Innovation is Just an Excuse

A lot has been written about Innovation already, and no one seems to talk straight about what it really means for a company, adopting an innovation-driven approach.

While trying to survive in the recent years, where everything seems to daily double its speed, companies fall down and are easily replaced by new ones in a blink.

They call it “Innovation” when trying to define the root-cause for the decay of those old-fashioned giant corporations and the raise of new fresh companies with a higher appetite for risk, willing to rule the world with a bucket full of creativity and curiosity. An appetite for experimenting.

But innovation is just an excuse.

An excuse to set the focus on the customers

Because customers have not always been at the front of the business strategies for most of the companies worldwide. It’s true we always claim to be always thinking their customers and blah blah,… but, really?

For so many time, economy worked like this:

There was so much demand, and the offer was quite small so almost everything that companies launched at the market would have a reasonable acceptance by the overall audience.

The product was the king of the corporate kingdom. And everything: strategy, portfolio, marketing, IT,… was there to support it. Quite a comfortable world where there were just a few concerns, regarding how beautiful the package should be, how new should our product look like, or how to build the proper marketing mix to feed the whole product-centred strategy

Old paradigm: in the past, someone suddenly had a business idea and built a product based on his concept. When launching to the market, people usually accepted it, started to buy it and the incomes were dedicated to build more units of the same product

Companies learnt to manage those products in their portfolio and only a few changes were allowed in time, when business performance was not as expected.

But now things are completely different (I’m not saying that things are more difficult, just different) as demand -in almost any industry- has dramatically fallen down. And the offer is so wide and massive -mainly thanks to the digital disruption- that products seem to have lost their momentum.

Crisis of the old paradigm: abruptly, the customers stoped buying that old company’s products, because they have a wider catalogue of competitors choices where to look; new offer that better meets their needs; or -simpler- they don’t feel the need to own those product anymore. Then, the money stoped flowing towards the company’s pocket and -eventually- even the largest companies are susceptible to go to bankruptcy.

In a world where not every new product is always welcome. Where the customer is the one who decides when, where, how and why search / acquire / use or dismiss something, what matters it’s not the product anymore. It’s the people who should be getting all the attention. How they move, what they feel and what they really need.

New paradigm: today, companies need to set all their research efforts[2] on a deep understanding of their customers, in order to permanently build an innovative offer based on products and services (or even experiences [3]), which should meet the distribution expectations of the customers in time and manner.

But -again- innovation is just an excuse for turning companies upside-down to get the required skills, processes and tools to design solutions which solve real people’s needs.

An excuse to drive change

Innovation is an excuse to start thinking out of the box. To try to leave prejudices behind us and open our minds to different ways of making business. Making money, at the end.

In the corporate world, we all think that everything has already been done before, and we tend to act as if nothing could be questioned. But most business need a deep re-formulation to be adapted to the real outer world. And some times, long walks on the outside of our offices should be required.

To accept change, both a cultural and a structural, change is required. For the first, the whole organization has to be open to new ways of collaborating, working together and embrace the same corporate objectives. The structural change is easier, although companies tend to be much more reluctant to embrace it, although every day we can find new examples of large unquestioned companies which are reshaping structures to embed Design and Innovation at the core of their strategies[4].

An excuse to reallocate budget, from BAU to new business development [5]

Some will say companies cannot just stop selling their current portfolio just because it may turn into irrelevant some day in the future. And this may be 50% correct.

Sure this change should not be driven in an immediate way. It would be impossible and stupid at the same time. We are now living at the edge of two worlds which may co-exist from now till forever.

In the late 90’s, companies allocated 10–20% of their global budgets to Research and Development projects. While the remaining 80% was set to continue doing BAU.

Exploiting and Exploring [6]: to ensure mid-term feasibility, companies need to transfer efforts (economic and human) from the 20–80 rule to match a perfect 50–50 budget allocation.

Keep an important view on how current business is performing. While experimenting and investing on a permanent innovation strategy.

An excuse to foster digital transformation[7]

I’m not going to hide that the digital era has a main role on all the changes we’ve been forced to make. Personally, I like to set properly the difference between innovation and technology, but to be honest we all know they touch each other most of the times, as we can barely think about any kind of newness which has nothing to do with data, communications, accessibility or connections of somehow.

Innovation is a driver to foster the so called “Digital Transformation” within any large or small company, where sometimes people may be much slower in adoption of new tools and processes than it’s required.

While talking about some tools to adopt innovation inside companies, collaborative intranets, open innovation platforms and an empowered Agile IT team is what first comes to mind.

An excuse to keep being a relevant company

Summing up, innovation is just an excuse for those companies that refuse to be forgotten. An excuse to keep fighting for the top positions at the best biggest companies on Earth in terms of profitability, preference and brand awareness.

Innovation is not -and should never be understood- as just a communication motto or a series of nonsense investments on promising startups. Innovation is the strategic excuse to address almost any current problem that your company is currently facing.

Originally published in LinkedIn (Feb. 2016)

[1] The Design-Driven Corporation: The Customer at the Center of the Strategy

[2] How to Remain Relevant in an Economy Based on Experiences

[3] An Economy of Experiences

[4] New Product Development in the Era of the Customer

[5] The New World of Innovation

[6] The Ambidextrous Organization

[7] Misunderstanding Digital Transformation