Let’s Innovate

Innovation seems to be the buzz word these days. Everyone seems to be following & applying it. From big corporations to the small start up entrepreneurial ventures, everyone’s using the term, following blindly, wasting resources & getting nowhere. Browse through the internet & you will find the word written on every consulting & client website. But the question one should ask is, are we having the appetite for innovation? Or is it that its being followed as a fad? What are the innovations required for my business? Would it be a good idea to follow company X innovation strategy, which is in some other unrelated sector? How can I institutionalize innovation in my organization? Is technology innovation meant for me?

If you carefully observe & read between the lines, the above questions boil down to two points — meaning of innovation for your organization & attitude towards it. For example, for GE, innovation would be to come up with a great idea on climate control or emission reduction, while the same term for Apple would mean to come up with something creatively innovative & useful for its target audience at the same time, & which would satisfy some kind of a latent demand. For some other businesses, like food processing industry it would mean to come up with some kind of new ready to paste which can be added to any Asian food being prepared to increase the shelf life of the dish. While for some others like Stan Chart, it can mean great ideas that can improve their efficiency & customer convenience at the same time.

Now getting back to the agenda, innovation means any improvement, small or big, radical or disruptive, slow or fast, that improves any of your metrics in any function of business. For example, anything that can lead to increased consumer value, increase in revenues, increase in turnover, decrease in manufacturing cost, decrease in operational costs, decrease in lead times etc. are innovations. Amazon.com, Sony walkman, Apple IPod, Hotmail etc. were sudden disruptive innovations that changed the rules of the game. They forever changed the industry norms & killed competition like no other company did. Dell, FedEx etc. were slow innovations that changed the way the industry operates. Now they have become the benchmarks, every other company in their sector is following them. Ford assembly line was a sudden big innovation whereas the Gramin Microfinance was the slow big innovation. Both these companies brought about new sectors or operations in existence. So, innovation changes/ improves processes, creates new segments/ industry sectors, adds value to the consumer. Benefits of innovation are meant for the consumer, directly as in Apple IPod case or indirectly as in the case of GE, where consumers get the benefit of clean atmosphere/ air as a result of environmental friendly aircraft engines.

Some companies have come over innovation. These big corporations are so much drenched in over confidence due to their industry leadership that they cannot think anything innovative anymore. For them innovation means to come up with costly marketing campaigns that don’t have any effect on buying behavior. In fact these type of useless strategies add to consumer distraction & irritation by getting exposed to media messages repeatedly. Moreover, these branding & advertising campaigns add to the cost of the product. Had some money been saved on these activities, the value to consumers could have been increased. Branding is important but not more than innovation. ‘If you wear Scabal suit but the body inside is same as that of your neighbour who wears a school uniform, then sooner or later, a comparative test would prove it. & your customers would come to know that they are the ones who are paying for the costly suit. Also they would rather pay less for the package than get mesmerized by the suit.’ So, by focusing on continuous innovation, you can focus on adding value to the package rather than to the cost of the suit of the package that is much cheaper than what its labeled.

The basic starting step towards building an innovation centric organization is having the right attitude. Rectifying the mistakes, calls for admitting that you have done a mistake in the first place. If you don’t accept your mistake, 99% chances are that you won’t take any remedial action. Same goes for bloated & over confident companies, who think that they are the best. But believe me, none of the top 100 organizations of the past century were on the list of in the 40’s & neither are 80% among the ones that featured on that list in the 50’s, now. So does that give you some hint to what was happening to the top corporations then & what’s happening now & what will happen I the future?

Two things happened in the past. First, very large degree of innovation took place in the manufacturing sector. The innovators became industry leaders, became arrogant & down went in the lanes of history, as they were destroyed by the new innovation wave. Second, many big corporations those were not good enough in innovating, started concentrating on how to innovate their corporate strategies, by acquiring fast growing companies. They survived for a while but they too became extinct with time as M&A is tool for consolidation but it cannot guarantee strategic success you against a raging innovator that rejects to kneel down & instead goes on a war. So, finally the companies that survived were the ones that were innovating continuously & the ones that rank a little lower on the innovation front but have very deep pockets. But as said earlier, sooner or later, everyone’s going to discover who’s paying for that costly Scabal suit? Deep pockets work for a time but not continuously. One has to be innovative enough to take on changing competition landscape & rules of the game. Remember the IBM — Microsoft story or the BT — Vodafone war!! Everyone at the IBM thought that a startup, that was not even there, is no match for ‘us’. In fact they didn’t even think that Bill Gates is going to give them a run for their money & would force them to leave the sector for good. IBM no longer sells personal computers. Vodafone revenues GBP 45 Bn & BT accounts GBP 21 Bn (less than half of Vodafone), with the former at number two position (as per number of subscribers) in the world & BT is not even in the top fifteen.