Resilience, innovation, lean startups

Resilience

Resilience isn’t a concept you hear mentioned in too many boardrooms yet, but I think it’s a useful frame for conversation across many industries and endeavors.

Resilience refers to a system’s ability to survive major shocks and spontaneously generate new order afterwards—like a forest recovering from a fire. The characteristics of resilient systems include redundancy, modularity, diversity, complexity, and emergence— all poor fits for many of the institutions and infrastructures we’ve been collectively building since WWII.

Resilience can be described as a necessary response to predictable system shocks like peak oil, economic collapse, and the global and local impacts of climate change. Or it can be positioned more cheerfully as a natural evolution in business- and group-building metaphors from machines, to computer networks, to ecological systems. Either way, the major themes are the same.

For smart writing on resilience, see here, here, here, here, and here.

Creative Commons rainforest_moorea Tim Waters

Oponohu valley, Mo’orea, Creative Commons, Tim Waters

Innovation

Innovation is a concept that’s already gone viral, and in business publications, it’s been ubiquitous for some time. There have been downsides to this: many novel value propositions and “pieces of flair” get praised for being innovative, while some healthy businesses and long-term scalable successes go unsung.

But I think the fact that we’re talking about innovation, and talking about it so much, is itself poignant. You could read this as a sign that the basic premises for many industries are unraveling—e.g., allowing companies like Google to create zero billion dollar industries overnight—or that the increasing competitiveness and efficiency of business in general is forcing everyone everywhere to search faster for new kinds of value-creation. Both interpretations are correct.

I think that Clayton Christensen has contributed the most clarity to discussions of innovation, and his distinction between sustaining and disruptive innovation is a particularly useful one. The model below illustrates how these two activities differ within a public company:

sustaining and disruptive innovation curves

  • Sustaining innovation (the “A” curve) has a predictable and positive ROI. We know how to do this, with over a hundred years of traditional management philosophies, processes like Six Sigma, and expert leaders to steer the course. Every organization of any scale must get good at this to succeed. Sustaining innovation pays good dividends for a while, but over time, incremental improvements to what we’re already doing offer less and less bang for the buck.
  • Disruptive innovation (the “B” curve) is different. Because we’re shooting for an end-value that has never been seen before, we don’t know how to get there. The ROI curve at the outset is therefore less promising: we have to experiment and fail, and learn from those failures until we see our way towards something new.
    Disruptive innovation requires a different mindset, yet in today’s business climate all organizations that survive more than a few years must excel at both kinds of innovation at the same time. In fact, in every sector, industry, and company today, you can see a yin-yang of sustaining and disruptive innovation happening at every level of scale.

Disruptive innovation is not yet something we know how to do well. In the business world, there have been glimmers of best practices, noteworthy trends, and provocative anecdotes, but until now no real methodology.

Lean startups

Which brings me to The Lean Startup. I’ve been to many conferences where the topic of the event is inevitably described as a “movement.” I recently attended the excellent Startup Lessons Learned Conference in San Francisco, where the “m word” was used, and in this case, I think it’s entirely earned. Eric Ries and others behind The Lean Startup are onto something big.

Ries defines a startup as “a human institution designed to deliver a new product or service under conditions of extreme uncertainty.” Lean Startup is a school-of-hard-knocks approach to succeeding against that backdrop. It’s not a recipe, but rather a flexible framework for iterative strategic hypothesis testing.

In other words, it’s a methodology for disruptive innovation.

The Lean Startup by Eric Ries

Lean Startup has been growing as a movement in Silicon Valley for several years. It may have started with technologists (with an influx of best practices from previous movements like lean manufacturing), but its language—and I think this is very important—is that of business. It’s neutral enough to be embraced and adapted by designers, engineers, and entrepreneurs in any industry. And its emphasis on experimentation and validated learning is in-line with some of the most forward-thinking educational organizations today.

The videos from the Startup Lessons Learned conference are all online—I love that—and include a mix of broad overviews and fascinating real-world anecdotes from companies like Intuit, Dropbox, Groupon, and others. Also, the book The Lean Startup officially comes out this fall, and is well-worth getting.

We need more resilient systems, and disruptive innovation is, to a large extent, how we’ll get there. Lean Startup therefore is a right idea at the right time. And it’s not just for startups—it’s for everyone.