If it ain’t broke…

Douglas Haig was the Commander of the British troops on the Western Front between 1915 and 1918.

He was also a cavalry officer. So he knew the quickest way to win a battle was with a decisive thrust by mounted troops, who could move fast, get in behind the enemy and capture ground quickly for the infantry to consolidate.

That was the prevailing military orthodoxy. That’s what he’d been taught at Sandhurst. That was the way battles had been fought and won for the last 300 years.

So, when military designers approached him in 1915 with a prototype for a ‘land ship’ – an armoured vehicle with caterpillar tracks and guns – he couldn’t see the point. The new weapon was mechanically unreliable, difficult to manoeuvre and nowhere near as fast as a galloping horse.

But, as the war on the Western front continued to be a bloody stalemate, Haig was frustrated. He needed to find a way of breaking through the well-entrenched German lines, so he could deploy his cavalry and win the battle.

So he contacted the designers and told them to send everything they had – at the time, around 50 vehicles (which, by now, were being referred to as ‘tanks’, in a bid to persuade enemy spies they were just for transporting water).

By the time they got to the front, only 32 of the 50 tanks were still working, but Haig threw them straight into battle. It was a qualified success – only nine made it as far as the German trenches. But they did some damage, so he persevered.

Over the next two years, the technology improved. The tanks got quicker and more manoeuvrable. By 1918, they were an established weapon: over 500 of them took part in the decisive battles of the hundred-day offensive that eventually broke the German lines and ended the war.

What’s interesting is the conclusion both sides drew about the tank as a weapon after the war ended.

The British still saw it as a tactical solution to a specific problem (breaking through a defensive line).

Whereas the Germans, having experienced tanks from the sharp end, realised they were a devastating new way of fighting wars – and re-designed their whole military strategy around them.

22 years later, their Panzers came back to Northern France and ran straight through the French and British armies, who didn’t know what hit them.

You see the same thing in business all the time.

Some companies embrace innovation as a way to completely transform the way they work and the experience they offer their customers.

And some see it as a way to keep doing the same things that worked last time, only a bit quicker and cheaper.

Like the British army in 1939, they’re still fighting the last war.

 

What’s that ticking noise…?

In 1958, the average lifespan of a business in the American S&P500 index was 61 years. Today, it’s 18 years. By 2028, it will be nearer 11.

In fact, according to a study by the Yale School of Management, it’s likely that around three-quarters of the companies in the S&P500 today will have disappeared from it altogether in ten years’ time.

No wonder CEOs are jumpy.

They know that, if they don’t keep reinventing their business, it won’t be one of the 25% that survives beyond the ten-year mark.

But they also know that, if they don’t hit their short-term targets, they probably won’t be around long enough to make the changes anyway.

With operating costs already cut to the bone, those targets are getting harder and harder to hit, which means there’s very little margin for error.

And that’s precisely where the problem comes.

When you’re looking for creative ways to reinvent your business, the surest path to failure is to play it safe. A little bit of incremental change here, an extra blade on your safety razor there. These are not the things that will save your business when a disruptive new competitor rips up the rule book and starts eating your lunch.

But, when your primary business focus is on delivering short-term results, you’re unlikely to have a culture where people embrace risk and failure.

It’s far more likely to be a culture where people stick rigidly to the processes and ideas that worked last time. A high-compliance culture, where contribution is measured only in numbers. And where nobody wants to admit that something hasn’t worked.

That’s not an environment where new ideas are likely to flourish. And, unless you can do something to change it, your business will inevitably suffocate and die – sooner rather than later, according to the Yale study.

So, what can you do? How do you take a workforce of people conditioned to be compliant process-followers and turn them into agile entrepreneurs?

Well, the bad news is that there’s no process for it. There’s no template to follow. No lever to pull.

The only way to do it is by changing the culture of your business. And the only way to do that is if you – and every other leader in the business – really wants to.

Everything else – launching a new purpose and values, polishing your employee value proposition, setting up a ‘creativity lab’ – is just a more or less interesting way of avoiding the issue.

You hear that ticking noise?

That’s time running out.

