If you look at Leadership for any period of time, you're going to quickly see the word Innovation pop up.
Sometimes you see it Directly as "Innovation".
Other times you see Variations and sometimes you'll see it used in "Very" Gimmicky ways.
For instance, many Leaders recently tried to rehash Innovation with the phrase "Serendipity of Ideas" (a Myth) popularized during the Failed Return-To-Office "Mandates.
But, regardless of the Jargon being used, they are pointing to the same Idea of Innovation.
When you start to talk about Innovation, you begin to see that people React to Innovation in "Very" Different Ways.
Sometimes people Treat Innovation as if it were a Myth of Old - Either to be Idolized and Worshipped or to cause Terror and Fear.
But there are other people who say that Innovation really is Not that big of a Deal.
As Shaun Coffey put it recently (who inspired this article), "Innovation = Ideas Successfully Applied".
When you put it that way, it doesn't (and shouldn't) sound very worthy of Fear or Worship.
So, which is it?
Is Innovation the Ultimate Goal?
Or is Innovation something Simple we should Achieve Every Day?
Well, the Reality is that there is a Reason that people are Divided on the Idea of "Innovation".
It is because Both Sides are Correct in Different Ways.
How?
They are Looking and Speaking about "Different" Types of Innovation.
You could call it Incremental versus Exponential Innovation.
When people are talking about Innovation being an Uncomplicated Concept that we "Should" be Striving to Accomplish, you're looking at Incremental Innovation.
Some people discuss this as the 1% Rule or Marginal Gains, which Indeed becomes a Very Powerful tool.
In Sports, it has been popularized by Sir David John Brailsford who used this concept to create Extremely Successful Cycling Teams.
In Business, this has been popularized by Toyota through Kaizen.
The Idea is that if you make things 1% Better, they will have a Compound Effect over time that creates Gigantic Results.
This is a Very Powerful Tool that has Created Tremendous Efficiencies and helped Many Teams and Businesses Succeed at High Levels.
In my work with Clients, it is something they Learn to do as well, though we Optimize this to 4% through Flow States.
This is where Humans Perform and Feel their Best, and a 4% Improvement is the average point in the "Challenge-to-Skill Ratio" where Flow Occurs.
On the other end of the Spectrum, you have Exponential Innovation.
This is where there is a Large Innovation that usually Dramatically Changes the Business Landscape.
The term that has been popularized by Christopher Lochhead is Category Design.
When you look at Category Design, you discover that Businesses fall into "Market Categories".
Now, what does this all have to do with Innovation?
Well, in Category Design Economics, there is usually a Category King/Queen who owns the Majority of a Market Category.
Typically they own, on average, 75% of their Market Category.
From a Business Perspective, this is a Gigantic Advantage.
It is also Extremely Rare for a Category King/Queen to be Dethroned.
When you look at the "Cola" Category, Pepsi has attempted to "Dethrone" Coca-Cola for Decades, and has Epically Failed.
This is because of the Category Economics involved.
There typically are only 2 Ways for a Category King/Queen to be Dethroned.
The first is if they "Willingly" Give it Up.
This happened to Google with "Fitbit".
Fitbit was the Category King/Queen of Everyday Health Wearables (Not to be Confused with Precision Health Wearables which is a Different Market).
Google decided to Purchase Fitbit so they could gain Access to Fitbit's Technology and Platform.
However, Google essentially Destroyed the Value of Fitbit in Favor of their own "Google Watch", which wasn't even a Nominal Portion of the Market.
People Loved Fitbit.
People barely Knew Google Watches Existed.
This allowed the Apple Watch to become the Category King in Everyday Health Wearables.
This form of Category King/Queen Dethroning rarely happens though.
Usually, a Category King/Queen already owns a Market, and when another company creates a "Better" Product (aka an Incremental Innovation), the Category King/Queen simply "Buys" that Company.
This is what Facebook did with Instagram.
The Reason Google Lost in the Example Above is because "Fitbit" was the Category King/Queen, "Not" Google Watch.
If Google had put whatever was good about the Google Watch into Fitbit, they would have Maintained the Category King/Queen Status of Fitbit.
But the More Common way a Category King/Queen is Dethroned is through a New Category.
But when a "New" Category is Created that the Market Deems as Significantly Better than an "Old" Category, then the New Category Destroys the Old Category.
This is what happened with Automobiles and Horses.
This is what happened with Netflix and Blockbuster.
This is what happened with iPhone and Blackberry.
This is "Why" so many Leaders are Focused on AI currently.
These would all be examples of Exponential Innovations.
When an Exponential Innovation occurs, it Changes the entire Market Landscape.
Companies that "Used" to be seen as the "Gold Standard" begin to Disappear and Fade Away.
New Companies begin to Pop Up, what seems to be Out of the Blue.
"This" is the Type of Innovation that causes CEOs and Investors to Sweat Bullets.
"This" is the Type of Innovation that people Glorify.
When an Exponential Innovation occurs, no amount of 1% Innovation is going to Impact the "Old Category".
Either the "Old Category" accepts the New Category, and further Cements the New Category King/Queen, or the Old Category simply Ceases to Exist.
In some cases, they still "exist", just Significantly Diminished from their "Former Glory".
That is where Walmart currently Sits in comparison to Amazon.
This brings us to something very Interesting that we Must Understand.
Both types of Innovation are "Necessary".
If a Company is "Not" Growing, it will Naturally Decay, so it Needs the 1% Incremental Innovations.
At the same time, if a Company does not become the Category King/Queen of an Exponential Innovation, they will also lose in the long term.
Here is where it becomes "Important" to pay attention.
How can you Design a Company that Accomplishes Both Types of Innovation?
That is the Question that Most Leaders Fail to Ever Answer.
Why?
Most Leaders Fail to Understand how Human Psychophysiology plays into this Question.
What do you "Need" from a Psychophysiological Perspective to have a Workforce that can Create Exponential Innovations?
Flow States.
Flow States are the "Only" State of Being where Humans begin to Connect Dots to make Connections that Elludes even the Smartest and Best-Equipped Individuals.
This is what allowed the Wright Brothers (Nobodies working out of a Bicycle Shop) to beat out Samuel Pierpont Langley (who was Government Funded) to achieve Flight.
But, what is also Incredibly Potent is that "Naturally" people in Flow States will "Also" Achieve Incremental Innovations.
However, Getting to Flow States is a Massive Problem for Modern Leaders for One Reason.
Burnout.
In Burnout, Human Beings are "Literally" Locked Out of Flow States.
In Burnout, Leaders have a Workforce that Fails to Achieve "Both" Incremental or Exponential Innovations.
In Burnout, Leaders become Terrified because All Innovation becomes Impossible to Attain.
They are Terrified because Nothing they Do or Say makes "Any" Difference to the Reality of the Problem.
They are Terrified because they Know that as soon as the Next Major Exponential Innovation occurs, they are Screwed.
The Best Employees will simply Scramble over to the New Category.
This is the "Root" of Why so many Leaders Look at Innovation Mythologically.
This is also Why Leaders "Need" to Design a Regenerative Legacy.