The past four weeks have been extremely busy. Thankfully, I have had the time to squeeze in a number of interesting lectures and talks. Over the next few posts I am going to cover some talks I attended covering topics such as innovation, systems science, design and design thinking and on creating a smarter planet.
I have mentioned before that in an uncertain economy, innovation becomes more important than ever before. Scott Anthony of Innosight Ventures and author of “The Silver Lining: An Innovation Playbook for Uncertain Times” recently gave a talk at University of Toronto’s Rotman school of business covering innovation and its increasing necessity.
What happens during downturns?
You might think that during an economic downturn companies tighten their belt and hold on for dear life, waiting for more profitable days. While this may (or may not) allow your organization to survive you certainly won’t thrive. Some of the most innovative companies and products were launched during downturns due to their leaders’ insight and visionary thinking. In fact, 50% of companies listed on the Dow Jones started during downturns. These companies include the likes of NCR, Microsoft and GE. Innovations such as the iPod and strategic re-alignments such as those by Cisco, and Marriott all came about during tough times. During these same periods when incumbents struggled and failed, disruptors like Southwest airlines, Best Buy and The University of Phoenix were surging, creating profits and markets which they had never before enjoyed.
So what can we take away from all this?
The importance of innovation
In this post-flat world economy innovation has gone from a nicety to a necessity – your biggest threats don’t exist yet and they will take your business in five years if you don’t do something about it now. If you wait until there is a clear signal that a major shift is needed in your organization then you have waited too long and you have already missed the opportunity. Take Sony as a perfect example. In the last 10 years, Sony has missed out on at least 4 billion dollar ideas:
- iPod – Sony owned the portable cassette market with the Walkman and still had a comfortable majority of portable CD players (Discman). How did they miss out on the Mp3 generation?
- Kindle – Although they had the first e-book reader, without the whole experience (seamless integration of device and content library) it never took off.
- Wii – Playstation 2 is the best selling game console of all time how did Sony miss out on the next generation? The PS3 is now doing quite well after a few painful years but it is unlikely Sony will hold the gaming throne again any time soon.
- Flip Camcorder – Pocketable, simple to use and easy to get your content to the web the Flip is a huge seller. With their massive handycam business and profitable Vaio line of media centric laptops and pc’s this should have been a no-brainer.
Over the past 10 years Sony has survived, but it hasn’t been a particularly pleasant time. Billions of dollars lost, degraded market share in key segments and multiple missed opportunities. Based on this one case alone, it is simple to see how important innovation can be.
Six tips to innovation success
Anthony recommends six tips to steer you organization towards success and attempt to avoid missed opportunities.
Remember to prune your innovation portfolio. Rather than spending resources on every idea, take the time to evaluate the ideas to weed out the noise and focus in on the potential game-changers. When trying to rank potential innovations try to identify uncertainties that affect and ideas potential and try to calculate the cost to find out more about those uncertainties. It is important to take an outside-in view of innovation. Get into the mindset of your customer and try to figure out what job they are struggling to complete. Once you know that it is easier to create a product they can “hire” to make the job easier. A great example of innovations coming from this type of thinking is products from P&G like Febreze, the Swiffer and Crest White Strips. If you read the Harvard Business Review, this next tip will be familiar to you: Build a minor league system for innovations. In October’s issue, Anthony had a short article talking about building a system for innovations so that they can be tested in more and more competitive environments so that the real talent can be discovered and the weaker ideas can be trashed before too much has been invested in them. The fourth tip is to create an innovation factory. This includes the formation and funding of an innovation strategy, the creation of an innovation process, putting in place a support structure for innovation and innovative thinking and creating a common language so that all parties involved can discuss the innovations. In order to be a disruptive innovator you need to love the low end. Look for non-consumers people who do not use a particular product because it is too complex, too expensive, etc. Find out how these people measure quality and re-create the product to suit their needs using a low-overhead process so that thin margins can be enough. Finally, in order to be successful with innovation, Scott Anthony recommends an organization help drive personal re-invention through interaction with people from different backgrounds to gain differing insights, complication of your life by interacting with other disciplines – things you know nothing about and by challenging your mind with things like integrative thinking.
In an economy where innovation is no longer an option your organization had better be prepared to innovate effectively, efficiently and expediently.
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