Innovation’s Unintended Consequences
The power of innovation is its ability to introduce change into stable systems. Sometimes that change will be fundamental and profound. When we work to design and implement our innovations how do we prepare for and manage fundamental and profound unintended consequences?
Recently, the Haitian relief effort demonstrated how unintended consequences can have long-term effects. Shortly after the disastrous earthquake (over a year ago now) provision of relief had to overcome some major obstacles due to the massive destruction on the ground. Innovative partnerships formed between NGO’s, corporations, and military forces enabling the challenges of crippled infrastructure to be overcome. Providing life-sustaining support was welcome yet some of the unintended consequences have been that local business men and women have not been able to get back on their feet and rehire employees. One gentleman, Mr. Alex Zamor, who ran a drinking water factory has been unable to rehire up to 200 people due to low demand…
“Of course we welcome the relief, but nobody wants to buy water if there’s free water on the streets,” he says. Mr. Zamor says international relief agencies should be sourcing more of their products for the relief effort from Haiti itself. “We should be helping Haitian companies instead of companies in Florida,” he says. (via Global Aid Is No Relief for Small Haitian Businesses – WSJ.com.)
But what of direct product or service innovation’s unintended consequences?
If we consider the innovation in the financial markets that gave rise to credit default swaps and collateralized debt obligations, both of which were designed to manage the risk associated with the trading of complex derivatives, the unintended consequences have been profound and lasting. In their implementation there was a breakdown in both assessment of impact and an understanding of elemental behavior that these financial products would foster.
Or consider reaching back to the lasting impacts of the Great Depression and the response of the New Deal which gave rise to institutional innovations leading to the rise of agri-business, large-scale industrial farms and the demise of family farming. What other consequences of innovations can you observe or cite?
Rogers and Merton developed a model for defining and assessing stakeholders affected by innovation in order to determine first generation consequences and beyond. They note,
Certain stakeholders tend to more frequently affect the introduction of innovations while others are more often affected by them. As with most classifications the two roles overlap to some degree; adopters may apply an innovation in unanticipated ways, thereby affecting it. Also, desirable and undesirable effects overlap and coincide; some adopters will find the innovation desirable, features that some consumers love others may hate.
The theme for innochat this week is the power and impact of unintended consequences on the introduction of innovations. Here are the questions we will consider:
- What examples of unintended consequences can you cite from your own experiences or observations of the implementation of innovations?
- When you design solutions what potential problem identification and risk management activities do you undertake to minimize negative consequences?
- What tools or processes do you recommend for getting behind the value-based benefits of innovations to eliminate or mitigate unintended consequences?
- How effective have you been at managing unintended consequences when they arise?
- And a philosophical bomb - Is all innovation okay regardless of the consequences?