How can we make our organisations more innovative?
The report is Adapt to win: How Australian oil and gas companies improve productivity in challenging times, and you should check it out. They’ve been studying productivity in the oil & gas sector for a few years now, and this is their second report to come from that work.
The consistent finding is that productivity is driven by three things: innovation, competitive capabilities, and collaboration.
This might seem counterintuitive. This is a highly competitive industry – it’s dog eat dog. And it’s all about efficiency, right? Who can spare resources to innovate?
Well, it seems like the only firms that can spare resources to innovate are the ones that want to succeed.
It’s a story that holds true beyond oil & gas.
One of the questions that they asked is “what are your barriers to business success?” Here are the answers for three groups of firms: those that don’t innovate on the left, the middle is firms that do some innovation, and the right are the novel innovators – the ones that come up with completely new to the industry innovations.
For the non-innovators, everything gets in the way. But for the general innovators, the main barriers are learning challenges and contracting constraints. The big finding is that for the novel innovators, there are no external barriers.
Here’s what they say in the report:
The most remarkable feature is that innovators do not cite external factors when asked about barriers to their business success. Innovators are impacted by such factors (e.g. red tape), but not to the extent that the factors are seen as impediments to business success. The finding suggests that the effect of the ‘barrier’ is more dependent on the organisation than the barrier itself.
A Japanese proverb springs to mind: “Fix the problem, not the blame.”
Novel innovators are those firms who have implemented solutions that are wholly new to the industry. When they were asked about barriers to their success, constraints were rarely mentioned at all. This surprising finding deserves closer scrutiny. We do expect novel innovators to find creative solutions to particular problems. What is unexpected is that often, those solutions that novel innovators come up with somehow resolve all problems. This does not suggest that novel innovators operate in a different world, but rather, they operate on a higher plane. That is, where others see only barriers, innovators see opportunities. Red tape, green tape, problems in execution and the list goes on… these become ‘catalysts’ for innovation and perhaps even ‘pathways to productivity’. For novel innovators, this list of commonly cited issues is not perceived as barriers to productivity. Industry, take note.
This is a really important finding. When I talk with firms that struggle with innovation, all I hear about are the barriers. There are labour problems, and too much competition. Their industries are over-regulated, and they face too much uncertainty.
The big idea in this work is that novel innovators face these problems as well, but instead of letting them prevent innovation, they use them to spur innovation.
This reminds me of the terrific TED talk by Kelly McGonigal on stress. She summarises her research on stress, and the results are fascinating.
What she finds is that stress causes reduced health outcomes – but only if you believe that stress is bad for you. If you believe that stress is simply a biological sign that there are things happening that you must respond to, then your health outcomes are identical to people that aren’t operating with significant amounts of stress.
In other words, the different health outcomes depend on whether or not we view stress as an obstacle, or a trigger.
This is basically the same as the findings from John, Jerad, Martic-Louise and E&Y. If you view issues like red tape, labour problems and competition as barriers, then they will make you less competitive. But if you view them as innovation triggers, you will be much more likely to succeed.
Innovative firms in this study are nine times more likely to find ways to increase productivity than non-innovative firms are. A big part of the reason why is that the innovators respond to barriers differently. Instead of seeing them as something that blocks progress, they view barriers as a trigger that requires an innovative response.
Constraints spur innovation, if you have the right attitude. Where others see only barriers, innovators see opportunities.
If this is true in the ultra-competitive oil & gas industry, it is probably true in ours as well.