Nov 26, 2024
Throughout my decades of working with startups, entrepreneurs, and innovation teams inside large corporations, I’ve noticed a profound paradox: Success in transformative innovation isn’t about being right all the time—it’s about being spectacularly right when it truly matters (aka disruptive innovation) and being somewhat right, but consistently, when the stakes are lower.
To use a metaphor from a sport that is still largely foreign to me: In the world of groundbreaking innovation, your batting average isn’t what defines you. Instead, it’s the magnitude of your occasional home runs that separates true innovators from the cautious masses.
Contrast this with how most established businesses operate. In a scaled organization, leaders are rewarded for consistency, for minimizing risk, and for avoiding visible mistakes. Every decision is carefully calibrated, and every move is strategically plotted to maintain stability. The goal? Predictability. But transformative innovation? That’s a different beast entirely.
And that’s fine if you find yourself in a game of marginal improvements, what Clayton Christensen called “sustaining innovation.”
But when it comes to disruptive change, you must be willing to swing big, to embrace potential failure as a necessary companion to breakthrough insights. You might be wrong nine times out of ten, but that tenth time? That’s where magic happens. That’s where paradigm-shifting ideas are born.
So far, so good. But this fundamental tension is why, I believe, large companies so often struggle with genuine breakthrough innovation. Their organizational DNA is optimized for reducing variance, while innovation demands exactly the opposite—a willingness to explore wild, seemingly improbable paths.
The challenge with this is that you have to work within a function that dictates you must optimize your reward function either for the magnitude OR the frequency of correctness. As much as we might strive and wish for a world where we get the big things right most of the time, it’s just delusional to believe this is likely to happen. Nor can we, of course, afford to neither be right often enough AND not achieve a high enough magnitude in our efforts.
Here’s the challenge: The two approaches are both required for our organization to survive AND thrive—but they also require fundamentally different strategies, execution, and metrics. The best companies have worked this out, and—in parallel—can tend to the garden AND swing for the fences.
@Pascal
