This month's Frame: How organisations can stay innovative—learnings from the canalization framework

A framework to ensure your team avoids path dependency.

Introduction

For the first time in years, the discourse around the capacity of GAFAs (Google, Apple, Facebook, Amazon) to innovate isn't as optimistic as it once was. Apple just wrote off a $10b investment in self-driving cars. Tech pundits are finding it hard to distinguish an iPhone 15 from an iPhone 12. Google is now often characterised as a bureaucratic behemoth, with a hint of nostalgia looking back at the golden era when its employees were expected to spend 20% of their time on projects outside of their job description. 

While the GAFAs continue to excel at optimising their core offerings, there's growing sentiment that the innovative spirit that once defined them is being overshadowed by a focus on safe, predictable development paths. It raises a critical question—can these companies keep delivering transformative innovation?

The concept of canalization provides a compelling framework to analyse this phenomenon. It suggests that like natural organisms, organisations can become path-dependent, following established trajectories that resist deviation.

The framework

Canalization is a concept that finds its roots in developmental biology but has implications far beyond, including in neuroscience, psychology, and organisational behaviour. The term was originally coined by the British geneticist C.H. Waddington in the mid-20th century. Waddington’s concept described how the development of an organism follows predetermined pathways despite genetic variations and environmental disturbances.

Waddington used the metaphor of an "epigenetic landscape" to visualise the concept. In this landscape, development is represented as a ball rolling down a hill, where valleys guide the ball's path towards certain outcomes. The valleys are the "canals," and the process of the ball falling into these pathways represents the organism’s development being channelled in specific directions, resulting in the emergence of specific traits or behaviours. The deeper the canal, the more likely the phenotype (ie. the set of observable characteristics or traits of an organism).

Last year, some of the leading academics in the field of computational psychiatry published a paper that applied the concept of canalization to neuroscience. In this context, canalization can be understood as the brain's tendency to favour certain neural pathways over others, leading to habitual patterns of thought, behaviour, and emotion. Neurological canalization is what underlies the formation of habits, preferences, and biases, shaping individual identity and collective culture.

The concept of canalization in thought and behaviour illuminates the dual forces of resilience and constraint. On one hand, it explains the stability of personality traits and organisational culture, providing a foundation upon which individuals navigate the world. On the other hand, it highlights the challenges of change, whether in breaking a habit or fostering innovation within an organisation. 

Using the framework

There is no bulletproof strategy to ensure an organisation keeps on innovating. The canalization framework highlights the importance of counterbalancing the natural process through which certain paths become preferred due to their efficiency or familiarity. 

Said differently, to foster innovation, you must ensure you are forcing the introduction of variability in your digital product development processes and strategies. The surest way to achieve this is to harness external inputs to inject novelty into your thinking. This can be done through organisational design and product strategy. 

At the organisational design level:

• In the same way that “neurons that fire together, wire together” collaborators who have been working together for a long time tend to unconsciously fall back on similar thinking patterns that will hinder the emergence of new ideas. Several simple initiatives can counteract this tendency, eg.:

  • Regularly rotate people in different teams

  • Hire people with diverse professional, cultural and academic backgrounds

  • Develop relationships with partners from outside your organisation (eg. academics, companies from other industries)

  • Ensure that you're regularly meeting users (and non-users) in real-life settings to challenge your assumptions about what their needs are

At the product strategy level: 

• When conceptualising a digital product, you have to decide how much control you want to retain over the user experience. An antidote to path dependency is to develop mechanisms that enable external actors to shape your product, in effect trading off consistency for variability. In practice, this can be done in several ways, eg.:

  • Leveraging external developers:

    • The surest way to keep delivering innovative products is to foster an ecosystem where external developers are incentivized to build apps on your platform. An extreme version of this is developing a marketplace (eg. what OpenAI recently did by creating the GPT store) but the same logic explains why several digital products (eg. Miro) are developing APIs to let external developers build product features. 

  • Leveraging users directly: 

    • Inspired by this model, in the last few years game designers have built environments where users can create their own games. This led to the formidable success of Roblox or Minecraft. 

One could argue that GAFAs are so large and have been around for so long that it has become structurally impossible for them to stay innovative.

We don't think so. In order to regain their edge, they need to ensure they're doubling down on initiatives that counteract their natural shift towards path dependency. As epigenetics is increasingly revealing, there is no such thing as genetic fate in nature. Similarly, there is no rule that condemns companies to stop innovating. 

Canalization landscapes, whether genetic, psychological or cultural, are never fixed but the more entrenched they become, the more modifying them requires intent and effort. Recognising the problem is the only way to start.  

News

• Stripe Partners’ Simon Roberts was invited to participate in this year’s Nuffield Trust health summit. The conversation explored the certainties revealed by demography, the uncertain question of how AI is or might reshape healthcare, risk, prevention and the need to engage imaginatively with the imperative to improve productivity. You can read more about it on our website.

Frames is a monthly newsletter that sheds light on the most important issues concerning business and technology.

Stripe Partners helps technology-led businesses invent better futures. To discuss how we can help you, get in touch.