HBS Managing Innovation Winter 2012 Course

16Apr/110

Less is More: How Resource Constraints Can Spur Innovation

Let me ask you this: when you see a glass with water filled halfway – is it half empty or half full? Call me an optimist, but when I hear about resource constraints, I actually see an opportunity for innovation to thrive in such circumstances.

Let’s take a step back. Oftentimes, resource constraints are cited as a problem in the context of innovation – that is, they are viewed as inhibitors of true product innovation. In most organizations, the pervasive mentality is that procuring more money correlates directly with more innovation and the production of better products. Organizations emphasize the importance of gaining more resources to put behind R&D and tremble at the idea of losing headcount or funding for projects tagged as “innovation.” But, the reality is that resource constraints can play a powerful role in determining new paradigms and ways of thinking.

For one, resource constraints can actually force companies to be disciplined and make hard decisions about what product features to exclude. In particular, when resources are scarce, companies are motivated to focus on cost-cutting initiatives and aggressively assess what features are really necessary in their products. As we have learned in many of our cases, product innovation is not just about what features a company incorporates into its products, but about what it chooses not to include. Companies like Apple (despite having access to plentiful resources) excel at this task, demonstrating the success of products adhering to a “less is more” design construct. Perhaps the rest of the corporate world could use a little more of this type of discipline.

From a competitive context, there are real benefits to focusing on a streamlined product approach. In her book, “Different: Escaping the Competitive Herd,” Young Me Moon notes that firms often attempt to differentiate themselves through product augmentation. The irony of the situation is that the pursuit of “relentless, incremental augmentation” has resulted in a world with products that are less differentiated than before because of the proliferation of meaningless (and costly) features. In this context, the benefits of resource constraints are clear – they induce companies to reduce or even withhold certain product attributes, thereby focusing only on the ones that really matter and increasing the chances for true differentiation.

Resource constraints can also expedite the process of innovation and new product development. The best example of this is reflected in Internet start-ups that quickly release versions of their products. The sense of urgency that most start-ups feel due to their capital constraints (at least, in the initial stages) is a real motivator for them to develop and release their products as quickly and efficiently as possible. Despite financial and time constraints, successful start-ups are able to launch quality products quickly out of sheer necessity – they need to secure their next round of funding and “prove” their models based on these beta versions. Contrast this with many traditional consumer products companies, where new product releases (from ideation to launch) can take up to two years, because leadership continues to agonize over the results of the latest quantitative consumer testing. Essentially, resource constraints can force companies to be nimble and quick and prevent them from falling into the trap of analysis paralysis – they simply don’t have the resources to put behind re-testing a new product concept. Lean companies are required to focus only on the most critical, essential aspects of their products, thereby forcing them to make difficult decisions up front about product criteria. As such, resource constraints tend to encourage the adoption of “good enough” as a standard for product innovation, which can result in a more efficient and timely product development process.

Thus, resource constraints in many contexts can act as a facilitator, rather than a barrier to, innovation. As antithetical as it may seem, their presence can generate value and spur innovation. Taking it a step further, imposing false constraints and targets could force companies to be more innovative with respect to existing products and processes.

Oftentimes, in innovation, we ask ourselves to imagine a world of limitless resources to get our creative juices flowing. In this context, we ask the age-old question: what would you do with $1 million dollars? I would propose a different question: what would you create with $1? Which would produce more interesting answers?

Posted by twie

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