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Digital business designers

‘Strategic’ analysis is killing your ability to innovate

Many companies struggle to innovate successfully, and almost none ever make a real breakthrough — because they allow business analysis to lead the way forward. To innovate successfully, back creative thinking over boxed thinking every time.

Mark Wilson

Managing Partner & CEO

I want to start with a quote, taken from an article in the last issue of Harvard Business Review.

“Strategy professors (including me) typically teach students to think about strategy problems by introducing them to rigorous analytical tools–assessing the five forces, drawing a value net, plotting competitive positions. The students know that the tools are essential, and they dutifully learn how to use them. But they also realise that the tools are better suited to understanding an existing business context than to dreaming up ways to reshape it. Game-changing strategies, they know, are born of creative thinking: a spark of intuition, a connection between different ways of thinking, a leap into the unexpected.”

This was Adam Brandenburger. He’s a Professor at the NYU Stern School of Business among other things and I think it’s one of the most honest insights I’ve read about strategy — certainly from the business school ‘establishment’ — for some time.

I’ve been thinking a lot recently about tools and processes, and what role they have to play in modern business strategy and innovation.

Thinking inside the boxes

Those that know me well will know that I’m not a fan of templated processes, nor am I a fan of anything that requires people to ‘think’ by filling in boxes (or cells). I understand that some of these tools are designed for non-practitioners, and we have used them as part of processes designed to help clients learn how to build genuinely innovative cultures. Here, I’m persuaded that they have their place.

I am also aware that many recognised analytical tools have value in helping an initiative progress, because they’re written in the same language that the ‘business’ speaks and the people at the top of the company learned to use the same tools at business school 25 years ago, so they consider them ‘sound’ and ‘rigorous’.

However, I am increasingly struck by how many people believe that, in the context of innovation at a business or service level, rigorous analysis — using the sorts of tools that Adam referenced above or one of a hundred more — are going to lead to breakthrough innovation. Operational improvements? Sure. Incremental innovation? Possibly. Market-changing breakthroughs? Not a chance.

Most traditional analysis tools are backward looking or at best a way to assess the known current state — even those that are supposed to help people look forward. They are also frequently used by people whose training and experience is naturally aligned with how business has been, rather than how it might be.

You can't prove an innovation in advance

If there’s one thing we’ve learned in the last two decades, it’s that the digital economy does not follow traditional market rules, and frequently makes even the most sophisticated analyses worthless. Breakthrough innovation doesn’t disprove analysis per se, it simply side-steps it and makes it irrelevant. The more I see people attempt to perform rigorous analysis of future opportunities to ‘prove’ their viability, the more I want to shake them.

Future certainty simply does not, and cannot, exist in today’s world — no matter how much analysis is conducted.

One of the things that worries me most about the obsessive reliance on analysis in business is the amount of time and money that’s wasted on it: resources that could be invested in more progressive activities.

I’ll pick on one here as it comes up a lot: SWOT analysis. I could write about this all day. I think SWOT analysis (as it’s taught) is positively dangerous in the modern world. Strengths can kill you because you focus on them too much in a bid to reinforce a ‘defensible’ position, while the Threats that matter don’t exist yet or can’t easily be identified. Legacy constraints are often put in the Weaknesses box when they should be thought of as potential assets for innovation. Opportunities are worthy of focus for sure, but not in a traditional way. Instead an organisation should develop the ability to harness opportunism as a behaviour instead of basing key decisions on a list diligently generated via analysis by someone with an MBA.

The problem with systematising and over-analysing is that it fundamentally overlooks one key issue: breakthrough innovation rarely solves an identifiable current need or problem. Instead, it enables a new type of behaviour or capability and resets some aspect of how people conduct their home or work lives.

You don’t get that from analysis, you get it from creativity.

The real breakthroughs come from envisioning a futurestate without constraints, flipping current certainties, applying lateral experiences, and often, from simply listening to people.

