America
Innovation in business is overrated: Indian-origin researcher
Washington, Aug 21
Drawing an analogy between
how Formula One (F1) racing teams and businesses function, a new study
co-authored by an Indian-origin researcher has found that big changes
usually do not deliver as much value for businesses as incremental
changes.
"The conventional wisdom that companies need to embrace
change is often wrong," said co-author Jaideep Anand, professor of
strategy at the Ohio State University's Fisher College of Business.
Using
data from 49 teams over the course of 30 years of F1 racing, the
researchers found that the teams that innovated the most, especially
those that made the most radical changes in their cars, were not usually
the most successful on the race course.
"We found that it was
not always good to be the aggressive innovator," Anand, an alumnus of
Indian Institute of Technology (IIT), New Delhi, said.
According to Anand, F1 racing is a very good venue to take lessons on innovation in business.
The
innovation-intensive industry's teams of engineers, drivers and
sponsors work together to succeed, which is comparative to the
environment in which businesses function.
Moreover, Federation
Internationale de l'Automobile (FIA), the independent governing body of
F1 racing, imposes changes to racing teams' environments by releasing a
new set of rules each year, which is similar to changes in the
regulatory and business environment that businesses face on a regular
basis.
Analysing the degree of freedom FIA gave the teams to
incorporate technological innovations, the researchers found that
"incremental improvements were often better than big changes".
The reason: Formula One cars -- like many businesses -- are complex, interconnected systems.
"There
is a risk when you make some kinds of changes that you won't be able to
make the whole system work together again," Anand said.
The best
path, according to the researcher, is usually to make changes on the
margins, where you can gain some efficiency without disturbing all the
other parts of the system.
However, Anand cautioned that the study results do not mean innovation, even radical ones, are not sometimes needed in business.
"But
we are pushing back at the conventional wisdom that innovation is
always good, and is always the right choice for business. Sometimes
there is value in going slow," he said.
The study appeared in the current issue of the journal Organisation Science.