More Details On The 8 Productive Tensions Of Innovation - 1. Flexibility Or Discipline

More Details on the 8 Productive Tensions of Innovation

1. Flexibility or Discipline (selection vs execution)

Q - Should you be flexible or disciplined when capturing growth opportunities?

This is sometimes called the opportunity paradox (how can organisations capture new opportunities most effectively?)

What is the optimum way of selecting opportunities and executing? There is one Approach that suggests leading this selection of opportunities be tied to emergent customer demand. This is most appealing in settings

"...characterised by a swift and unpredictable flow of opportunities, shifting market boundaries, and ever-changing competition..."
Christopher Bingham et al, 2022a

Thus, there is an underlying belief that you need to move quickly in new markets. However, moving rapidly gives you less time for deliberation and you can end up making bad choices.

However you need to know when to remain disciplined and focus and when to be flexible, receptive and opportunistic.

"...disciplined planning during opportunity selection early on may even pave the way for more latitude in opportunity selection later..."
Christopher Bingham et al, 2022a

Some people like growth to be planned, ie this helps

"...chart a course for the achievement of goals, develop 'what if' scenarios, identify risk factors, and prepare for contingencies in a most comprehensive way......research findings show that performance often benefits from adhering to standardised tempplates for a new market-entry..."
Christopher Bingham et al, 2022a

This may work in a stable environment but has limitations in a dynamic, competitive environment. The latter requires extensive experimentation, adaptation and improvisation to handle an uncertain world with all its unpredictabilities, eg market boundaries are ever-shifting and competition is continually changing, etc. This requires agility and flexibility.

Each opportunity has 2 parts

i) opportunity selection (which customer problem to solve)

ii) opportunity execution (entails solving the customers's problem)

Too often the main focus is on execution, ie creating value by developing solutions that customers want. Equal focus should be on opportunity selection.

Diagram - selection v. execution (how can we capture new growth opportunities most effectively?)

Christopher Bingham et al, 2022

"...Opportunity......consisting of opportunity selection and opportunity execution. Shifting from an intense focus during selection of flexibility during execution promotes learning and provides maximum leeway for leaders to adjust adeptly to unforeseen realities..."
Christopher Bingham et al, 2022

Opportunists vs Strategists

Opportunists tend to rely on a less scripted, more flexible, less conscious approach to selection, eg let customers' enquiries shape opportunities selection
"...opportunists view themselves as astutely cherry-picking the low-hanging fruit, or seizing narrow windows of opportunity before they close or competitors capture them..."
Christopher Bingham et al, 2022a

For opportunists, ambiguity is not necessarily undesirable as it can help make better decisions quickly as against the outcome of focused planning.

On the other hand, strategists choose to limit themselves to particular markets where they have identified viable opportunities. They are more disciplined and study the background to the opportunities so that they can devise plans on how to handle them. This allows them to initially pursue the more important or easier option.

Flexible selection and inflexible execution

Generally opportunists, who are more flexible in the selection phase, are less flexible in the opportunity-execution phase, ie once selection is made they become more rigid.
"...this pattern-flexibility in opportunity selection but rigidity in opportunity execution - often leads to poor results..."
Christopher Bingham et al, 2022a

Focus selection and flexible execution

Generally strategists, who are more disciplined and rigid about opportunity selection, tend to be more flexible on opportunity execution.

Lessons on opportunity capture

i) opportunists are more flexible in opportunity selection but more rigid in execution, ie 'post-decision cognitive lock-in'; while strategists are less flexible in opportunity selection and more flexible in execution.

"...These patterns can be traced to the ways we perceive ourselves as careful decision-makers or how we deal with unfavourable outcomes..."
Christopher Bingham et al, 2022a

ii) opportunists tend to rationalise their choices after the fact, ie focusing only on the positive aspects and ignoring the negatives

iii) opportunists tend to blame undesirable outcomes on external circumstances beyond their control; rather than question how rashly they made their decision in the first place

iv) opportunists stubbornly hang onto a set course of action, ie increasing their commitment, despite what the market signals indicate
"...rationalisation sometimes functions as sense-making devices......rationalisation often goes hand in hand with a face-saving shift of attention to aspects of an opportunity that they have ignored during the opportunity selection phase..."
Christopher Bingham et al, 2022a

There is a paradox, ie
"...the more leaders attempt to control, the less control they are likely to be able to achieve......longer executive experience seems to further discourage flexible execution at opportunistic companies...... prior successes at executing opportunities may tend to become institutionalised in organisation practices..."
Christopher Bingham et al, 2022a

Strategists try to standardise solutions for users and situations. Usually, this is unsuccessful in new innovation that can be inherently unique.

