2019 Knowledge Continuum Speaker Michael Schrage Talks Innovation

March 19, 2019

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Michael Schrage

Innovation is a buzzword that gets a lot of attention these days—and with good reason. Change in tech and data usage continues to lead the way to revolutionary outcomes across industries. It’s also been responsible for how organizations are empowered to better predict and plan for their future.

Critically acclaimed Author of Serious Play: How the World’s Best Companies Simulate to Innovate; The Innovator’s Hypothesis: How Cheap Experiments Are Worth More than Good Ideas; and Shared Minds: The New Technologies of Collaboration, Michael Schrage is a pioneer himself.

Having helped to redefine our ideas on the subject through techniques of rapid prototyping and by focusing on the vital role customer acceptance plays in the development of new products and services, Schrage has produced groundbreaking work on maximizing ROI from innovation. A Research Fellow at MIT Sloan School’s Center for Digital Business, Schrage is a columnist for Fortune, CIO magazine, and other business media. He also serves as a Senior Adviser to MIT’s Security Studies Program and consults the U.S. government on innovating its national security systems.

In advance of this year’s edition of McIntire’s Center for the Management of Information Technology’s (CMIT) Knowledge Continuum: Digital Innovation May 10, we spoke to Schrage about what makes disruptors successful and the importance of organizations being flexible with strategy.

You’ve said that "good ideas are the wrong unit of analysis" for innovation, and that people would be better served by using hypotheses that can be tested quickly, simply, and cheaply. How did you come to that conclusion? What led you to have that epiphany about the danger of good ideas?
At risk of sounding glib, I came to that conclusion by paying attention to—and living through—how effective innovators actually got things done. I, too, had bought into the seemingly “rational” and “reasonable” notion that a good idea was the seed and nucleus for innovation. But when I looked at how things actually happened—how innovators and entrepreneurs actually learned from their prototypes and beta tests—I realized I was wrong. In truth and reality, the most effective innovators—the most innovative innovators—could articulate “business hypotheses” that inspired curiosity, collaboration, and investment.

In your paper "Leading with Next-Generation Key Performance Indicators" (with David Kiron), you report that innovative platform brands Airbnb and OpenTable have forgone years’ long strategic plans in favor of the agility and quickness afforded by “adaptive, responsive, and anticipatory” data-driven, mission-aligned KPIs. What downside—if any—still might threaten an organization that chooses to abandon the long view?
I fear this question marginalizes and minimizes the importance of context. Never mistake a clear view for a short distance. Airbnb may “know” exactly what kind of company it wants to be, but if it is unable to respond with alacrity and agility to regulatory threats and unhappy customers, how will that vision be attained? Sometimes the only way to preserve the integrity of the longer view is to radically and dramatically improve your immediate situational awareness.

At this point in the development and use of machine learning (ML) and AI to inform customer experience and customer acceptance, how can organizations that have yet to invest in ML and integrate it into their KPI creation and decision-making processes expect to thwart their doom? Will they be playing catch-up with their competitors forever?
I’m not so pessimistic. I think it’s too soon to say that ML/AI imbues certain kinds of companies with insurmountable leads or inherently sharper competitive edges. My view is that the real issue is cultural, not technical: Are you really committed to transforming your customer’s behaviors, expectations, and outcomes? Are they happy and onboard with what you’re trying to do with and for them? ML is a means to an end. How well have you articulated and defined that desired end?

Speaking of culture, just how important is an organization’s culture when it comes to its ability to innovate?
If you have to ask, you can’t afford it!

Learn more and register for the 2019 Knowledge Continuum.