Innovate, Experiment, Commoditize

by Edward Henkler on November 26, 2013

It is natural to want to stick with things that are familiar but it may be a mistake, especially in a world where layoffs and organizational re-structuring are commonplace.  One possible answer is in an acronym I learned a number of years ago, IEC.  Innovate, Experiment, Commoditize suggests that companies should innovate in their core product area.  After implementing an innovation, the natural next step is to experiment to leverage the opportunity it represents.  During this phase, employees explore the best uses of the innovation and refine its use in each application.  The first two steps require the special knowledge of the product experts.  It’s the third step, commoditize, where it may be time to hand the previous innovation off to another firm.  Holding on to work that has become routine or commoditized is de-energizing for your employees and doesn’t fully use their skills.  If you are able to create a continuous pipeline through the IEC process, then your employees will always be challenged to be creative and the routine work will shift to firms that specialize in that work and can take advantage of volume efficiencies.

In “The Innovator’s Prescription”, Clayton Christensen noted that an administrator at one of the Boston-area teaching hospitals estimated that 70% of the patients in his hospital today would have been in the intensive care unit 30 years earlier.  He further estimated that 70% of the patients in his ICU would have been dead 30 years ago.  This is a marvelous example of how healthcare has progressed but also illustrates the danger in not completing the IEC pipeline.  Hospitals have amazing resources and expertise but are still doing the routine (i.e. commodity) work that should be shifted to a more proscriptive setting.  By maintaining the commodity work while continuing to innovate and experiment, they have ensured that they can address any challenge.  Unfortunately, it also means that they are executing lower skilled work in a very specialized and expensive setting.  It can be further argued that they are not even as effective with the lower skilled work as it is relatively uninteresting and may be less familiar, as their studies have prepared them for the newest techniques.

Don't get stuck in the ICE

Don’t get stuck in the ICE

The takeaway: focus on the work that is most interesting, constantly seek innovative approaches then optimize them, while handing the routine work off to other organizations that are best suited to accomplish them.

{ 2 comments… read them below or add one }

Jory Barrad November 26, 2013 at 8:19 pm

Very interesting and relevant in a global marketplace where off-shoring (and re-shoring) are all the buzz. Your model gives “letting go” new meaning.


Edward Henkler November 26, 2013 at 8:48 pm

Thanks, Jory. To some degree, it’s the spirit of abundance vs. scarcity. If we believe we live in an abundant world, then we shouldn’t be afraid to give up work that has become mundane for us, while taking on newer, more creative work. Benefits us and the organization that receives the work.


Leave a Comment

Previous post:

Next post: