Industry Update
Opinion Article14 June 2021

Innovation: Embracing Complexity And Contradictions (Frédéric Delley)

Series article #6/9 - What COVID-19 is teaching us about what needs to be taught

By Frédéric Delley, Senior Lecturer, Innovation Management at EHL

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Innovation is the process of creating value through the implementation of new ideas. Crises generate the exact opposite outcome: tremendous value destruction. Innovation, therefore, seems particularly well-suited to act as a powerful countervailing force in times of hardship. The process of innovation under stable conditions, while not straightforward, is relatively well understood. Not surprisingly, therefore, innovation education focuses primarily on established theories and frameworks assumed to operate, for the most part, under stable regimes or continuously evolving environments. But evolution – be it biological, social, or economic – is not smooth. Indeed, punctuated equilibrium theory warns of short yet impactful discontinuities that take place during otherwise longer periods of incremental change. The COVID-19 crisis is one such discontinuity and, as such, provides the ideal context in which to rethink the innovation curriculum.

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2.6.1 Deemphasizing innovation processes

Stable circumstances rarely call for drastic shifts in strategy, thus attention and resources naturally flow to the implementation and improvement of existing processes (Agarwal & Helfat, 2009). In the hotel sector, for example, online booking platforms, streamlined operations and technology-enhanced customer touchpoints are just three of the ways in which firms have innovated to achieve greater efficiencies. Similarly, innovation education in hospitality management has tended to focus on the process of developing new products and services, resulting in countless hours devoted to the nuances and relative merits of stage-gate processes, agile development practices, ‘sprint weeks’, and lead user methods. But while uncertainty management is a built-in feature of some of these approaches, they do not suffice in periods of sharp discontinuities and rapid change which still trigger, in most organizations, a sudden shift in perspective from how to do things (processes) to what things need doing (strategy). Unfortunately, this reactive change in focus often reflects the absence of a pre-existing innovation strategy that can prove effective in good as well as more challenging times. It may be beneficial, therefore, for the next generation of innovation leaders to learn less about the details of trendy product development concepts such as MVPs, SPRINTs, or SCRUMs, and learn more about the design of sustainable innovation strategies that go beyond the adoption and formalization of processes, to include, for example, the intangibles of culture, leadership, and openness.

2.6.2 Emphasizing complexity theory

The COVID-19 crisis has spurred a renewed interest in ‘Organizational Resilience’ which denotes the ability to bounce back from adverse shocks (Wildavsky, 1988). Resilience can be enhanced through the implementation of preventative measures, active scanning, performance optimization, and – importantly – adaptive innovation (Denyer, 2017). In response to rapidly changing – or deteriorating – environments, organizations can no longer expect to thrive through the incremental improvement of known solutions to known problems. Instead, they must engage in adaptive change which requires them to foster productive tension, creative problem-solving, collective action, and system-wide thinking. Adaptive innovation is about learning to live on the ‘edge of chaos,’ the boundary between order and disorder. Complexity theorists posit that it is only on the ‘edge of chaos’ that self-organization and evolution can take place. While the chaos in today’s hospitality environment may be perceived as a purely negative situation, it does in fact provide an opportunity for firms to rethink and reengineer long-entrenched practices. When menus offerings were reduced recently, for example, QSR franchisees advocated in favor of maintaining smaller menus going forward when they saw the efficiencies that resulted (Maze, 2020). The success casual dining restaurants have had during the COVID-19 crisis with retail, delivery and takeaway options suggests that establishments that develop complimentary revenue streams will swim while others will sink. These examples demonstrate that firms with a capacity for adaptive innovation are able to transform perturbations and random shocks into sources of organizational resilience. Because hospitality firms – like most organizations – are complex adaptive systems, innovation education for hospitality managers and students should emphasize to a greater extent the large body of knowledge on complexity that has been applied to other business sectors.

2.6.3 Incorporating paradoxical thinking

Paradoxes are a fact of organizational life and arise from the juxtaposition of contradictory yet mutually-related elements (Lewis, 2000). Innovation is rife with paradoxical tensions: efficiency-vs.-flexibility, present-vs.-future, stability-vs.-change. Such tensions become even more salient under environmental conditions of plurality, scarcity, and change (Smith & Lewis, 2011) – all of which are greatly intensified in periods of crisis. While these tensions might trigger defensive reactions and decision paralysis leading to organizational inertia, they can also provide opportunities for organizations to transcend contradictions (Lewis, 2000). Hotel companies, for example, have relaxed brand standards, provided more lenient cancellation policies, and introduced a variety of new dining options. These demonstrate that hotel companies who usually tend to favor predictability and control are now actively reconciling the fundamental organizational tension between flexibility and efficiency,

Paradox research also suggests that the tendency to accept and value contradictions – i.e., have a paradox mindset – is an important cognitive mechanism through which individuals can tap into the creative potential of tensions (Luscher, Lewis, & Ingram, 2006). Having a paradox mindset allows individuals to attend to divergent perspectives, to immerse themselves in tensions, and to use conflict to generate new understandings (Miron-Spektor et al., 2018). One of the new challenges for hospitality firms is finding the balance between increased health safety protocols while still delivering meaningful customer experiences as the industry shifts from a “high touch” to “no touch” interactions. Achieving this successfully requires new skills and attitudes amongst front-line employees who might at first perceive these directives as contradictory. Cognitive flexibility will therefore become a particularly important trait that can be instilled through appropriate training. Consequently, educators should incorporate insights from paradox theory as it highlights the central role of the individual in organizational adaptation.

References

  • Agarwal, R., & Helfat, C. (2009) Strategic renewal of organizations. Organization Science, 20, 281–293.
  • Denyer, D. (2017). Organizational Resilience: A summary of academic evidence, business insights and new thinking. BSI and Cranfield School of Management.
  • Lewis, M.W. (2000) ‘Exploring paradox: Toward a more comprehensive guide’. The Academy of Management Review, 25(4), 760–776.
  • Luscher, L.S., Lewis, M. & Ingram, A. (2006) ‘The social construction of organizational change paradoxes’. Journal of Organizational Change Management, 19(4), 491–502.
  • Maze, J. (2020). McDonald's franchisees want to make their smaller menu permanent. Retrieved from: https://www.restaurantbusinessonline.com/financing/mcdonalds-franchisees-want-make-their-smaller-menu-permanent
  • Miron-Spektor, E., Ingram, A., Keller, J., Smith, W.K. & Lewis, M.W. (2018) ‘Microfoundations of organizational paradox: The problem is how we think about the problem’, Academy of Management Journal, 61(1), 26–45.
  • Smith, W.K. & Lewis, M.W. (2011) ‘Toward a theory of paradox: A dynamic equilibrium model of organizing’. Academy of Management Review, 36(2), 381–403.
  • Wildavsky, A. B. (1988). Searching for safety (3rd ed.) 2004. New Bruns-wick, London: Transaction Publishers.
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Frédéric Delley

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