Innovation and the Outside Context Problem

Outside Context Problem

Ian Banks, the late science fiction writer, defined an Outside Context Problem as “a problem that hits you not only because no one saw it coming, but because it was so far outside your context that no one could have possibly predicted it.” He gave a clear example: 


An Outside Context Problem was the sort of thing most civilisations encountered just once, and which they tended to encounter rather in the same way a sentence encountered a full stop. The usual example given to illustrate an Outside Context Problem was imagining you were a tribe on a largish, fertile island; you’d tamed the land, invented the wheel or writing or whatever, the neighbours were cooperative or enslaved but at any rate peaceful, and you were busy raising temples to yourself with all the excess productive capacity you had, you were in a position of near-absolute power and control which your hallowed ancestors could hardly have dreamed of and the whole situation was just running along nicely like a canoe on wet grass… when suddenly this bristling lump of iron appears sailless and trailing steam in the bay and these guys carrying long funny-looking sticks come ashore and announce you’ve just been discovered, you’re all subjects of the Emperor now, he’s keen on presents called tax and these bright-eyed holy men would like a word with your priests.


In the business world, we see these outside context problems all the time, and businesses also tend to encounter them in the same way that sentences encounter a full stop. We don’t call it an outside context problem, we call it “disruption”. Organisations get disrupted all the time. We’ve all heard the stories – how print media didn’t foresee how the rise of online would impact the “rivers of gold” that used to flow into them through classified advertising. How brick and mortar businesses were slow to realise the impact of online shopping, how huge firms like Kodak failed to prepare for changing technology and disappeared.


This sort of market disruption is now one of the primary business models for aggressive tech focused startups. The strategy is simple: find a market that technology hasn’t disrupted and go disrupt it. “Like Uber but for XXXX” is a pretty common pitch. This disruptive innovation tends to hit organisations hard because they just can’t see it coming. Not that they don’t see it coming, but they can’t. Because their context is so firmly fixed into their current model that they can’t imagine any other way.


So what can organisations do about this? The answer is to innovate. Invest time, money and effort in innovating within your market and in adjacent markets. Not because you will invent the disruptive technology yourself, because you probably won’t. But innovating, thinking about new solutions to old problems, will broaden your context. It will allow you to imagine more possibilities and prepare for them. 

It can’t be any old innovation, either. You can’t just look for ways to make your current processes 2% better. That is innovation, but not the sort that broadens your context. You need new ideas, new products, new markets. Innovation that will challenge your existing ways of doing business, not innovation that sits neatly within your existing business model. Kodak was a very innovative company. They were constantly innovating new, incremental advances in film. That didn’t save them.


Granted, Kodak did innovate in new products and markets. They invented the digital camera, but that didn’t save them either. And you are right. Just innovating isn’t the answer. You need to use that innovation to imagine new ways of doing business. That’s where Kodak fell down. They invented something truly innovative but couldn’t imagine how it would fit into their existing business, so abandoned it for the (in their minds) safer path of incremental innovation. You need both – innovation and flexibility in thinking to allow you to imagine different futures. 


There are a number of established practices that can help the organisation innovate Things like innovation time, innovation hubs and teams, design thinking, innovation accounting and so on. These practices along with other powerful approaches like futurespectives and scenario planning can also help the organisation leverage those innovations to drive the new thinking that is required to broaden its context.


To successfully innovate requires the right-thinking, but also the right people. Your best operational people are probably not your best innovators. For a start, they are totally focused on keeping the business running. Unless you have some slack in the system, sometimes for people to think in new ways, they simply don’t have the time or mental energy to innovate. Also, experts in a particular field can get trapped by the existing thinking in that field and resist new ideas (the Kodak problem). If your organisation is made up of busy operations people who are experts in the field they are working in, your organisation’s capacity to innovate may be limited.


That is a problem that can be solved, though, and you tend to solve it through investment. Either investing in your existing people to free up their capacity and give them the time to innovate, or by investing in new people – bringing in innovation teams whose mission is to explore new areas and develop new ideas. These innovation teams can be long-lived and be a permanent part of your business, or you can spin up short-term innovation teams to explore a particular idea or field, then disband them once that exploration is done. 


Another thing that can help is to have a reliable innovation partner to manage and run those innovation teams. Innovation focussed teams need to be led differently to more operationally focused teams, and many organisations don’t have the experience to manage those teams effectively. The shiny new innovations teams get stifled by the same governance processes that the operational teams rely on to maintain quality. An innovation partner can bring the right processes and governance (and people) with them to enable innovation teams to thrive.


The other thing a trusted innovation partner brings are tools to help you incorporate the new ideas into your existing business. Like Kodak, many organisations struggle to incorporate new and innovative ideas. They may have innovation teams, but those innovations never see the light of day and more importantly, the organisation’s context stays limited by their current thinking.


Investing in innovation, either directly or through a trusted innovation partner, is the organisation’s best chance to survive disruption. Innovation turns outside context problems into in-context problems that can be understood and dealt with.