Loose-tight

For a period of around 20 years, from the early 70s to mid 90s, the UK was the undisputed world power in advertising. One of the great figureheads of that dominance was Steve Henry, whose London-based agency HHCL produced some of the most iconic campaigns of the time. If you lived in the UK then, you’ll remember the work they did for Britvic (You know when you’ve been Tango’d), the AA (The fourth emergency service) and Ronseal (Does exactly what it says on the tin).

One of the things that made HHCL so successful was the way they worked. As Henry explained in one of his excellent blogs: ‘You need a structure. At HHCL, we had very tight processes, because we believed in the concept of ‘loose-tight’. Tight processes meant we could explore loose – i.e. unstructured – thinking.’

The crucial point was that HHCL’s processes were designed to help produce outstanding work, rather than improve their margins by operating more efficiently.  They were all about creativity, not money.

This is in stark contrast to the model of large advertising groups, such as WPP, Omnicom and Publicis, which have grown rapidly by acquiring agencies and introducing efficiency measures – making them more profitable but, in Henry’s view, less creative and, hence, less valuable in the long term: ‘We’ve seen the ad industry become a lot more efficient – but at what cost? Nowadays, it can turn out bland, invisible work faster than at any time in history.’

It’s a familiar refrain. As advertising becomes safer, it becomes easier to ignore – and, consequently, less valuable to the brand owners who want to stand out and get people’s attention.

The underlying motivator is a fear of failure: if you have to do work twice, your profits will be damaged and your shareholders will be unhappy. Which is why nearly all advertisers and agencies now rely on focus groups to pre-test their ideas.

There are two big problems with this. The first problem is that your competitors are also testing their ideas through focus groups and getting exactly the same kind of feedback. Which means there’s a pretty good chance they’ll come up with the same ideas and solutions you do.

The second problem is that focus groups tend to be unfavourable to original thinking. It’s a truism that people feel more comfortable with things they know and understand than they do with things that are new and unfamiliar.

That same instinct for safety – the desire to avoid risk and only back dead certainties – is why most businesses are not very creative places. When looking at a problem, their first instinct is to apply a solution that worked somewhere else. Once they’ve got a solution they think won’t fail, they stop thinking and turn it into a process.

Whereas, if they carried on thinking, they might come up with a better solution.

 

Stop talking about innovation

A hundred years ago, it was a big deal when an aeroplane flew across the English Channel. Who would have believed then that we would be watching a live camera feed from the surface of Mars – and picking up data from a man-made satellite as it left our solar system?

Thirty years ago, who would have believed you could take a picture without film? Or make a phone call from the top of a mountain?

Even today, how many of us really believe you can manufacture objects in your own home with a 3D printer?

Yet it’s happening.

The pace of technological change is so fast nowadays that even visionaries like Bill Gates struggle to keep up (although he now denies making the regularly-quoted assertion that ‘640k of memory ought to be enough for anybody’). Today’s science fiction is tomorrow’s fact. And the corporate graveyards are littered with the corpses of big companies that didn’t adapt in time.

In 2009, Nokia was the world’s fifth-largest brand, worth $35bn. Two years later, it was a Microsoft footnote, swept aside by a smartphone Tsunami that it hadn’t seen coming.

In January 2008, Woolworths was one of the UK’s oldest and best-known retail names, with a swaggering Christmas advertising campaign and stores in every high street in the country. By January 2009, it had vanished.

That’s how fast fortunes turn.

An Innosight report suggests that more than 75% of the companies on today’s S&P 500 index will not be on the list 15 years from now. In most cases, this is because they will be overtaken or acquired by fleeter-footed rivals.

So it’s hardly surprising that innovation – in products, in services, in behaviour, in ways of working – is something almost every CEO regards as a priority. But recognising innovation as a priority and creating an innovative business are two very different things.

If you look around your own business (and be absolutely honest with yourself here), how much do you see that’s genuinely new?

There’s probably plenty of superficial innovation going on: an extra blade on your razor, a new flavour in your ice cream range, a one-hour delivery option.

But doesn’t it all feel a bit safe? A bit like what everyone else is doing? Where are the game-changers? Where’s the disruptive behaviour? Why do the big ideas always seem to come from somewhere else – from younger, hungrier rivals?

The depressing truth is that most companies are so scared of failure that they won’t do anything that isn’t guaranteed to succeed.

And that reluctance to make mistakes, as the Innosight research shows, is exactly why most of them won’t be here in 15 years.