Efficiency Can Be The Enemy Of Innovation
According to conventional wisdom, innovation can disrupt industries which means that these small, innovative, nimble companies are able to overtake these dinosaur-like predecessors (think Dollar Shave Club and Harry’s vs Gillette).
A great example of an incredible disruptive innovation is the PC, which managed to disrupt the computer industries that was based around microcomputers and mainframes. And, well another one is the internet, which pretty much disrupted everything.
There’s an assumption that innovation creates greater efficiency, which allows for the small businesses to propel themselves into the limelight and really get into the thick of it. But there’s a problem; whilst innovation can create efficiency, efficiency itself can make businesses take their eye off the ball and cause concentration lapses.
On the other foot is efficiency is when one or two companies dominate a market, it makes innovation less likely.
Let’s use high tech as an example. Google and Amazon completely dominate their markets to the point where no amount of incredible innovation is likely to rock the boat. Any start-up that threatens their dominance is acquired and folded into the monopoly.
But it’s not just in these markets where this is present.
There’s a good number of industries which may be once used to be a fairly balanced marketplace has been spoilt because of one or two businesses and their dominance.
Why does this matter?
Why does it matter we hear you ask? While the concentration of power and profit into a handful of huge “efficient” companies can sometimes benefit consumers in the form of low pricing, the quest for efficiency has many negative unintended consequences.
Social unrest being one of them. Efficiency through automation and efficiency through outsourcing results, both retrospectively impact unemployment and slave labour far more than people actually realise. What this can result in is misery and dissatisfaction which eventually can domino into revolutions and dictatorships.
Structural fragility. Efficiency can create structures that can easily be damaged, whether it’s a small blip or a simple error, it can really impact a business’s fragility and ultimately makes them rethink about how secure their business actually is.
How can we combat this?
Instead of encouraging efficiency throughout businesses, instead, we should be encouraging resilience. By having a resilient market, you’re creating a market available for multiple players and less concentration on the profit and power mentality, which in turn will encourage innovation and competition making it much better for the targeted customers of this market.
But, in this current climate, what we’re seeing is people encouraging monopolies throughout different markets if it results in lower prices for the consumers rather than the survivability of every other business within the market.
Now the likelihood of creating a resilient market now is slim, so you need to encourage innovation within your business so you can allow your business to grow.
You need to encourage others in your business to think. You need to give them a reason to care about your business. If people aren’t feeling connected to your business, then there’s very little incentive for them to be innovative.
Encourage your employees to input on decisions which can affect your business and ask for their opinions. If you bring your employees opinions into your process and plans early on, then they’re much more likely to be motivated to see it through. Their participation will fuel many more ideas and even encourage others to bring in that spark of innovation.
When your employees are being involved in discussions about plans for the business, the next step is to encourage them to make decisions and take action. You can’t be there for them all the time to make decisions and sometimes, you might not like hearing this, but your decision isn’t the best one.
If you encourage your employees to take safe risks and attempt new ways of doing things, they may stumble across the next great business idea. Be careful on being too critical when things go wrong, you don’t want to hit them with a lot of criticism otherwise no one else will want to try and take action in case it goes wrong.
No one likes to be the centre of negative attention, which will make people hold back on their ideas because they’re worried about the potential consequences.
When can innovation shine when employees are burnt out. You want to ensure that none of your employees is suffering from burnout otherwise the work they’re producing will take a nose dive.
As a business owner, you want to ensure to your employees that you’re trying to reduce burnout by offering them different ways that can reduce the chances of it occurring. This then means that there’s a much higher chance of innovation to be occurring thanks to your employees firing on all cylinders.
You don’t want to narrow your employees thinking, encouraging change and broadening their mind can be a great way for ideas to start flowing. You should have a look at how other businesses in your marketplace do things and even consider how you can implement changes in your business.
Those businesses who try to keep up-to-date with the market adopt and implement the best practices.
And any ideation or innovation that’s sparked through your employees, you should reward them! Start rewarding individuals or teams who come up with winning ideas that can really make a difference in your business. This will encourage others to come up with innovative ideas if they know at the end of it a reward is waiting for them.
You need to keep being innovative throughout your business, even if one or two companies are dominating the market. If you don’t then you’ll become a company who just accepts that you’re going to be in this position for the rest of your business’ life. All you need is that one idea to make that difference, so encourage it throughout your organisation so you’re allowing your business a great way to develop and grow.