Debunking the Myths of Innovation
Myth 5: Innovation is a “nice to have”
Reality 5: Innovation is your only defence against commoditisation and terminal decline
Organisations are traditionally built around stove pipes of specialisation. It is still important to have specialised groups that are experts in particular areas of an operation. However, organisations also need a holistic view of what customers want to accomplish and how new ideas, trends and/or developments can help customers in that effort.
The annals of business history are littered with examples of great companies that collapsed because they protected a once successful business model that would become irrelevant. In studying trends, it is important to have the courage and wisdom to ask yourself if the trend will disrupt your business. Then you have the choice of changing your business model, and even cannibalising current operations to ensure long-term sustainability. The alternative, in many cases, is that new entrants will “eat your lunch.”
A group like a Services Innovation Group performs a function much like a court jester in medieval times. We must question the conventional thinking, propose new lines of thoughts, provoke uncomfortable challenges, and tell stories and tall tales of the future. This is necessary to cause thinking and creativity to expand. The group also provides a place where new ideas can incubate until they are robust enough to be tested against harsh market realities.
Ideating and designing for innovative business – whether the focus is products, services, technologies, business models or business processes – must mean more than only attacking problems at the product and/or service level.
Peter Drucker once said the ONLY purpose of a business is to create a customer, and everything else follows from that. Unfortunately, many businesses have lost sight of that. As a result, their efforts at forecasting and trending and innovation are spread thin across too many dimensions. The focus should primarily be on the customer, secondarily on competition and everything else should be handed over to entities and experts who specialise in it and do it better (because you are now their customer!).
As companies begin to focus on what creates customer value (which means they have to understand the customer and what influences the customer better than they do today. Customers respond to their environment in total. It is not a particular trend that is important. What matters is the change in behaviour and value that a trend engenders in the customer. Any business that solely focuses on product or service rather than customer value ultimately will fall behind.
Successful businesses define themselves by the meaningful objective of bringing value to customers, not generating profit alone. The right balance of inspiration and execution can make the world better, make business more sustainable, and generate the profit to make further progress possible. For a great and pertinent example of looking deeply at trends to understand implications, you can see Kevin Kelly’s talk at the EG Conference in December of 2007.
Kelly notes that when the web first appeared, everyone thought it would be “just like TV only better.” No one at the time could conceive of business models like Google or Facebook, and therefore could not imagine the resulting impact on customer desires. The current consumerisation of IT is a product of the Web more than anything else. If companies continue to “forecast” by looking in the rear view mirror and extending that view forward, they are going to crash.
One has to look at the trends and value generators, the evolution of ideas, the evolution of IT and the evolution of organisations to be able to anticipate, or at least not be blind-sided by new technology, new business models and new usage patterns. After all, who would ever have expected that people would use Alexander Graham Bell’s great invention for voice to recreate the telegraph (text messaging), which his invention displaced in the first place.
