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The Innovation Conundrum

February 2, 2023 | Peter Poolsaar, Founder, Managing Consultant, Blue Catalyst
7 min read
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We all like the idea of innovation. It’s a sexy word and exciting concept, but as corporate leaders, what exactly is it? Why pursue it? And why is it so elusive?

Like everything, it starts with motivation. Why innovate? Why spend precious resources chasing something new and different? Why change anything for that matter? After all, real estate and construction doesn’t change much and when it does, it changes slowly and we can just react as needed…or so we think. The pandemic was a dramatic example of changes in working norms and patterns in ways that are currently rippling through the system and revealing previously hidden risks and challenges – from reimagining workspaces in the work-from-home world to health and safety, not to mention ESG, an inflationary economic cycle, challenges with a tight workforce, disrupted supply chains, etc.

So instead of viewing problems as trouble, innovators see these as opportunities. How can we better understand the true problem to be solved? What solutions can we potentially use to address these opportunities? Is it valuable for our customers? Is it valuable to us as an organization? …This is the Innovator’s Mindset: defining the problem, identifying potential solutions, validating the fit, and either digging in, or quickly learning and moving on. This is known in the technology start-up industry as “fail fast.” In innovative organizations, failure is not a bad thing to be avoided but encouraged as a path to true understanding. The only true failure is the failure to learn. Failure needs to be embraced and celebrated for its learnings.

Contrast the experiences of Kodak who invented digital photography, but failed to pivot, or Blackberry which was so confident that their device was more secure for corporate users that they dismissed the iPhone as a toy; with Amazon which was only one of many early online commerce platforms, but went on to dominate the market by improving and perfecting the buyer’s and seller’s experience…and then went on to invent cloud computing with Amazon Web Services by taking an internal best practice and commercializing it. Amazon is now setting its sights on the entertainment sector with its Prime streaming service. There are many such stories.


Does this all sound like “high tech” that doesn’t really fit with commercial real estate and construction? It is important to note that not all innovation is necessarily dramatically disruptive. Innovation is anything that changes the status quo in some way. Innovation drives progress and competitive success. The extent of the change involved in an innovation can vary, from minor improvements to existing offerings to a radically disruptive new technology or business model. It requires curiosity, collaboration, courage, and a focus on creating customer value by providing a gain or removing a pain.


OK, that all makes sense. So why is it so elusive? How do we become an innovative organization?


It boils down to three things: Mindset, Method and Know-How.


Mindset

Mindset we already touched upon, but change is hard. Corporate culture is ingrained. Organizations are tuned for efficiency vs change and tends to kill anything that affects business as usual. Further, people inherently don’t like change because it is uncomfortable and inefficient, and if we do need to change, we tend to struggle and look for some example to follow. We have been taught from an early age to color inside the lines and avoid failure, conform. This doesn’t work for innovation, because innovation by definition is new and novel.


However, innovation increases your chances to adapt to environmental changes and discover new opportunities or ways of doing things. It helps foster competitive advantage as it allows you to build better products and services for your customers that differentiate you from your competitors.


Let’s not kid ourselves, changing our way of thinking is the hardest part, and if done half-heartedly and without the proper senior leadership support, the immune system of a corporation which is tuned for efficiency is sure to kill it before too long. Innovation needs to become part of the corporate DNA.


Method and Know-How

Ok, I buy it, but what does it look like in practice, and how do I implement innovation?


Once you have the commitment and mindset, it becomes a matter of execution. A way to define the true problems and opportunities and collect, evaluate, and assess which resulting ideas are worth pursuing & determining the payoff.


The good news is that innovation has a process; proven techniques for translating new and/or existing knowledge into marketable solutions. Companies that pursue a successful innovation program have something decisive that puts them ahead of others – they have a clear understanding of the problems to be solved, and of the path from idea generation, validation, through development, to market entry. Consider the following examples of big industry problems in real-estate & construction: the shortage of affordable housing, the environmental impact of construction, challenges in sourcing skilled labor, etc. What part might innovation in your organization contribute to solutions to these big problems, and what benefits can you accrue as a result?


Fall in love with the problem, not the solution.


Like any journey, it starts with knowing where you are and where you want to end up. A good place to start is to do a diagnostic of your current innovation capabilities and opportunities which touch upon internal, customer, ecosystem, and partners. Then, establishing the destination starts with clarity on the industry problems to be solved, and the fit with your organizational goals. This is generally achieved via an Innovation Strategy developed by engaging key players inside and outside of your organization to develop clarity and an action plan for innovation that will help you set the foundations and identify the requisite resources.


The journey is the process, and processes need to be managed. One recent example is an Innovation Lab that was over-investing in candidate ventures despite having a methodology. Without having discipline in managing their methodology, they found themselves pivoting only after months of cost and effort – instead of weeks. What was missing were the gates, filters, defined responsibilities, and iterative discipline necessary to support the winning ideas, and learning from the losers.


A better method is to use a rapid cycle iterative approach with defined milestones, responsibilities, pre-defined tools, techniques, and templates to accelerate the establishment of an innovation program. The efforts are broken down into distinct managed phases which are tuned to the specific organization. It will take some time, but implementing an innovation program can be significantly accelerated with proper focus and support. Realistically this method can build-out a functioning innovation program in less than a year, whereas many organizations find that they have only loosely talked about the concept of innovation for several years now. The outcome for the organization is to have a clear understanding of the relevant industry problems, their role in solving these problems, and an established method of developing solutions that provide the requisite corporate and customer value to justify their pursuit and capture the benefits. In short, a functioning corporate innovation culture and program.


Given the accelerating pace of change, competitive landscape, and need for industry stewardship, reacting is no longer a luxury we can or should afford. It takes time to become an innovative organization so instead of investing in efficiency projects like automation on their own, consider how your organization can execute it with an innovator’s mindset that could yield superior results and address customer experience and the industry problems in your scope.


Where to Start

If the desire to instill innovation into your company resonates with you, ask whether your organization is purposefully innovating. If the answer is no, perhaps reflect on some of the principal causes why corporate innovation fails:

  • An incomplete, poorly defined and/or misaligned strategy
  • Failure to adapt your corporate culture to a culture supportive of growth and innovation
  • Inadequate leadership throughout the organization
  • The wrong tools and processes
  • Failure to integrate or assimilate innovation activity into the core business

The most successful organizations will make the pivot to a purposeful corporate innovation program that delivers results. Being passionate about innovation means exploring the tools to gain expertise and get the ball rolling in the right direction with Mindset, Method and Know-How.

Peter Poolsaar, Founder, Managing Consultant, Blue Catalyst
Peter Poolsaar is the Founder and Managing Consultant for Blue Catalyst, a boutique management and technology advisory firm founded in 2003. It provides advisory and mentoring services for corporate innovation, customer experience and transformation. Peter has worked with enterprises, SMB and start-ups for over 30 years as a technology executive and management consultant successfully delivering on hundreds of project engagements.

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