The success of innovative businesses can be attributed in part to the fact that, by innovating, they learn to face new challenges, which in turn improves their knowledge and skills. Extending their range of experience can lead them to outperform their competitors.
There is a quote from Mahatma Gandhi that should be in the lexicon of every aspiring business: “Live as if you were to die tomorrow, learn as if you were to live forever”.
Yet many firms shy away from innovation. Sticking with what they know, they fail to see the benefit of a lifelong learning curve, and in the process they get left behind their competitors. Look at music retailer HMV’s failure to invest in the digital marketplace. It had the brand name, it could have easily competed alongside Amazon, but it was too slow to embrace change. Similarly, Comet and Blockbuster feared to tread where other retailers dared to – John Lewis, Next and Dixons are among those that have managed to make their websites and stores work together, and so survived on the high street.
The focus of this study’s research was a group of fertility clinics in the UK. When the government introduced guidelines for such clinics to publish their success rates, the aim was to create transparency for the user, who could compare what percentage of treatments resulted in pregnancy, for each clinic. Nothing surprising there… until the results were analyzed over a period of time.
Because of the introduction of, in effect, ‘league tables’ for fertility clinics, it has become increasingly common for clinics to decide whom they will treat, given that certain women will get pregnant more easily than others. It does not take much to see why a healthy 25 year-old would be taken on while a woman two decades older with only one ovary and a history of failed IVF treatment might be turned away.
At first glance, the clinics that select heavily have higher success rates. But then the research measured what it refers to as the clinics’ ‘learning curve’, the notion being that with experience companies get better – as they take on new challenges, they learn more, and improve their results. And so it proved.
Those clinics selecting the more favourable cases, the ‘safe bets’, performed well statistically, but learned little in the process, as they didn’t need to veer away from their usual methods of practice. Conversely, those clinics that didn’t select women for their likelihood of getting pregnant, increased their knowledge base. They had to treat the difficult cases successfully, as well as the standard ones.
Although such cases were undeniably more challenging and time-consuming, they also added to doctors’ experience and encouraged their collaboration with embryologists, pharmacists and other medical professionals. In the end, they learnt so much more that, after a year or so, their success rate was higher than the very selective clinics. This was because the non-selecting clinics not only become adept at treating women with more complicated fertility problems, but the knowledge they amassed also improved their performance in standard cases.
If the fertility industry assumes that selection makes sense commercially, it is not looking at the bigger picture. Selection has a short-term positive effect, but in the long term a clinic is more likely to succeed if it innovates, testing new methods on clients with more complicated fertility issues.
The same may well be true of, say, law firms that only take on cases they believe easy to win, or architects who only design simple, formulaic buildings – or indeed any business that restricts its learning curve.
Step back and think about your organization. Analyze where business is coming from and how you are marketing your company. You may be under pressure to maximize results, and in doing so you look for short-term solutions, such as downsizing programmes, or outsourcing functions, or simply sticking to the current order sheet.
But is there room for change? Consider how risk averse you are and whether there are opportunities you shy away from? Are you promoting simply what you are good at, without understanding that there is so much more you could be achieving? Taking on challenging projects, those that other companies might refuse, forces a company to rethink its standard approaches, building knowledge and skills.
Of course, innovation may not be suitable for all businesses, because it requires a long-term approach – its benefits may take time to appear, as is the case with the fertility sector study. But this study illustrates that by being receptive to challenges and understanding the benefits of cumulative experience, many organizations can increase their learning and boost innovation – benefits that can set them above the competition.
Long-term success is not necessarily about restricting your efforts to the winnable cases and sticking to what you know you can do…it is as much about taking risks, risking failure, but learning and growing in the process.
Selection at the Gate: Difficult Cases, Spillovers, and Organizational Learning. Organization Science. Vermeulen, F. & Stan, M. (2012)
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