The Top to Bottom, Inside and Out of Innovation

What’s your innovation process? Most new ideas fail in the market, even if competently executed. This is known as the law of market failure according to Alberto Savoia [1].

The Greek Philosopher Heraclitus is credited with the idea that “the only constant in life is change”. In essence, an innovation process forms the basis of how your organisation adapts to changes brought about by the environment and market dynamics in which it operates, in a structured way.

But how do you put that into practice? A number of innovative and successful companies take opposing approaches to this. Take for example, the classic comparison between Apple’s top-down approach and Google’s bottom-up approach to innovation, discussed further here [2] and here [3].

At the highest level we can work with the following simple definitions:

Top-down innovation

Company vision driven through a well-defined and controlled product roadmap. Management drives from the top, engineering delivers.

Bottom-up innovation

Staff spend a percentage of time on innovation projects. Product designers, product managers, engineers, scientists etc. drive the company’s product offerings.

A further dichotomy in innovation approaches is the distinction between inside-out and outside-in strategies. Drawing on [4], we can make two further definitions:

Inside-out

An approach that is conducted around the belief that an organisation’s capabilities and inner strengths are more valuable than outside influences, and will be the key to success.

Outside-in

An approach that is conducted by the thought process that customer value creation, customer insights, and customer experiences are the keys to success.

So what approach is most effective? The simple answer is it depends. Many examples of excellent innovation cultures exist from which to learn and adapt from, Tesla [5] and 3M [6] to name just two.

Crucially as a leader, it is important to foster an internal culture that can adapt to change and shift strategy efficiently when needed. History has shown that inability to do so can have dire consequences, e.g. [7], [8].

The technology sector is currently experiencing radical change brought on by a combination of exciting technology advancements and macroeconomic factors . If you’re a product leader in this space, ask yourself a few simple questions:

As an organisation, how quickly could we pivot to serve a new market opportunity?

Does an innovation budget exist, independent of existing projects?

Do most new initiatives get caught up in resourcing discussions and organisational politics?

Is a lot of the organisation’s product development reactionary, whether that be from changes in the market or one-off customer requests?

Is the roadmap full of features to be implemented by a certain date rather than driving towards outcomes based on product analytics and feedback?

As stated at the beginning of this blog, the only constant is change. Frequent reflection on your innovation approach is key to longevity.