Innovation is, by definition, an unpredictable adventure, a journey into the unknown. It’s a dance with uncertainty, a relationship that innovators must embrace. Despite attempts by many companies to create the illusion of certainty, the intrinsic connection between innovation and uncertainty needs to be understood. Companies can now leverage – more easily and less expensively than ever – the three Es of lean innovation (empathy, evidence, and experimentation) to navigate and thrive amidst this ambiguity.

Innovation’s inherent uncertainty

The path of innovation is rarely straightforward or predictable. If an innovation can be defined as a non-obvious solution to an obvious problem, then it is easy to see that every revolutionary idea begins as a seed of uncertainty, growing in the fertile soil of ‘what-ifs’ and ‘maybes’. This inherent uncertainty isn’t a drawback or a flaw that can be ‘optimised under constraints’ (as engineers would like to believe) but a necessary condition for breakthroughs. It’s in this environment that creativity and progress flourish.

Lean Innovation: the antidote to uncertainty

Lean innovation principles offer a framework for managing the unpredictability of innovation. They revolve around three core tenets:

1. Empathy: understanding the user (and the non-user) is paramount. By talking to prospects, customers and experts, companies can gain deep understanding into their problems that need resolving and for which they would be willing to pay. This means delving into their needs, frustrations, current behaviours and aspirations. Companies can then tailor their solutions to create real value to solve real problems. This user-centric approach, gathering the right data from users, prospects, super-users and non-users provides directional certainty in the fog of uncertainty.

1. Evidence: not knowing what solution will work is acceptable; not knowing and understanding the problem you are solving is not. This is where data and market feedback can work like compasses for navigating the innovation journey. While top managers are told to decide with their gut, this is usually a bad idea in innovation. As Deming once quipped, ‘In God we trust; all others must bring data.’ Evidence-based innovation helps provide objective insights that confirm or challenge assumptions and guide decision-making, favouring hard or grey evidence over mere intuition. It helps avoid groupthink, on the one hand, and trying to innovate from an isolated research lab or within the confines of the office, on the other. This is why Steve Blank, a well-known professor and Silicon Valley guru, famously implores innovators to ‘get out of the building!’ Even if it’s easier today than ever to collect quantitative data through surveys, chatbots and data collection, it should be first and foremost about ‘talking to humans’ (see Giff Constable’s e-book of the same name) and qualitative research. It’s from semi-structured interviews that innovators can truly understand the problem in depth, as well as the ‘job to be done’, in line with Clayton Christensen’s (Innovator’s Dilemma, et al.) well-known theory. The trick is not to try to use data to remove uncertainty, but rather to use it tactically to validate the next key assumption. Here innovation starts to resemble the scientific method of testing hypotheses as an iterative process.  An important dimension in the innovation process is the creativity needed in order to conceive which experiments to set up, what conversations need to take place with whom and what next key assumption needs to be validated before proceeding. When done well, learning is accelerated, confidence is increased and a go/no-go decision can be taken on the basis of concrete findings.

1. Experimentation: within this evidence-based approach, innovation should be seen as an iterative process of testing and learning. As Eric Ries made famous in his book Lean Entrepreneurship, creating a build-measure-learn feedback loop is what allows innovators to ensure a higher rate of success when going to market. By conducting low-cost, rapid experiments, companies can validate hypotheses, learn from failures and steadily refine their innovations so that they can go to market with the confidence that they have achieved some form of ‘product-market fit’ – the holy grail of the innovator. This approach helps to mitigate risks, on the one hand, and to capitalise on emerging opportunities, on the other. And doing so without taking outsized bets or requiring certainty for taking next steps. Thanks to tools like generative AI and/or 3D printing, it is easier and cheaper than ever to rapidly prototype a product, service or solution. Everything can be experimented with; nearly everything can be rapidly prototyped, such that successful innovators today are often those who can think up new ways to test hypotheses cheaply, quickly and effectively – an important aspect of any company’s innovation playbook. For some companies that leverage platforms like KickStarter effectively, this approach can even become part of their business model.

Case study: Tesla’s bold leap into electric vehicles

Tesla’s journey exemplifies the effective use of lean innovation principles in an uncertain market. When Tesla entered the automotive scene, electric vehicles (EVs) were a niche market, surrounded by scepticism. The uncertainty was palpable – would consumers accept EVs? Could electric cars compete with traditional vehicles on performance and price? How would consumers deal with autonomy anxiety?

Despite these uncertainties, Tesla, led by Elon Musk, took a leap of faith. They empathised with a growing segment of environmentally conscious high-end consumers who desired a sustainable, yet high-performance vehicle. Tesla harnessed evidence by closely monitoring market trends and consumer attitudes towards sustainability. They didn’t just follow the data; they read between the lines to see a future that others couldn’t. Experimentation was Tesla’s game-changer. They started small with the Roadster, a high-end, low-volume car that served as a proof of concept. This step-by-step approach allowed Tesla to refine its technology, learn from early adopters and gradually build the infrastructure and credibility needed to scale up.

The European cautionary tale

By contrast, many European automotive companies waited for the uncertainties around EVs to dissipate. This cautious approach seemed rational but was ultimately a very costly strategic misstep. By the time these companies entered the market, Tesla had already established a strong foothold. They had developed advanced battery technology, a robust charging network and a brand synonymous with EV innovation. The delay in embracing the uncertain EV market left many European carmakers playing catch-up. This ‘wait and see’ approach has now also opened the door in Europe to new Chinese competitors unburdened by the legacy ICE (internal combustion engine) carmakers are carrying. To make matters worse, and a fascinating example of strategic irony, many of Tesla’s competitors in Europe and North America are paying Tesla billions of dollars every year for carbon offsets, which is now a regulatory obligation for carmakers. We could call this a tax on the desire for certainty when innovating.

Final words

Innovation and uncertainty are indeed BFFs (best friends forever). They coexist, each fuelling the need for the other. For example, thanks to electric vehicles reaching an adoption tipping point, the uncertainty about market maturity has started to wane. However, this has created new areas of uncertainty relative to the number and availability of charging stations, the number of garages that can service EVs, etc. And the innovations in the EV market are driving new zones of uncertainty in the internal combustion engine market, the hydrogen motor market and even the used ICE car market. Innovation begets uncertainty, and uncertainty begets innovation in a perpetual dance. Embracing uncertainty and applying the principles of lean innovation – with its emphasis on empathy, evidence and experimentation – allows companies to not just navigate but lead in times of change. Tesla’s story is a testament to this approach, showcasing that the willingness to innovate amidst uncertainty is not just a strategy but a mindset that defines market leaders. This approach is essential for any company looking to make a mark in an ever-evolving, unpredictable business landscape. And the good news is that it is cheaper, easier and more effective than ever to adopt a lean innovation approach.

Alon Rozen – Dean, CEO and Professor of Innovation at École des Ponts Business School
Accuracy Talks Straight #9 – The Academic Insight