Strategic Framework
Innovation vs Optimization Diagnostic
Are You Changing the Rules or Playing Better Within Them?
✓GENUINE INNOVATION
Definition:
New metrics that make old ones redundant and increase long-term human/systemic flourishing
Characteristics:
- • Creates new scoreboard
- • Makes competitors' advantages irrelevant
- • Opens new markets/categories
- • Initially appears inferior on old metrics
Examples:
- PageRank: Quality over keyword stuffing
- iPhone: Apps + experience over features
- Netflix: Convenience over selection
- Tesla: Software platform over horsepower
INVEST HEAVILY: 3-7 year runway
↗STRATEGIC OPTIMIZATION
Definition:
Systematically improving performance on established metrics without changing fundamental rules
Characteristics:
- • Same scoreboard, better scores
- • Clear success metrics exist
- • Incremental gains compound
- • Lower risk than innovation
Examples:
- Toyota Production: Waste reduction
- Algorithm optimization: Speed gains
- Supply chain: Efficiency improvements
- Process automation: Cost reduction
CONTINUOUS: 6 months-2 years
✗DIS-INNOVATION
Definition:
Metric shifts that appear innovative but corrode long-term value by incentivizing harmful behaviors
Characteristics:
- • New scoreboard, worse outcomes
- • Drives wrong behaviors
- • Hollows out real value
- • Gaming easier than performance
Examples:
- Social media engagement: Outrage economy
- Standardized testing: Teaching to test
- Quarterly earnings focus: Short-termism
- Vanity metrics: Downloads without retention
ELIMINATE IMMEDIATELY
⊗ANTI-INNOVATION
Definition:
Active resistance to evolving metrics/frameworks even when demonstrably inadequate
Characteristics:
- • Old scoreboard, irrelevant measures
- • Institutional inertia
- • Activity vs. outcomes focus
- • Defended as "discipline"
Examples:
- Universities: Credit hours vs. learning
- Healthcare: Procedures vs. health outcomes
- Government: Budget spent vs. mission success
- Manufacturing: Hours worked vs. value created
CHALLENGE & EVOLVE
7-Question Diagnostic
Which Game Are You Playing?
| Question | Innovation Signal | Optimization Signal |
|---|---|---|
| 1. Are you changing what success means? | Yes—creating new definition of value that makes old measures irrelevant | No—improving performance on existing, accepted definitions |
| 2. Would competitors recognize your metrics? | No—you're measuring something fundamentally new or different | Yes—industry-standard measures everyone tracks |
| 3. Do current leaders have an advantage? | No—their existing strengths become irrelevant or even liabilities | Yes—they have economies of scale, experience, established relationships |
| 4. Is there a clear playbook to follow? | No—you're writing the playbook as you go, pioneering new approaches | Yes—best practices exist, can learn from others' successes/failures |
| 5. What's your primary risk? | Market rejection, paradigm resistance, education needed, timing uncertainty | Execution failure, commoditization, competitor catch-up, efficiency limits |
| 6. What's your success timeline? | 3-10 years for paradigm shift to take hold and scale | Months to 2 years for measurable gains and competitive advantage |
| 7. Who are you really competing against? | Status quo and inertia—the way things have always been done | Direct competitors on known dimensions—speed, cost, quality, features |
Strategic Framework for Executive Decision-Making