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Jeffrey Phillips


Signal vs. Noise

Three simple rules to distinguish innovation from business as usual

Published: Thursday, February 16, 2017 - 13:02

The attempt to eliminate noise from an operating system or a business process is an interesting and perhaps worthwhile challenge, until one considers the question: What is the real signal? What is creating the noise?

In many businesses today, there are several signals, what we might call noise conflicts. These include:
• What management says it wants vs. what it reinforces
• What the operating systems support vs. what is needed
• The amount of risk that is encouraged vs. that which is tolerated

Noise conflicts raise the question: Is innovation noise or a signal?

Strategic need and communication

Let’s start with a classic issue: sending a signal that isn’t meant to be received or implemented—or worse, failing to understand that a signal isn’t correctly received. Many executives have concluded that innovation is important and must become a cornerstone of their business strategies. However, they have little understanding of how innovation works. To them, innovation must seem like magic pixie dust: Sprinkle it around, encourage it, and new, innovative products will spring to life. They take to the lecterns and advocate for innovation but don’t change deliverables or goals or investments. People hear about innovation but don’t see the requisite change in risk attitudes or investments, so they become conflicted. In these cases, innovation is noise introduced to a consistent signal that is business as usual.

What actually gets done

What’s worse, perhaps, is that some new, good ideas may get developed by resilient, innovation teams or individuals. But those new ideas will encounter all of the existing measures (such as return on investment) and decision-making gates that expect fully formed, fully proven products rather than nascent, unproven, and risky ideas. Processes that have been honed to perfection, where randomness, variability, and risk have been eliminated, treat innovation as noise, while consistency, efficiency, and predictability are the signal. We place filters in these communication programs to eliminate noise (i.e., innovation) and improve signal (business as usual).

What the market signals

However, at the same time that business as usual is being preserved as signal, the market and customers are signalling needs for new products and services. They do this by preferring new products that meet unmet needs, expecting lower prices for products and services that become commoditized, and shifting alliances to solutions that understand their journey and expectations. The markets and customers are constantly signalling their needs and expectations, but too often we listen through filters of:
• Past experience
• The investment we have in existing products
• The risk and change associated with creating new products

In this case there are actual signals, clear signals of the need for new products and services, that are ignored or filtered out by the way corporations listen (if they listen) or respond to customer requests and market trends. In this case clear signals are ignored, filtered out, or overcome by the noise of business as usual.

Many people would like you to believe that innovation is difficult. Nothing could be further from the truth. Innovation, creating new ideas that become new products and services, is easy. It happens all the time, across the globe, every day. The real challenge to innovation is cultural, both on the corporate and the consumer side. An underlying issue within those cultural challenges is the inability to distinguish signal from noise—in other words, to communicate. This occurs both internally (as we’ve seen: what management wants vs. what it supports), in operations (what we reinforce—efficiency; and what we resist—creativity) and what we hear from customers and markets.

To succeed at innovation, there are three simple rules:
1. What executives say, matters. They must both say they want innovation and then reinforce the desire with new investments and priorities.
2. What business as usual dictates and expects, matters. If efficiency matters more than innovation, you are communicating a value proposition.
3. What customers and markets say, matters. Are you listening? Or are you filtering to hear what you’d like to hear? Can you separate signal from noise?

Perhaps the most important first step of any innovation activity is to ask these questions: What signals are important? How are they received? How can we amplify and clarify the important signals? What do we filter? How can we listen, hear, and respond more effectively?

First published on the Innovate on Purpose blog.


About The Author

Jeffrey Phillips’s picture

Jeffrey Phillips

Jeffrey Phillips is the lead innovation consultant for OVO, which offers assessments, consulting, training and team definition, change management, innovation workshops, and idea generation space and services. Phillips has led innovation projects in the United States, Western Europe, South Africa, Latin American, Malaysia, Dubai, and Turkey. He has expertise in the entire “front end of innovation” with specific focus on trend spotting and scenario planning, obtaining customer insights, defining an innovation process, and open innovation. He’s the author of Relentless Innovation (McGraw-Hill, 2011), and 20 Mistakes Innovators Make (Amazon Digital Services, 2013), and co-author of OutManeuver: OutThink—Don’t OutSpend (Xlibris, 2016).