In an economic downturn, innovation isn’t our best friend – – it’s our only friend. Margins disappear as our customers and clients find ways to cut costs, find alternatives, and (gasp) slice off chunks of what they buy from us. In boom times we may have been the vendor of choice, but in these lean times past loyalty may go straight out the window.
We might have been expecting a $4,000-$7,000 order and find out they went to someone else for a $1,000 Band-Aid. No party is completely happy with that but it’s a survival option. Innovation is the only antidote to margin crushing competition, not only in recessions and recoveries, but ever increasingly in our “good times” too. The good times now discontinue the past; deregulation, instant worldwide connectivity, rampaging technology, and media scavenging are just some of the globalization headaches we have to deal with.
Traditional models of growth, as if we hadn’t noticed, are now long obsolete. However, they still exert a tremendous pull on the thinking of old-school executives searching for better strategies. In fact, a disturbingly high percentage of top officers and owners cling to an emotional belief that their best chance for long-term survival is to maintain the safe status quo that brought so much success in the past. Such leaders have built teams around them that are adverse to risk taking and, in essence, have built a culture of fear and denial.
Too many companies are adept at producing only sustaining innovations and incremental improvements to their products and services; they meet only the current commands of existing customers in their long-established marketplace. They have yet to discover the disruptive growth is less difficult and risky than their traditional endeavors. According to Clayton Christensen “the probability of creating a successful, new growth business is ten times greater if the innovators pursue a disruptive strategy rather than a sustaining one”.
The new way to grow comes by addressing the issues that surround our products, rather than by simply improving our offerings. The big opportunities to grow come by helping our patrons reduce complexity, increase speed, organize data and information, and from that make better decisions. In other words, we become the most trusted “go to” source by devising imaginative services for the future by mastering the current problems of our most important customers.
What innovation does is bring us closer to our customers and involve them with us in new and unique ways. The heart of innovation is understanding what problems our clients have that we can help them solve. That’s why innovation is the lifeblood of any growing company. To expand margins we need to create value. The basis for value creation and growth can be found by creating and shaping entire new markets; we need to touch our customers deepest desires and unexpressed needs.
Innovation needs to become radical in order the challenge the dogmas of the corporately entrenched beliefs and assumptions that we are all immersed in i.e. the traditional ways of thinking have become wholly insufficient for us. Radical innovation spots trends that have gone unnoticed but have obviously been there for some time. It means we are looking where competitors have not.
We can pursue innovation by learning to live inside our customer’s skin. It means paying attention to what they are “feeling” instead of listening to what they are “saying”. Insight comes from discovering unarticulated needs by having a boundless empathy with human frustration. It comes from getting at unexpressed, unvoiced needs and visceral feelings.
Businesses cannot and do not adapt as fast as our markets do. Markets are not subject to culture, leadership, or emotion and consequently do not experience the bursts of desperation, denial, depression, and hope that we (as our company’s champion) have to face. Markets do not have fear, lingering memories or remorse and they are not locked into invisible fossilizied mental models.
Corporations today are having an incredibly difficult time producing growth. High-performance requires innovative skills which provides for managing risk, maintaining current profitability, and adapting infrastructure to be suitable for both growth through new disruptive initiatives and continued excellence in our current operations. Corporate leadership is found in elevating our best assets, our workforce, through a new approach to thinking, learning and knowledge sharing.
Think about this (from Jennifer Alsever of Fortune Small Business Magazine): 82% of small-business owners understand that innovation is more likely to come from a small business than a big corporation; only 70% of small-business owners asks their employees for innovative suggestions; 23% of small businesses fail to ask their customers for ideas to improve their products; and finally, 57% of small businesses have recently cut back their research and innovation budgets.
Are we going to make our world or is our world going to make us? Lets feel no sorrow or pressure knowing our world is truly what we make it. So lets decide to decide and then we can start searching for the wisdom we need.