By | Deepa Prahalad | Design Strategist, Author & Thinkers 50
As the tools and frameworks for innovation have expanded, so too have our expectations. Introducing successful new products and services is no longer enough – there is an expectation that organizations should strive toward “making the world a better place.” Innovation is now dissected and studied at every level – from mindset to process to national policy.
The expectation that innovation simultaneously creates prosperity and addresses wicked problems at an ever-increasing pace weighs heavily on many business leaders. Can both objectives be pursued? How? The complexity of these challenges increases as firms try to serve global consumers with vastly different lifestyles, incomes and attitudes. Coming to terms with this uncertainty and self-doubt is vital in order for business to improve both innovation success and social impact.
Looking at the impact on innovation at the country level should provide some reassurance. There is a clear correlation between innovation and prosperity. Furthermore, many of the countries that have rapidly raised living standards in the last two decades have done so by plugging into the global innovation ecosystem in meaningful ways – whether in manufacturing (China, Mexico), software (India) or the creation of global brands (South Korea). Aid has not produced similar results. As a development policy, innovation is the clear winner. In addition, many social enterprises that have reached scale and delivered impact (Grameen, Habitat for Humanity, and many others) have done so by embracing business principles in their processes and governance.
The importance of innovation in improving the reputation and fortunes of firms is clear. But what about the impact on society? Does business have the ability – or the obligation – to directly address social problems? Here, too, innovation plays a unique role that cannot be filled with policy or philanthropy alone:
Innovation transforms market size: There is perhaps no better testament to the power of innovation than the rapid adoption of cell phones. The market for the first comically large and bulky phones could not be expanded to current levels even with lower prices. A deep understanding of the consumer, rapid experimentation, new business models, improved infrastructure and features in today’s cell phones illustrate the power of innovation to transform a want into a need. Policymakers can create an enabling environment and incentives, but business leaders must imagine and manifest consumers’ aspirations.
Innovation increases social impact: Ideas, even the very best ones, do not have an impact in a vacuum. Even where profit is not the central objective, innovation (both in offerings and narratives) is required to drive behaviour change. The idea of Indian independence, for example, existed for at least 50 years before Mahatma Gandhi. It was not until the creation and widespread adoption of the spinning wheel and the narrative of self-sufficiency took root that the objective was reached. Many of the success stories of innovation in history and in technology reinforce this message – great innovations must increase inclusion.
Innovation helps people cope with change: The study of innovation tends to focus on identifying trends. However, many of these changes are felt and experienced before they can be precisely measured. For example, most people understand that many families today have two working parents, that fathers are choosing to take a more active role in parenting, and that there are same-sex couples raising children. Big data may give us additional precision on all of these trends. Innovators must translate these trends and understand their implications for individuals. Innovation cannot stop at describing change – it must help people cope with change. It can start with simple and meaningful steps – like putting a diaper changing station in the men’s restroom.
The faith in innovation can at times seem at odds with reality. Fewer innovations are successful, the widespread diffusion of technology coexists with increasing global inequality, and public trust in companies has declined. My father, the late CK Prahalad, always emphasized that innovation is not just about ideas, it is also about ideals. The big success stories of business and social innovation in the past decade share a common thread – the willingness of the organization to struggle with questions of fairness and equity. Apple had brilliant design, but it could only deliver the experience because it found a way to tap and compensate the efforts of hundreds of thousands of programmers outside its walls. Muhammad Yunus did not change banking because he discovered a new mathematical theorem – he began with deep empathy.
Today, consumers are adding their voices and choosing to engage with businesses that align with their values. An abiding concern for fairness will make the difference between the companies and countries that create opportunities and the ones that create and attract opportunists. Innovation can indeed make the world a better place. But ensuring that it does so requires that business leaders exhibit the same amount of impatience with social injustice as they do with poor financial results.
Deepa Prahalad is an author, business strategist and consultant specializing in opportunities at the intersection of consumer experience, technology and strategy. Passionate about emerging markets and innovation, she began her career researching how to improve efficiency in UN procurement and later moved to Singapore to become a commodities trader with Cargill. Prahalad is coauthor of Predictable Magic: Unleash the Power of Design Strategy To Transform Your Business (Wharton School Publishing, 2010).