstructing it into to smaller challenges to make it more manageable, and then running experiments, looking for resources and finding solutions.
Let’s look at each of these in turn:
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