The next wave of innovation

During the early stages of the Industrial Revolution, the first organizations were created to bring together people and resources to undertake endeavors on a much larger scale than traditional craftsmen could undertake single-handedly. “When man learned to do more with less it was his lever to industrial success,” Richard Buckminster Fuller wrote in his book from 1970, I Seem To Be A Verb. As a result, these organizations were input-driven. They focused on “resources used” and “time spent by people” and the way to innovate was to ensure the optimal allocation of work and resources throughout the hierarchy by specialization of labor.

The invention of machines was not just a great enabler of this way of organizing, it also provided us with the still-dominant view of the organization as a large, complicated, and hierarchical machine with clear inputs and outputs. This image of the complicated machine also governed the next stage in which the realization grew that it was essential to focus on outputs such as products, revenues, and profits. Making organizations efficient, well-oiled machines became the number one innovation priority of management. Tools such as LEAN Operations and 6-Sigma were created and wholeheartedly embraced by whole generations of managers.

Over the last two decades, though, we have seen an increased focus on what users need. Or, as Clayton Christensen calls it, their “jobs to be done.” In this third stage, the organization’s attention shifted from inputs and outputs to the outcomes for its customers. This meant that employees throughout the organization had to collaborate and innovate with customers outside their organization for possible answers. Enabled by Design Thinking and Lean Startup, innovation and co-creation became the new “holy grail” for management. Unfortunately, this third wave has also led to many of the technology-driven market innovations that have deeply affected our relationship with businesses, governments, and civic institutions, and have come under intense scrutiny recently.

Today’s complex challenges go even further than the customer and market-oriented ones we find on our doorstep, just outside the building. Our employees and society at large demand organizations to lift their gaze and take into account the whole system, including solving real issues like climate change, inclusivity, inequality, to name a few. This next stage requires organizations to step up again. Leaders need to define a bigger purpose they truly commit to and they need to stimulate collaboration with unlikely allies, often outside their traditional industry scope. Organizations need to embrace systems thinking as a way of creating understanding, influencing and creating positive systems-wide impact.

Creating this higher-level impact and innovation requires not just a new way of doing, but also a new way of being. We see that it is possible for leaders to transform themselves and acquire the higher-order perspective needed to deliver the outcomes users demand and the impact the system deserves. We see glimpses of this type of leader and leadership in politics (New-Zealand’s Prime Minister Jacinda Ardern); in business (Salesforce CEO Marc Benioff); and in society (International Institute for Peace chair Forest Whitaker).

These leaders who can move people with a compelling vision for an alternative state of affairs; leaders who dare admit that they don’t have the answers, but who take people along on a joint exploration of the path; leaders who stay away from winning and losing, and strive for the betterment of all.