Is incremental innovation holding your transformation back?

16th November 2022

Is incremental innovation holding your transformation back?

 

A lot has been written about the advantages of adopting small incremental improvements. Even though each individual improvement might seem small, over time they compound to create more significant benefits. This is similar to compound interest on a savings account… a difference of 4% might seem insignificant in the short term, but if it is sustained it can have a bigger difference in the long run.

While there is definitely a place for incremental improvements in organisation, there is an inherent danger of focussing too much on the ‘low hanging fruit’ and the ‘quick wins’. Quite often these types of opportunities focus on making existing processes work more efficiently. There is no doubt that this is a good thing to do—but it is unlikely to lead to new ways of working being discussed. It will likely lead to discussions on how to do the work better rather than discussion about whether the work needs to be done at all. More disruptive, discontinuous innovation is likely to require us to step back and think differently.

 

An example: The good old ‘Tax Disc’

Let’s take an example. In the UK, up until 2014, motorists proved they had paid Vehicle Excise Duty (sometimes known informally as “road tax”) by putting an official paper disc somewhere visible in their vehicle. Cars would typically have a tax disc holder on the windscreen, so that police (or other authorities) could check whether the car was correctly taxed or not.

There were many ways a motorist could get a tax disc, but a common way was to queue up at the local post office and get it issued there.  When taxing my first car I can remember getting a tax disc with my car’s registration number handwritten on it … and with so much manual handling I suspect that the system was open to occasional mistakes and fraud. In fact, put a good enough fake tax disc in your windscreen and I’d guess you’d rarely have been challenged.

Someone wanting to ‘improve’ the situation and reduce fraud in an incremental way might suggest adding holograms, watermarks and other anti-fraud measures. These may well work in the short-term, but as soon as there’s an anti-fraud measure, someone will find a way round it. Taking a step back and thinking about the situation more holistically would likely lead to more radical options. Asking questions such as “why do we have a tax disc at all?” , “what is it actually for?” and “how else might we achieve the same outcomes, but in a better way?” will likely yield some interesting conversations…

Indeed, it appears that questions like these were considered, as after 2014 no more tax discs were issued. Instead, drivers pay a fee directly to the relevant government agency, and their registration number is presumably stored in a central database. Not only this, a penalty is automatically issued if the tax isn’t paid (unless the motorist has declared that the car is ‘off road’).  Combine this with automatic numberplate recognition, where the police can quickly check for untaxed drivers, and the possibilities for evasion or fraud are greatly reduced.  I would guess that the amount of tax taken has increased, as it’s much harder to forget to renew your tax. I suspect most people find it more customer friendly too (no queuing at the post office).  It was certainly more than just an ‘incremental’ change to processes, the work (and customer interaction) was redesigned.

 

No one size fits all

This example illustrates that sometimes it’s appropriate to have a rethink of how and why things are done. Of course, incremental (or radical) forms of innovation aren’t inherently bad or good. What is appropriate will depend greatly on the context in which the organisation is operating. However, it is key to make a conscious choice, step back, and avoid inadvertently getting stuck in the ‘comfortable default’ of changing things just a little bit when a different change might be more appropriate.

Stepping back, thinking about the situation from different stakeholder perspectives, and thinking holistically is key. Working with others in this way might just lead to some unanticipated new ways of working being discussed and adopted!

 

by Adrian Reed, Business Analysis Expert