Embracing Creative Destruction to Get Ahead

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In this recent post by Rohan Rajiv are some novel insights into what traditional companies need to do to get ahead of their rivals. While his focus is on the technology sector and how to compete against the big tech companies the lessons are valid for all. In particular the idea that the innovation curve is no longer contiguous.

The idea that innovation has jumped ahead and that there is a chasm between the market leaders and the traditionally solid performers should resonate no matter what industry you are in. It is just more evident in technology.

So, how does Rohan suggest that this chasm be bridged? By accepting that many of the tried and tested ideas that have made us reasonably sucessful will no longer to continue to bring success. Once this is understood it is easier to identify novel ways of challenging the status quo. Not all of them will work but those that do will accelerate business success. If a company takes a learn fast approach (see my earlier post for more on this idea) then the ideas that don’t work will encourage a culture of entreprenuerism within the company that will further accelerate success.

Over the years I have worked with a number of non-tech companies on transformation projects. The most successful of thes have seen the internal conversations revolove around how to manage the transition away from the traditional business model (e.g. we sell data products) to a new paradigm where the company is selling a technology based and data driven partnership with the customer.

Rohan’s over arching theme of “creative destruction” is one that the top tech firms have embraced wholeheartedly. For example Microsoft have stopped being Windows centric in the development of its productivity suite with updates oten being provided to other plattforms (iOS in particular) first. The idea is that they want a piece of every device out there. This is a variation of what Amazon has done with it’s market place. They want a piece of every online transaction and don’t care if they sell the product or someone else does.

Applying creative destruction in our professional and personal lives is not something that comes easy. However, if we are realistic, the days of a person holding a job for life are long gone and  there will be times in which it is essential for us to reinvent ourselves in order to stay relevant within constantly evolving industries.

A classic example of this is traditional manufacturing in western countries. Repetitive low skill jobs are either been performed by robots or have been moved off shore to countries with cheaper labour rates. The remaining manufacturing jobs are high tech and higly skilled. The result is a significant jump in unemployment while people retrain or find alternative low paid work (if it exists).

So no matter who we are and what we do, unless we embrace change we will find it increasingly difficult to keep up. Or as Rohan sums up “what got us here won’t get us there.”

 

Is the Cost of Innovation Worth it?

A great article explaining why focusing solely on a businesses current core strengths is not always a good thing. At least not in the long term.

https://hbr.org/2014/02/the-strategic-mistake-almost-everybody-makes/

I find it fascinating that many intelligent people fall into the trap of thinking that because their company has a competitive advantage in an area (whether  a market segment or a specific product) it means that they do not have to keep innovating. Often it’s born out of a fear of cannibalising the sales of existing products or what the market will think of their margins or a fear of competition. But look at three of the most successful companies going, Apple, Amazon and Microsoft.

First Apple is in no way shape or form afraid of cannibalising their own sales. If they were they would not have introduced the iPad Mini, the iPod touch or the iPhone 6 plus.

Second Amazon, Bezos has steadfastly ignored the markets desire to see Amazon’s profit margins increase. Instead Amazon continues to stick with margins that would barely allow others to continue operating. The strategy… grow market share. Amazon wants a share of every $ spent on line. This is the thinking that underpinned the Amazon Market place. Rather than competing with every online seller as well as with eBay, Amazon created a platform whereby everyone is a partner and pays them for the privilege. The pay off is starting to be seen as Amazon is now the first place most head when searching for products online.

Microsoft may not be first to the party but with pockets as deep as theirs they are able to play a long game. Don’t believe it? How about the Xbox it started out as the bit player in the console gaming market dominated by Sony and Nintendo. Now Nintendo are an after thought despite being the first to introduce motion sensors into gaming. Also the introduction of Office 365 subscriptions that include the right to install versions of office on multiple devices at no extra cost. Great for the consumer but not so good for the bottom line as they are foregoing revenue  on those sales in order to keep market share away from Google Docs (also Microsoft are still in the search game. Not nearly on the scale of Google but still enough for it to be worthwhile).

Speaking of Google it has been shown relying on advertising revenue to support a suite of free apps is not necessarily the best business model.

So next time you hear someone bemoaning the amount of money being invested into new product R&D tell them to stop being so short sighted and start thinking in terms of the long game!

Design Thinking

Why are the likes of Amazon, Apple and Google successful and seemingly able to continually re-invent themselves? Design Thinking (i.e. thinking like a designer) may, in part, explain it. 

The other part of their success is the focus on customer interaction and ensuring that this is immediate, relevant and provides an outcome or resolution for both the customer and the organisation. Those less successful tend to focus on the outcome for the organisation only.

Combining a customer focus with design thinking and you end up with very creative ways of resolving customer issues or developing new products…

This article from Management Today gives some interesting examples and expands on Design Thinking:

http://www.managementtoday.co.uk/bulletin/mtdailybulletin/article/1168361/baroness-kingsmill-public-sector-learn-lot-likes-amazon/

Taking this approach as a Project Manager, a developer or an administrator could result in some novel outcomes for your projects and deliver game changing results for your client / employer.

The Innovation Engine

Innovation used to be the preserve of the small agile company that is able to develop a new technology or product, bring it to market quickly, disrupt the status quo and in doing so make a huge impact. Now that is becoming less and less the case as large companies are looking for ways to foster innovation within.

These days when you ask someone to name an innovative company Apple would be the first to spring to mind for most. While, without doubt, they make products that people want to use, most are re-interpretations of products that already exist; mobile/smart phones, laptops, desktop computers, MP3 players to name a few. The one true exception to this is the iPad. In it they created a device that created an entirely new class of device. Previous tablets were simply touch enabled laptops that were hamstrung by being dual purpose machines with a short battery life. Weighing in at about 3kg (more if you add the power supply and an extra battery) meant they were anything but easy to lug around.

The iPad aside Apple’s real innovation has been their principle of keeping designs simple while also being at the cutting edge of hardware. Simple in form, simple in function, simple to use. Before I go any further I should point out that simple should not be confused with basic or limited. There are definite limitations in products like the iPad and iPhone; the lack of an onboard expansion port or USB connector are the examples most often cited. But this is all in keeping with the above principle.

Apple is not the only large company that is looking to innovate, both Google and Microsoft are doing so as are the likes of Boeing and Airbus with their greener planes,

So how are these companies achieving this? In part by acquiring the innovators and absorbing their technology and in part by leveraging their scale and reach to develop new ways of working and engaging with their customers. This HBR ARTICLE shows how one company has just that to take a decisive advantage in the Indian market.

So the challenge for the rest of us is to see where similar opportunities lie within our organisations to do something different with the core competencies of the company and as a result give the customer something that is new and exciting. It could be as simple (conceptually at least) as creating a portal whereby they can access a data subscription in a self serve manner rather than you shipping the data to them.

The lesson to learn from this is that spirit of innovation does not need to be lost as a company grows. This article looks at how a company can maintain that spirit while it grows and also how one that may have lost its way can find the path again.

I believe that no matter what, the key to innovation is to be found in how a company values its employees. One that has them at the core of what it does is much better placed to have them act as the innovative engine room that will drive the company on to success after success.