‘Productivity’ and ‘innovation’ are virtues that every leader strives to instil in their organisation, and with good reason. Some of the best remembered and most respected businesses in history – the likes of Ford, Apple, and Samsung – have been defined by their high productivity, their innovative approach to new products, and their ability to pioneer, create, and master markets.
While achieving one of these virtues is difficult enough, embodying both in a single company presents new challenges. All too often, efforts towards increasing productivity and driving innovation interfere with each other, wasting resources and creating internal friction. Attempts to streamline and enhance current workflows in the name of productivity can take energy away from initiatives that could deliver truly innovative ideas and products for the business, while an excessive focus on developing what’s next can leave little time for dealing with what’s in front of you.
The Productivity Trap
This tension exists in every organisation, but the conflict is most pronounced in the knowledge economy. Unlike in manufacturing or primary industry where productivity can be more simply measured and expressed – units produced per worker per hour, tonnes of material extracted per day – tracking the output of knowledge workers is a tricky prospect. When the job of your workers is to think, solve problems, and generate ideas, how do you develop meaningful KPIs? The disappointing truth is that many businesses simply don’t. Instead, they rely on poorly fitting vanity metrics: time on call for a salesperson, number of tickets closed for a developer, number of meetings or hours at the desk for everyone.
Simply put, these vanity metrics choke the potential for innovation, reducing complex work designed to be met with creative, abstract thinking into a rote series of countable activities. When leaders prioritise countable activities over everything else, they leave no room for the kind of brainstorming or free form development process that is behind every revolutionary business model. This is something every worker understands, though perhaps only subconsciously – how innovative and creative do you feel after your fourth calendar-filler meeting of the day?
Even on good days when employees have the time to look beyond their standard duties, the existence of these vanity metrics can disincentivize the very creative thinking that leaders need. When you enrol your staff in a rigid and inflexible system designed to achieve maximum productivity within a narrow section of tasks, people may begin to think of themselves as replaceable units of production in the organisation – what the organisation values is the output of the tasks it has set for me, not my ideas.
The Ambidextrous Organisation
There is a way out of this trap. The secret to balancing both innovation and productivity – and unlocking the kind of sustainable success that every business owner wants – is in becoming an ‘ambidextrous organisation’. Coined by influential academics Charles A. O’Reilly III and Michael L. Tushman in their paper of the same name, ambidextrous organisations are defined as those able to simultaneously explore new opportunities while exploiting their existing capabilities. Put another way, these companies can achieve success in the current market while preparing to succeed in a future market – perhaps even helping to create it.
Those organisations full of bright knowledge workers trapped by vanity metrics are stuck in exploit mode – their entire business is orientated around squeezing every bit of value out of their current products and the current moment, with no room left to consider what comes next.
The Value of Ambidexterity
It’s natural for businesses to get stuck in ‘exploit’ mode for periods of time. For new businesses who’ve just attained a degree of stability, or existing organisations who’ve just gone through a significant transition, there may not be the energy or the appetite to think about the next step.
Resist complacency – the rewards of becoming an ambidextrous organisation are enormous. A shining example of a company managing the fine balancing act between exploit and explore at scale and over time is Amazon. Growing from a simple online bookstore to a multi-faceted and multi-billion-dollar technology company in less than three decades doesn’t happen by accident – it takes broad competencies and a comfort with risk that can be hard to achieve. But Amazon has done it, not only taking the crown as the undisputed leader of global ecommerce, but launching category-defining products in cloud computing, digital streaming, and AI while holding it. Such is Amazon’s breadth and its success in various markets that it’s likely that if you mention the company to some workers in tech, they’ll likely think of their robust Amazon Web Services offering before they think of same day shipping or streaming the latest movies.
Redefining Productivity
Perhaps the solution to our original problem is less in finding some perfect balance between productivity and innovation, but in getting rid of the idea of them as two discrete virtues to work towards. What if we were to rethink the very idea of productivity, recognising innovation as a process within it? What if we thought of productivity as being able to maximise the value derived from our limited resources in both the current and future markets?
That mindset shift could be the key to unlocking your business’ true potential, leading you to a strategy that helps you kick goals now and into the future, not chasing diminishing returns from a revenue model with an approaching expiration date.
If that sounds appealing to you, we can help. Orange Squid takes an innovative, and people-focused approach to strategy development, helping you build a plan that helps you capitalise on opportunities as they arise.
Reach out via our contact page or call (03) 9005 6033 to find out how we can assist.