Innovation – art or science?

Listening to the speakers at the Sri Lanka Innovation Summit, Seth Godin’s famous words comes to mind. The majority of panelists represent relatively young startups. To the casual observer, it may seem that incremental innovation – the norm in larger companies – attracts less hype, as evident from the skewed participation ratio. All businesses are innovative to various degrees. Corporate catch phrases such as ‘unique selling proposition’ and ‘competitive advantage’ illustrate the drivers behind this process. An R&D department is a given in most established organizations. High-tech companies in particular dedicate vast resources to search for new ideas. The annual budget of Sri Lanka would pale in comparison to that of Google Ventures – the internet search giant’s research arm.
However these very companies dedicate the same if not more resources to acquire startups. Yahoo’s spate of new acquisitions is only one example of ‘deep pockets’ trying to buy innovation and growth and ‘startup DNA’. The popularity of this strategy is visible in the current unprecedented levels of activity in the global M&A market. Selling out to a larger company, rather than enduring the rigors of an IPO is becoming an option for an increasing number of founders. Does this mean that the cushy environment of a large company simply cannot drive innovation with the same entrepreneurial zeal and hunger in the belly of a startup? Or are there other intangibles and structural issues holding the Goliaths back? Obviously shareholders of an established firm would be less willing to bet everything on a ‘moonshot’. The R&D department is likely to be more affected by market noise such as rivals’ strategies etc. and be pressured to deliver results in the short term. Evidently, these structural factors create a bias towards incremental improvements, as opposed to going all-out for the next big thing.
That said, in terms of the ‘science’ of bringing new ideas to life, large companies have a clear head start over their smaller counterparts. Arguably, a startup would have a more difficult time disrupting the pharmaceutical industry than the social media space. Indeed large listed companies still file the vast majority of new patents. Patents are widely considered as an objective measure of innovation, thus this is a trend worth dissecting. Attempts to imbue more ‘science’ to startups – in the form of having systematic processes to treat new ideas – such as the lean startup approach by Eric Ries, have proved popular, but larger companies still clearly have the edge in this aspect. Not surprisingly, startups find their strength in doing the exact opposite. In their universe, rebelling and actively disrupting the way things are currently done is encouraged. Intuitive grasp of the marketplace takes precedence over validated ideas. Henry Ford’s “Ask the people what they want and they will say faster horses” is frequently quoted. Maintaining just the right amount of critical distance; innovating for the consumers while not being of them is very much akin to the artistic process. This crucial difference in attitude and culture is perhaps why startups have proved so disruptive in spaces such as consumer internet, where they have mustered the ‘science’ sufficiently.
So what can the budding innovator take home from this discussion? Simply put, innovation is both art and science. It requires both perspiring, rigorous application of technology and inspiring leaps of faith into unchartered territory. Intuitive garage tinkers may be counted on to produce breakthroughs as much as research scientists and indeed the Edisons of the world have proven this true. This is the ultimate leveler and its implicit knowledge is perhaps what drives young innovators to break the mold, despite the sizable risks involved.