The one element of innovation that seems incontrovertible is that it must happen faster than it has in the past. Product lifecycles are shrinking dramatically across all industries. In the automotive industry, for example, a 48-month development cycle and six year model were once standard practice. Today concept-to-production times are below 24 months and several industry leaders are aiming to bring that period down to 12 months. Add to this the impact of globalization, which not only introduces new markets but new competitors.
Most companies respond to this challenge with an attitude of “work harder, faster” investing more in core competencies and familiar resources. This is a losing proposition. It amounts to doing more of the same, just at a quicker pace. Rather than accelerating innovation, this approach traps companies in what can be termed the “Red Queen Effect.” This pernicious dynamic is named for the advice Lewis Carroll’s Red Queen offers to Alice in “Through the Looking Glass.”
“Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else — if you run very fast for a long time, as we’ve been doing.” “A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to go somewhere else, you must run at least twice as fast as that!”
In sum, the Red Queen is saying that you must exert ever more effort just to maintain your current position. This approach may yield short-term benefits and avoid a bit of risk but ultimately cannot compete in a globalized economy. In their book “The Global Brain” Satish Nambisan and Mohanbir Sawhney describe the Red Queen effect in terms of its impact on business.
“Despite having hundreds of in-house scientists and engineers working tirelessly on innovation projects…innovation pipelines are not delivering the results they need to sustain growth. Innovation productivity is declining while the cost of new product development is increasing day by day. Investing more dollars into internal R&D efforts does not seem to produce the desired payoffs.”
Red Queen thinking is a learned behavior. Companies are continually looking for ways to improve their competitiveness. The impetus for change usually comes from a rival in the marketplace. When a threat is perceived, the organization makes incremental improvements in efficiency, messaging and products to strengthen their position. The rival, also looking for ways to improve, sees these actions, learns from them and makes its own incremental improvements in response. This arms race approach to organizational improvement strengthens both organizations over time and intensifies competition. It does, however, have a downside.
Red Queen organizations tend to use history as their guide for action, responding to new situations with whatever worked in the past. This worked well in a slower paced, more localized market. As the world has expanded and accelerated, lessons learned in an earlier setting quickly become irrelevant or even counter-productive. In other words, what worked them, probably won’t work now. In addition, this learned behavior approach cannot account for new players with whom the company does not share a co-evolutionary history.
Industry is littered with examples of disruptive, dark horses for which established players have no response. Consider the music industry’s litigious and ultimately futile response to digital downloads. Sears & Roebucks fiercely clung to catalogs and brick and mortar as their competitors moved online. Major airlines were driven out of business by upstart budget carriers. Organizations need to learn the lessons of the past but should not be constrained by them. Fortunately, what can be learned can be unlearned and the Red Queen can be overthrown. To do so, however, you must first meet and defeat her three henchmen: the Man of Genius, the Alchemist and the Hidden Expert.
Who these henchmen are and how they can be overcome is the subject of my forthcoming Maverick research report Radical Openness: Profiting from data you didn’t create, people you don’t employ and ideas you didn’t have. I will also be speaking on the subject at Gartner’s US Symposium in Orlando this November. Hope to see you there.