Let’s discuss two ways of long-term thinking when it comes to innovation in terms of introducing* new products and services accompanied with a new brand:
- First is using innovation to create the future.
- Second is using innovation as insurance against the future.
*It doesn't matter if we are talking about introducing it to existing or new market.
Create, don’t foretell
As far as I know there are no functioning crystal balls. You cannot analyse your way into the future. You also cannot wish or hope yourself into the future.
Instead of engaging in witchcraft, you can imagine different futures and outcomes through methods like scenario planning and strategic foresight.
Once you have imagined these ends you can move to figuring out the means. Do you want to leverage what you have? Do you want to invent new ways to get there? There are endless combinations, and you are free to choose as you like.
Ideally, your choices are grounded in your long-term strategic objectives. There still needs to be alignment between the imagined future and the trajectory that your organisation is currently on. Otherwise you are risking rejection down the line.
Innovating within the established organisations has this irrational element to it. If the innovation is too different from what the organisation is used to, it'll be rejected. If the innovation is too similar to what the organisation is used to, it will also be rejected.
So, why am I making a distinction between foretelling and imagining? Beyond semantics, former is akin to giving a prophecy that we are passively waiting to fulfil, while latter is drawing on our capabilities and stretches our mind, without taking our agency away.
When we have taken that route we can truly work on creating that imagine future. Our mindset can shift from reactive and wishful towards being proactive and enterprising. Fortune favours the prepared mind.
And while the future will most likely not be what you have imagined, the creations you have invested in will be quite real and tangible. The products, services, brands, ventures – all the small steps you have taken – will have put you in a much better position to once again change your path towards another future.
Which leads me to...
Best time to get insurance is before you need it
When was the last time your house burnt down to the ground? Hopefully, the answer is never. Does that mean you will “save” by not investing in fire extinguisher, fire alarm and sprinklers? In the big picture, cost of these are minuscule, compared to potential horrific consequences of not having them.
It’s worth pointing out that's the case of proactive insurance, however oxymoronic that sounds. In other words, if a fire breaks out, you have the chance to stop it before it spreads. The damage doesn't need to happen for you to benefit from your investment in insurance.
Traditional insurance products pay out after some sort of damage has been done. An example is the Wimbledon Championships, which has been paying for the pandemic insurance since SARS outbreak in 2003. When they had to cancel their events due to COVID-19, insurance helped them mitigate their losses.
Investing into the innovation falls firmly into the former category. Being able to respond better is a form of insurance. There is nothing worse than being taken by surprise, forced to make a decision under suboptimal terms.
More importantly, it allows you to develop much needed internal capabilities before your existence depends on it. After all, it won't be much help if you see the train coming, but cannot step out of the way because your legs have atrophied.
Additionally, when the going gets tough, past decisions are going to be under scrutiny. If you can demonstrate continuous investment in innovation, with results, there is higher likelihood that shareholders will approve of your more* innovative initiatives.
Hence, thinking about innovation as insurance allows us to shift our mindset from being a passive victim of unforeseeable events towards being a thoughtful caretaker who is aware that difficult times could arrive any day. Fortune does favour the prepared mind.
*As in more uncertain and outside of your perceived core business.
Which stance is better?
That was a cheap trick question.
The old adage offence is best defence might be true to some extent, but is too black and white for my taste.
Both of these mindsets are valuable.
They are complimentary and liberating, allowing us to take control and set our own course of action. In some areas we need to be more assertive and offensive, in others more observant and defensive.
One doesn't void the other. There is no one size-fits all. But there are some useful mental models, that allow us to see the world in different ways.