The Risk of Becoming Irrelevant — Key Areas for Sustainable Innovation
Truly great companies like Apple, Google, Amazon, and Starbucks constantly find new ways to become relevant to us and remain an essential part of our lives. When you evaluate it closely, you can see that they are simultaneously executing operationally and innovating. Great companies execute and disrupt at the same time. The best ones often disrupt themselves.
Before the days of global competition and fast pace of technology change, the life cycle of products and services had a runway of years before hitting a ceiling. In today’s market the ceiling is now months, if not days. The list of countless disrupters grows as we sleep: Uber, Airbnb, Seatgeek, Zola, Udacity, StitchFix and the list goes on.
To avoid disruption, or even lead disruption, companies must accelerate the way they operate internally in order to keep pace with a rapidly changing world. Great leaders maintain the balance between achieving results today, and trying new unimaginable things to innovate for new opportunities in the future. There are countless short-term vision examples such as Kodak, who actually invented the digital camera but feared impacting immediate sales and never commercialize this invention, in order to protect its film business. The company became comfortable with its success in film and looked backward in the rear view mirror instead of forward.
At some point, every company was once a creative infant thriving off developing solutions to problems people didn’t even know they had. Then they grew, scaled and became an adult focused on efficiency, better known as “operational excellence”. To stay on edge companies spend time on market research on what the “competition” is doing, but will often miss new business models. Marriott and Hilton Hotels were so busy competing with each other that they never saw Airbnb coming! Or Blockbuster executives who were so fixated on their in-store operations, that they missed the opportunity to acquire Netflix.
The real magic happens when companies are able to balance operations while creating sustainable innovation. This doesn’t necessarily mean creating “Innovation Events” or instructing employees to “Innovate 10 hours a Week” or “Innovation is Everyone’s Job”. This approach is not sustainable.
In fact, 75% of venture — capital backed startups fail to return a penny to their investors, and yet these teams pour 100% of their time into to succeeding at innovation. How can we ask our employees to tackle innovation part-time when dedicated full-time start-up teams have a hard time succeeding? I’ve heard some executives say their strategy is to “acquire the innovative start-ups,” this could be a good short-term plan, but then the acquisition will merge into operations and innovation is lost again.
A key to your organization’s long-term success is its ability to balance the achievement of short-term financial results with the agility to quickly capture new opportunities. If there is not enough innovation and changes do not occur quickly enough, people can lose their passion, products can become outdated — and worse, businesses can become irrelevant. As Bill Gates has said, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” To be innovative, you cannot be afraid to obsolete your own products. If you are, others will obsolete them for you. That is what happened to Kodak and many others.
Here are some common areas to evaluate as your develop your strategy:
1. Leadership — Some organizations believe innovation starts with culture but it starts with leadership. If you have an open and safe culture that supports creativity and innovation, but bring in a leader with an operational mindset who is uninspiring and afraid of failure, you will crush creativity and innovation. Leaders create the culture. Look for leaders that have entrepreneurial backgrounds, are creative and courageous, and are not afraid to take risks and celebrate failures.
2. Different Skills & Talent — Traits of successful innovators and disruptors are not typically what you see valued on a traditional resume. The latest technology skills or pedigrees don’t necessarily equate to innovation. Innovators typically have stronger right-brain soft skills: they are curious, imaginative, and empathetic. They ask the “What If’s” and are highly collaborative. They also thrive on experiments and are open to trying new methods.
3. Diversity — Businesses typically sell products and services globally to consumers of diverse backgrounds. Why wouldn’t we have the same diverse teams when conceptualizing and developing products and services we sell? Most of us have “comfort zones” and tend to want to be around people that make us comfortable. To have an innovative team you need diverse ideas, backgrounds and experiences, not an echo chamber.
4. Empower by Running Dual Operations — A dual operations structure separates the innovation organization from operation organization. This structure allows the leadership and management to execute on the opportunities of today without being burdened by the free-flowing nature of an innovation network. At the same time, an innovation network provides an engine for new innovation that is not limited by the structure of the day-to-day operations. Successful companies that excel at sustainable innovation have brought this to life by creating a separate dedicated group of people who actively manage and measure innovation. This group of people ensures innovation is continuously executed, similar to a start-up incubator; experiments are learning efforts where you fail, learn, pivot and create.
5. Culture — The world has changed — an innovative culture begins with the organizational attitude of accepting rapid shifts. It’s about cultivating a mindset to learn to see the world in new ways. The key traits to developing this culture are:
- Open Mindset — Sometimes the greatest innovations come from novices, not experts. Open-minded organizations often convert off-the-wall ideas into marketable products.
- Highly Collaborative — No organization holds all the cards in developing new innovation. Collaboration with outside groups, such as complementary corporations, universities, government agencies, and think tanks, often brings new perspectives and ideas to the innovation process.
- Embrace Failure — the risk tolerance for impacting existing clients and revenue in operations is low to zero. This makes creating a dedicated innovation environment, a safe area to tolerate high risk and high failure experiments, crucial. Innovative companies recognize that failure is an important step in the process of success, and with each failure, the company moves one step closer to success.
Wherever innovations come from, however they are done, and in whatever part of the business they occur, companies need to continuously innovate their business models and disrupt themselves or risk dying.
