“Better the devil we know than the one we don’t know…” I saw this quote from a business leader the other day and realized that this pretty much sums up the logic that leads to lock-in.
Every CEO is saying today that their strategic agenda is innovation and growth. But what they’re doing instead is incrementalism and cost optimization. Why would business leaders do the opposite of what they say they’re going to do?
One reason is that innovation requires venturing into the unknown, what we call “white space.” In this creative space there is infinite potential for innovation, but there are no guarantees. In fact, most innovations fail… and failure is a career killer in Defend & Extend Management.
I’m sure that business leaders’ reasoning goes something like this: “I can put a lot of time and money into finding a breakthrough strategy which we have no way of knowing will succeed or not, OR, I can drive up short-term profits through more cost-cutting and efficiency efforts like more downsizing or squeezing our vendors. Hmmm, the first option holds the promise that we’ll be here a decade from now, but the second assures me I’ll make a big bonus this year… I think I’ll go with option 2 and study this innovation thing a bit longer…” As they say, nobody ever got fired for making the current quarter’s numbers…
Ok, so maybe that’s an exaggeration, but it is surely accurate in principle. Here’s the flaw in that logic: it assumes that avoiding innovation is the safer option. In today’s economy, if you don’t reinvent your success formula on a recurring basis—that is, take the risk of breakthrough innovation—you may not even have a decade, you may have only a couple of years. In fact, the only way to HAVE a future is to disrupt and reinvent your business.
To stay ahead, leaders and their organizations must learn to trust the devil they don’t know—to trust the future to innovation. This requires that leaders must place their confidence in their ability to figure things out when there is no proven road forward, instead of relying solely on what they already know and can prove. And that will be a big step for leaders, a step that we predict very few will make.
