Last month I spoke at the AICD Company Directors National Conference in Hamilton Island on the Digital Disruption Panel where I developed the theme of Innovating on Innovation. The panel was well received and I would like to summarise those ideas in this Blog.
Smart enterprises innovate on innovation to drive disruption to their markets rather than waiting to be disrupted. Each new wave of innovation builds on the previous one; people and enterprises build capacity and capability wave by wave. In this scenario, learning is more important than strategy. What we need to learn is to position people and enterprises to take advantage of emerging trends and strategies.
Consider the establishment of the canals between Chicago and New York in the nineteenth century. This began building the trading infrastructure for America. This investment did not deliver the promised economic benefits because railroads overtook and destroyed their business model. However, the railroads could not have been successful so quickly without the prior wave created by the canals. Similarly, in the fifteenth century printing brought about consistency of spelling, word separation and silent reading. This deeply impacted cultures by enabling freedom of thought and rational thinking – thereby some say leading to the Scottish and French Enlightenment 250 years later because groups and political movements emerged to spread new ideas. It’s fascinating how each innovation spreads the base for unanticipated new inventions that are entirely dependent on the earlier innovation. History can tell us many more such stories.
Building One Layer of Technology over Another
From the time the PC was invented and the internet was made accessible by Tim Burners-Lee with his definition of the WWW in the early 1990s, technology quickly became an integral part of everyone’s lifestyle. The human race embraced computer technology like none other. As with other innovations, this led to a series of innovations horizontally and vertically. Each wave of technology was an innovation from the previous one. Then multimedia came onto the scene in the late eighties but exploded with social media when the internet came of age.
Kodak’s great asset was that they owned most of the important patents around the digital camera but they did not exploit them because they feared destroying the market they dominated; they did not realise that the technology would destroy their business.
Setting an Appetite for Innovation
We need to better govern our companies. Most boards set an appetite for risk but they must also set an appetite for innovation. When setting the risk appetite, a company must understand the risk of not innovating. If Kodak had driven its thinkers to innovate whilst it exploited its dominant market position, would it still be operating today? The appetite for risk is not uniform across all the companies and there is no one single formula. It is the responsibility of the board of members to determine the appetite for risk in their organisation by deeply understanding their environment and leveraging their capabilities and capacity to create value.
In today’s business world where technology is bringing about major changes in the way business works, if we do not innovate, we will be left behind. Businesses need to have a keen eye for what works and what doesn’t work. They also need to think about why something works or why it doesn’t.
A good question to ask is “If I were the customer would I buy the product that I am selling at the price and with the flexibility of service that I am providing”. If you wouldn’t, you need to be afraid. It will not be long before your customers find out what you know. If you are an intermediary who is not adding value, you need to be very afraid. It is essential to build trust with customers and suppliers, and indeed everyone in your business network taking advantage of innovative collaborative technologies because trusted collaborators will help you identify ways to drive value. The trust of many customers will build a business network that creates profitable markets. Amazon and Yelp are good examples. Your trusted connections are the best way to identify value.
With billions of people connected through trillions of devices, all markets are becoming more efficient so value is identified and non-value adding products and services can be more easily avoided. Wisdom of crowds drives the efficient and effective exploitation of proven processes.
Let’s take the example of Dropbox. This tool allows the synchronisation of files across all devices with the ability to share those files with anyone in the world. The product is designed to reward the subscriber with free storage space for every new member they introduce. The mere use of the product allows the user to gain additional benefits from the product. The more you use Dropbox the more your network joins and the more free storage you get.
Innovation in Your Business
When thinking about innovation in your business, start by learning about the waves of technology that impact your enterprise. Research the skills and capabilities that are important for you and your enterprise so that you are fit, healthy and geared up to take advantage of the next important strategic opportunity that comes over your horizon.
Some small businesses with few employees have become global players because they have leveraged technology in their business in a way that traditional businesses have not. The challenge here is to use technology and what it enables you to become to design new ways of working, learning and living because it will be how you adapt existing business models and invent new ones that will create the most value.
The ‘Network Effect’ has been magnified by technology. The consumer has the capacity to gather an enormous amount of information on any product or service. They are spoilt by choice. If it is easy and everyone is doing it there is no competitive advantage. We must find better ways of doing everything that demands innovating on innovation. We need to get better at gettiing better. We need to stay ahead of our customer (Steve Jobs tells us it is not the customer’s job to know what new features they want) and your competitors. Can you meet your customer’s demands:
- Give it to me NOW!
- Tell me straightaway can I…
- Tell me what you already know about me and I’ll add what else you need to know.
- Make everything as simple as possible!
If you cannot meet these demands be very afraid as a competitor soon will.
After speaking on these themes at the National Conference Bienalto asked me to discuss these themes with their customers you can see the video here.