Stop calling optimization "innovation."

[Yoni Greenbaum]

I really appreciate this distillation of the twin needs of optimizing the Engine — getting as much value as you can out of your existing business model — and the Explorer, which is all about actual innovation that seeks out new products, markets, and models.

“If your staff meetings are all about how to hit next month’s KPIs, you don’t have an Explorer. You have a very well-oiled engine. True resilience means insulating your Explorer team from the Engine. It means giving a team room to spend 6 months on a project that could totally flop without punishing them if it does.”

I think this is clearly true. At the same time, I think it’s very optimistic about where many organizations actually are: they very often don’t have those goals or KPIs to hit. The result is a kind of vibes-based strategy. Because nothing is measured, or the right things aren’t measured, it’s impossible to run an informed experiment.

In those organizations, what feels like innovation is just getting to baseline competence. Before they can optimize, they need to define a concrete strategy, with attendant metrics that you can measure as the basis for performing experiments. Buying a neat new product can be a way to absolve the team from doing the hard work of strategy-building: “look,” they can tell their boards, “we’re innovative!”

Creating a concrete strategy and deploying technology that can help serve it are vital. But they, in themselves, aren’t innovation: creating a real culture of innovative experimentation where you can try new things and fail fast is how you de-risk your business for the future. That means understanding your readers incredibly well, so you can anchor your experiments around their needs; it means giving your team the permission to fail; it means creating cross-functional teams who can be radically collaborative and draw conclusions from their experiments quickly; and it means being clear-eyed about where your business actually stands.

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