Rules matter

Innovation is more effective with constraints, despite arguments to the contrary, according to a report by McKinsey & Company.

In a recent report titled The simple rules of disciplined innovation, author Donald Sull argues that sophisticated innovators find constraints “spur and guide innovation” – a view that seems somewhat counterintuitive given that much discussion regarding innovation talks about free-flowing ideas and a lack of barriers.

Arguing against this theory, the author suggests that a total lack of rules is thought to overwhelm innovators, causing activities to become uncoordinated. Instead, the author suggests a set of simple rules that he says will eliminate chaos but won’t necessarily guarantee success, however they should increase the chance of success.

Citing manufacturing company Corning as an example, the article shows the firm looked to past successes with breakthrough products such as the television tube and optical fibre to distil four simple rules for innovating. These were:

    1. Addressing markets in excess of USD 500 million.
    2. Leveraging expertise in materials science.
    3. Being a critical component in a complex system.
    4. Having patent and IP protection.

Another notable example mentioned is Lego, a company well known for the successful turnaround of its business through innovation. Lego utilises a simple rule for product development in which designers must re-use a certain number of existing pieces when designing a new product. This helps to balance innovation with the practical need for control of manufacturing costs.

The author contends there are “four characteristics of effective simple rules” for innovation.

These are:

  • Cap the number of rules – in defining the few, important rules, it essentially results in codifying “the essence of the company’s strategy”.
  • Make the rules apply to a well-defined activity – such as the selection of new projects.
  • Tailor the rules to the business’ culture and strategy.
  • Rules are for guidance only.

However, the author stresses a word of caution for rule four, and that is that rules should be “guidelines not algorithms”.

Read the full article here.