A recent survey by the City University of London professor Paolo Aversa and his colleagues suggests that at certain situations more innovation has led to poorer performance.
An article in hbr.org elaborates on the research.
Aversa said that the research starts with observation that in some races, no frills cars were doing well.
'My research partners—Alessandro Marino of LUISS University, Luiz Mesquita of Arizona State, and Jaideep Anand of Ohio State—and I then took it to a higher level and ran statistical models on 30 years’ worth of races. And it was clear that innovation didn’t always lead to better results. When we mapped the relationship between the two, we got an inverted U, showing that increases in innovation initially helped performance but after a point began to hurt it,' he said.
However Aversa said that the real breakthrough was seeing that in certain circumstances, less innovative cars performed better. And average drivers were winning with average cars.
He says that it has to do with the environment around the innovation.
'If you have a complex product, like an F1 car, and are in a turbulent market, your instinct might be to innovate—to invest in getting ahead of all the change. But your chances of failing with an innovation in a dynamic, uncertain environment are very high. Often, it seems, it’s better to wait until things are more stable and let others who are busy innovating during times of turmoil fail,' he stated.
He said that the time of turbulence plays a major role in the performance.
'A time of turbulence is mainly defined by three factors. One: the magnitude of change. How much is the industry changing compared with other times? Two: the frequency of change. How often are changes coming at you? And three: predictability. Can you see changes coming? The most important of these is predictability. You can absorb almost any change you can see coming. But if predictability is low, and either frequency is high or magnitude is large, you should scale back innovation until things get more stable. Certainly if all three are working against you, you should innovate less,' he said.
He said,'We can apply these three factors to lots of industries. In fashion, magnitude is generally moderate—styles, materials, and so forth keep coming back in cycles. Frequency is steady, seasonal. But predictability—knowing what the next big thing will be—is wildly low. Think about music formats: The frequency of change is increasing, but it’s still not that often—vinyl was around for decades, CDs were around for years. But magnitude is massive when changes take you from something like a CD to a streaming service. And predictability is really low now,'
'F1 teams really have one product, the race car, but most companies have a portfolio of products. So we look at their different markets and think about where they should be scaling back innovation because of uncertainty. I would never say stop innovating altogether. I would say maybe push the envelope in this stable market but scale back and focus on efficiency in that market,' he added.
He emphasised that they are looking at other effects of turbulence.
'Specifically, we want to understand how it affects the likelihood that managers will create partnerships and alliances. There are lots of ways to look at what happens in times of instability. The chase goes on,' he said.
