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Jack Be Quick


(An argument for your company's sustained growth...)

Most large-scale enterprises aren't known for their ability to pursue profitable innovations in a nimble way. In fact, of the 18 companies listed in the 1994 bestselling business book, Built to Last, which documented companies that weathered the decades to emerge stronger, "the fact remains that at least 7 of [the book's] original 18 companies have stumbled - scarcely better than the results you'd get by flipping a coin."

No company can afford those odds. While a company may cite tremendous talent in management, or robust systems, or an aggressive and dedicated sales force as reasons why it won't get the "tails" side of that flip, there remains at least one universal vulnerability: it's extremely difficult for most companies to trial new innovations successfully. If the market turns in a direction the company is not prepared to pursue, it might become a follower and not a leader in the short time of ten years that it took 7 other rock-solid, legendary companies to stumble.

You might argue that the pursuit of an exciting new product can lead to danger, such as the mortgage industry saw recently in the dramatic decline of the adjustable-rate mortgage. It would be great to assert that your company didn't go down a bad avenue of business because you saw potential hurt to your investors, your customers, and your reputation. But the truth is that we often don't capitalize on opportunities not because of sage conservative wisdom but because our in-house systems and culture can't turn around quickly enough.

Not all innovations should be implemented. The adjustable-rate mortgage, for example, forgot to consider the customers' long-term affordability of the product. To successfully platform innovation, first ask critically: is it good for all involved in the long-term? After unconditionally answering that question in the affirmative, a second question must be asked: what's the right and the least expensive way to prove this innovation?

Innovations are risky, by nature. If an innovation is the right direction, rapidly prototyping a platform for the innovation to prove the concept is the next best step. Here, some companies have been hurt by investing too deeply in an unproven technology before proving incontrovertibly the value to the company. Whenever this happens, unfortunately, executives become increasingly gun-shy to green light another pursuit of innovation. The irony here is that the sustained growth of every business lies in the ready pursuit of the right innovations. Businesses need an innovation engine to adapt to changes in the market, and most don't have one.

Clayton Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School. His is a fancy title, but Christensen's specialty is laying out the principles for smart innovation within established companies. He's written three well-regarded books about this topic. In part of a recorded series, Christensen talks about corporate awkwardness.

Every company needs to grow, and innovation is the ticket to sustainable and profitable growth. What decisions can managers take to increase their probability of successfully building innovation-driven growth businesses?

Many are convinced that it is impossible to predict with confidence whether an innovation will succeed, so they feel they need to place a number of bets with the hope that some will be winners.

Others believe that the best way to create new growth businesses is to meticulously search for detailed quantitative data to identify opportunities and develop a rigorous plan to attack those opportunities. But many times conclusive data is only available after the game has already been won.

In a paper recently written about how to achieve this, Institutionalizing Innovation , Christensen's consultancy, Innosight, gave this successful example of how to achieve this.
Dedicated incubator groups can take rough ideas and relatively quickly turn them into something bigger, better, cheaper, and faster. Once ideas have received a focused push, they can be reabsorbed into the core organization.

Shell Oil Co. created a program called "Game Changer" to help it proactively foster or prioritize novel ideas. Launching the program, Shell said it "recognizes the rich vein of innovative ideas runs through Shell Chemicals, but that new ways are needed to surface these ideas, take account of external influences, and provide appropriate, staged funding for their development." This unit strives to develop real businesses that are "outside and between" the company's existing lines of enterprise by following a process "outside the constraints and priorities of Shell's day-to-day business."

Can your company say the same? That it has a "rich vein of innovative ideas" that runs through its company? I'd assert very much so, yes. Many people inside companies propose efficiencies, improvements, new products, and attractive sidesteps to help the company grow. The challenge though is that we often wait for entities outside of our control to give us permission for any attempt we make to innovate. What would our investors say? What would our sales partners say? Those are valid questions, but should they inhibit the ability to innovate? Another challenge: how many companies can't implement innovation because of difficulty in adapting log-jammed systems? Should a company let a systemic impasse prevent our ability to move forward innovatively?

Every business' first priority, above all else, is to build and implement a sustainable growth model. Your company has successfully built a corporate architecture that supports the way in which you do business today, but the market tomorrow requires nimble adaptations and any lag in your response time can prove a threat to future growth. The right innovations done the right way will help you position your company for tremendous growth, proving that you are, truly, "built to last."

Are businesses up to that challenge? How can a business establish a model inside to foster, incubate, and prove innovative concepts? Perhaps this is the first area in which every company needs to show ability to adapt and be creative.


by Brett Rogers, 3/27/2008 2:28:06 PM


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