Snowballing innovation: harnessing the magic of compounding

24 May 2022
6 min read

Not many people would give their brainchild a name that specifically alluded to failure, but that's effectively what Norm Larsen did in 1953 when he finally came up with WD-40.

Founder of the Rocket Chemical Company, Larsen's aim was to produce a water-displacing oil to prevent corrosion on rockets. And he did, after 39 failed attempts! WD-40 stands for 'Water Displacement, formula 40', and heralds the success eventually achieved. This was a case of innovation taking failure in its stride. Larsen knew that the lessons learned would lead to success, by learning from the failures and channelling the lessons into his next steps.

While a can of WD-40 can still be found in almost every garage, the aerospace industry that once inspired the product took a turn in 2011 when NASA's shuttle program ended. After a 50-year history, experimentation in space travel was deemed too risky and expensive to pursue in the USA, but then SpaceX came along with the ambitious goal of putting human beings on Mars.

SpaceX has experienced a number of failures in its pursuits, yet persists by embracing and learning from those failures and carrying the learnings into the next iteration.

In contrast to the Saturn V rocket that only had two real-world test launches before carrying humans into space, SpaceX seeks to undertake as many test launches as possible even though many may fail. The company practices innovation that snowballs or compounds, carrying lessons from the past into the future, achieving results that were once thought impossible.

There is a great deal the professional services industry can learn from the space sector as far as compounding innovation and learning from failure is concerned. Rather than simply accumulating instances of innovation, we should aim to more effectively leverage what we have learned.

The innovation stockpile

Innovation is ubiquitous. Although the professional services industry has become very good at solving old problems with new approaches, we have tended to innovate on a project by project basis and have failed to transfer the knowledge accrued to the benefit of other projects. To optimise the use of innovations that are constantly emerging, we need to find ways to reapply and build on them.

Taking a blank-canvas approach to each new project is somewhat wasteful of the efforts that have gone before. Doing so results in a stockpiling of unlinked innovations, and we are in danger of constantly reinventing the wheel. There are likely to be wasteful overlaps, and we are also likely to miss out on the compounding benefits.

If we want to build upon knowledge and technologies, we need to break the habit of jumping to the next project without disseminating what has been learned.

Missions and moonshots

One of the characteristics SpaceX has that a lot of other companies do not is a steadfast commitment to a bigger picture. Sending humans to Mars is a lofty aim, even so the goal is paramount and each launch and mission moves them one step closer.

The professional services industry does not compound innovation because there is currently little incentive to do so. Our mindset is myopic – our goal currently is to resolve each seemingly unique problem as presented within a project. We move rapidly from one project to the next, without taking the time to reflect on the bigger picture and how we can capitalise, build on and reapply what we have learned.

Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is a strong proponent of moonshot or mission-oriented innovation as a means to realise the true value of many individual efforts.

To create incentive and encourage compounding innovation, organisations must ensure each project is nestled under a particular theme and to cluster those themes around larger goals.

While we still need to go through the process of experimentation and failure, we also need to apply accumulated and progressive knowledge. Approaching projects in accordance with set themes will require us to work more deliberately at filling knowledge gaps in pursuit of big-picture goals.

Forward motion

Meeting or even exceeding clients' expectations is the immediate aim; however, truly innovative organisations go further. They look towards something greater, emphasise continued learning, and foster knowledge sharing. They understand that: The true value of innovation lies in the ability to compound.

This is not a new concept. Consider the fundamentals of the academic system. By means of citation systems, researchers are able to contribute novel ideas to their given field. It can add to the body of knowledge, either by building upon concepts that others have previously introduced or by filling gaps in the collective knowledge.

Open Source is another example, which demonstrates the power of communities that are committed to building something larger. Take Linux for example, an open source operating system launched in 1991 that powers everything from phones to rockets. Everything is designed not only to be shared, but to be adapted and built upon.

The role of emerging technology

As digital technologies and artificial intelligence-based (AI) approaches become increasingly sophisticated and accessible, the ability to embed learning into our daily practices will become more commonplace. 

Digital applications provide a means for organisations to continually consolidate and centralise learning. In the past, organisations would have followed manual processes and developed optimisations within their own teams. Having common digital applications used across organisations provides a way to capture experience and improvements, and deliver them centrally, enabling them to be built directly into the application's functionality.

These approaches will allow for the collection and curation of past analyses and decisions, and to build on them and reapply them in new contexts. Our aim is to have our systems generate options based on the insights that have gone before, so that clients benefit from our accumulated successes.

Collective contribution

Whether we are learning from failures or reapplying successes, pursuing and maintaining an innovation system in a sustainable, long-term fashion is challenging, but is certain to reap rewards.

As we've learned from WD-40, SpaceX, or Linux, when we deliberately carry lessons learned from the past into the future – treating successes and failures as opportunities to do better next time – every attempt becomes a compounding step towards the goal. The professional services sector might not build rockets, although we can certainly set bigger goals for ourselves and make what was once thought too difficult a reality.

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Stewart Bird
Written by
Stewart Bird

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