Ignore what they tell you: innovation cannot be formulaic

The initiatives that deliver a step-change in a company’s fortunes, the real innovations, all have one thing in common, and it’s not tools, or process or analysis. It’s creativity. Breakthrough innovation is always built on brilliant creative thinking.

Read David Rowan’s new book: ‘Non-Bullshit Innovation’. It’s an entertaining read all-round and contains plenty of examples of companies going about innovation in interesting ways. But it was the introduction to the book that was the highlight for me. In a wonderfully laconic way, David told the story of his attendance at the ‘Innova-Con’ — the annual convention of the International Association of Innovation Professionals (IAOIP) in Washington, USA, where they are accrediting professional innovators. They claim to be the home of the ‘scientific formula’ behind successful innovation.

As you might guess, it’s the spectacular bullshit that the rest of the book is a counterpoint to. (IAOIP’s use of the ‘-con’ extension is wonderfully ironic).

The reason everyone should read at least the intro is to appreciate how poorly understood innovation really is by many of the people who claim to practise it, and why companies that become genuinely good at it are going to dominate the future of their industries (and perhaps much more besides).

Those companies will not be built on systematic, templated, procedural analysis. They’ll be built on creativity. I’d argue that the standout companies of today already are.

I fear that creativity is still the poor cousin to analysis and process in innovation, because its importance is still not understood (nor is its value recognised enough) by business leaders. I wonder how many senior execs would honestly say, even today, that they valued creativity over traditional business analysis? How many would confidently invest in a potentially game-changing new concept without conducting ‘proper’ analysis, or ‘due diligence’?

I defy anyone to tell me how you do that for something that is meant to change how people behave in the future, or reset the rules by which something works.

Protecting yourself makes you vulnerable

The reality is that analysis is used as a defence against blame more than as a valuable insight into future potential: numbers and quadrants are still trusted over ideas and vision. That’s simply a failure of understanding. Rigorous thinking is essential — ‘prove the future’ analysis is not.

I spent a good chunk of yesterday rattling back through our archives. Hundreds of projects for organisations all over the world in various forms. I couldn’t find anything that we’ve worked on where the value in the future service was born of analysis. In every case creative thinking — whether by us, our clients or their customers, was where all of the important leaps forward lay. Forming new combinations, making new connections, a passion to change something, reinterpreted constraints, redefined assumptions, sparks of insight, or just a plain old intuitive hunch: all of them have more chance of powering an important innovation than a spreadsheet or a framework.

Now, to slightly temper my position here, I’m primarily talking about the early stages of an initiative because this is where most of the best innovation initiatives die. Boards most comfortably invest in analysis, because it’s logical. Analysis mitigates risk and makes them more blame-resistant, and convincing analysis is most dangerous early in the innovation lifecycle because by definition the initiative is predictable… or the analysis is nonsense.

If you want to see your innovation efforts pay off, invest in creativity and potential. Over-analysis begets average initiatives and kills good ones. Sack off the management consultants claiming to be able to analyse your business to its future — they’re wasting money that could be spent exploring new avenues or backing a radical shift in thinking.

If you rely on analysis, don’t be surprised when it leads you down a blind alley, makes you highly predictable, or positions you in the perfect spot to be hit by a wave you didn’t see coming. Push back against your backward-thinking peers who want the reassurance that someone has ‘really done the numbers on this’ and invest in generating and executing on exciting ideas with potential. They may not fit nicely into boxes, but they will provide you with a genuine chance of flourishing well into the future.

How to design for the customers of tomorrow

When envisioning the futurestate of a company or a service, we’re usually faced with the challenge of designing for a customer that doesn’t exist yet. What do we mean by this? Well, they exist in the obvious sense, they’re just not ‘there’ yet.

Customer-led design won’t lead you somewhere new

Customer-led design is an accepted norm these days; a go-to approach for innovation teams. But there’s a fundamental flaw in customer-led design when you’re trying to take a real leap forward: customers can’t lead you there.

Coming of age: 18 years of WF

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