Ten Tensions in Innovation

In a series of journal articles, Charles O’Reilly and Michael Tushman have talked about the importance of being an ambidextrous organisation in order to succeed at innovation. To be ambidextrous, organisations have to be good at both exploration and exploitation. All this sounds a bit academic, so here it is in clearer terms (I hope!): firms that are successful at innovation are able to simultaneously come up with ideas that allow them to take advantage of what they’re really good at (exploitation) while also being able to search for novel new ideas (exploration).

This is a hard balance to maintain – the two processes require quite different management skills, different processes, and different measures of success. Exploitation is usually about operational efficiency, while exploration is about experimentation and risk.

These seem almost like opposites – and that’s one of the challenges of trying to manage innovation. To be really good at it, you have to do things that appear to be opposed to each other.

Here are ten tensions in innovation management:

  1. Exploration versus exploitation: we need to be more efficient while also being more experimental.
  2. Radical versus incremental: this is closely related – we need to have a relatively balanced innovation portfolio. It’s the incremental innovations that improve current operations, but it’s the more radical innovations that keep us in business over the long term.
  3. Now versus the future: our natural tendency is to focus on now. However, innovation is really about the future – we innovate to bridge gaps between where our performance is right now and where we want it to be.
  4. Core competency versus benchmarking: if we are above average at some things, and below average at some others, where do we invest to improve? Do we try to get the below average things up to a benchmark, or do we extend our advantage in our core area of strength?
  5. Analysis versus intuition: In The Design of Business, Roger Martin talks about how design-driven innovation is able to balance the tension between analysis and intuition. Organisations often have one dominant mode of decision-making.
  6. Open versus closed: do all of innovations come from inside of the firm, where we develop the new ideas internally and execute them ourselves? Or do we systems set up so that the ideas we execute can come from anywhere, and some of our own ideas end up being brought to market by someone else?
  7. Centralized versus decentralized: do we create an innovation team that is responsible for driving innovation, or make innovation part of everyone’s job?
  8. Planned versus accidental: is innovation a process that can be managed successfully, so that we are able to consistently perform well at it? Or is the uncertain nature of new ideas so strong that innovation success is mostly accidental?
  9. Structure versus emergence: to recreate innovative success we often need structure – processes, technologies and tools that support innovation. However, these are costly, and as the market shifts around us we this structure might prevent us from reacting to change as quickly as we need to.
  10. Big versus small: is it easier to innovate when we are big – with market power and established network relationships? Or is it easier when we are small, so that we aren’t tied to history and old ideas?
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  1. Very interesting!

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