However, strategists only appraise a few opportunities within the broader array of possibilities. Thus they are less likely to have faulty choices and are able to approach execution more open-mindedly, ie tend to adapt and experiment.

Strategists are more likely to modify their execution plan, eg change products, practices, etc than opportunists.

Sequencing involves stringing multiple opportunities together in an orderly fashion, like easiest first. Strategists will do it by starting with one and then branching out into others. This sequence of opportunities provides a link the past, to the present and future; it also facilitates stakeholder alignment, ie know where they are going in a synchronised fashion.

"...Sequencing......calls for an orderly approach to opportunity selection - assessing where the organisation is now, where it wants to go, and path to get there - that serves as an alternative to using emerging customer demand to select opportunities..."
Christopher Bingham et al, 2022a

Selecting and chasing multiple opportunities quickly can make it difficult to learn from, ie feedback on customer needs, suitability of products and/or services, etc,  and build on their efforts. It can pull the organisation in multiple directions.

Strategists often select markets based on their ability to learn from them and to prepare a foundation for the next market. Furthermore, they will use sequencing to enhance their legitimacy and credibility in the marketplace.

Sequencing can work both ways, ie from niche market to general, and/or general to niche. Tesla started selling high-end electric vehicles, before moving into the general market.

However Burton started with wooden snowboards for the back country and continued to branch out to cover other aspects of that industry (see below for more detail).
'Trial and error' is an important part of successful innovation, ie
"...our mantra is to assume the product will fail - then to make sure it does not..."
Jake Carpenter as quoted by Christopher Bingham et al, 2022a

For example, Carpenter founded Burton (1997) to make top-quality snowboards; after creating superior wooden snowboards for backcountry, he used the knowledge gained to make suitable snowboards for ski resort; then he expanded his product portfolio to include racing boards, softgoods (boots and clothing like jackets, waterproof outer wear, etc); he now has 35% of the $350 billion snowboard equipment market.

NB the implementation of sequencing requires
"...considerable cognitive sophistication: it takes time to acquire insight to how opportunities can and should be ordered..."
Christopher Bingham et al, 2022a

Ways to select opportunities

- be wary of an easy opportunity like UberRush (a network of bikes and private vehicles to provide delivery for retailers to their customers; this seemed a logical extension of Uber's ridesharing concept. Unfortunately there were some important differences like daily delivery services from retailers are less urgent than transportation, unsuitable for transporting large loads, eg furniture, etc)

- take the long view (focus on the long-term like what will be the flow-on opportunities, etc)

- consider all options, not just immediate ones (consider the full array of choices like

    i) opportunities size (is it a suitable size to be worthy of your time and resources, eg it can be too small or too big?)

    ii) reachability (does the organisation have, or can develop, capabilities to handle?)

    iii) competition (are there other players, currently or potentially, in the field?)

Ways to execute opportunities

Execution requires a flexible, rapid and iterative learning cycle.

If using similar products and/or services as part of a new opportunity, need to capture the process efficiencies, including economies of scale, from current routine, etc.
Need to be able to walk away from a losing situation.

Important to design a series of experiments to test what customers want and how to meet the demand.

Successful interaction depends on

- regular interaction with customers

- willingness to adapt to responses like negative results, ie 'cut your losses and run'
Opportunity audit

Use the following questions:
"...- How did you choose the opportunity you are currently chasing?
     - If you could start over, which opportunity would you choose?
     - What opportunities lend themselves best to building a rational and powerful sequence?
     - What are the results of your current effort?
     - What are common explanations of poor performance?   
     - What might be done to help avoid making excuses?
     - If the company were threatened with bankruptcy today, which single opportunity would you keep?
     - Which opportunities would you give up?..."
Christopher Bingham et al, 2022a

NB
"...throwing good money after bad is a common trap: people tend to intensify their commitment to a failure they feel responsible for..."
Christopher Bingham et al, 2022 a

Summary - managing the opportunity paradox