Today, too many organizations remain trapped in the quandary of accidental innovation. If they happen to stumble onto something innovative while working, then that is viewed as merely a secondary bonus that compliments their primary focus of short-term profit margins. Many established companies are proud of what they have been able to accomplish and achieve, and with good reason. However, avoiding what is thought of as unnecessary risks in order to maintain this success and not “rock the boat” can be a deceiving strategy for the future.
Article Contributed by Mathew Miller from Beehive Innovations
Sometimes an existing business model can even seem fail proof. However, precedent (like Kodak and Blockbuster) shows that if your innovation practice is only reactive to a trend in your market -- you are likely only catching up with competitors.
For the future, good advice would say that innovation should not be reactive, but proactive. “Benchmarking” your industry leader and imitating them for the next 5 years means you will match them where they were 5 years ago, once you get there. To be leaders in the future, you might actually focus primarily more on the innovations of processes; and any products or services that derive out of them would be the secondary bonus. Now, it certainly would not be wise to abandon all the significant processes that currently work for you, but it might be wise to fall in between the two ends of the scale.
Take Kodak for example. Seemingly, they were so content with their current business model they did not want to face the reality of the disappearing film market. They, like many companies, could not justify shrinking their current profit margins to prepare for what the future turned out to hold for that market. Yet, it ended up costing them later anyway.
Instead of Kodak, other companies stepped up and dismantled the film market by innovating proactively. Kodak did innovate, but they merely adapted reactively. Here’s why – even though Kodak developed digital photography ahead of their competitors, nothing hit the market until it was too late. More of a primary focus on innovating proactively might have helped them out significantly. Blockbuster would have largely benefited from this business model as well. Innovation is not just a certainty for future business models in the technology age, the whole foundation of the industrial revolution’ business model might be reinvented with today’s technological revolution’s “elastic” business model.
Innovation, the process of improving upon an existing product or process, is different than “elasticity”, which is a fundamental and systematic transformation of the way companies do business & innovate. It is a “redesigning” of business. Companies in the future, as well as today, need to be able to “stretch” over many of the emerging new technologies to improve the way they do business.
This includes the creating of their product or service, or marketing with many, ever-growing, social media tools. Wealth can be created with innovation, but also with elasticity. The main function of elasticity is to improve economies of scale in the information and technology age – much how the industrial revolution’s business model created economies scale in the context of what defined it, manufacturing and production lines.
To summarize, the futuristic business model and economy looks to be demanding proactive innovation and a shift to an elastic business model, and less reactive innovation. So what are some tips for companies to, one, inspire more proactive innovation from their employees and be more innovative at the head offices; and, two, get rid of the fear of changing their existing business model to one of a innovative and elastic one?
Help your employees generate more proactive innovation:
Merely talking about innovation alone usually will not inspire employee innovation. Create a culture that integrates and celebrates change to spur more innovative initiatives. If organizations want more from their employees and customers, they should “let them play” an appropriate amount.
For example, Google encourages their employees to spend 20% of their work time on their own side projects. Now how many different products and services has Google been able to bless us all with? The answer is at least more than if they had an archaic business model that focused first on only their current services.
Another tip comes in the form of managing your employees. When choosing team building activities, you must choose activities that accomplish a specific goal, as John Peragine, Jr. says in “365 Low or No Cost Workplace Teambuilding Activities.” Team members may learn other lessons from an activity too. When discussing the activity, be flexible about what results are expected. Creative social activities will then offer multiple opportunities for growth and innovation.
Lastly, tap into your employees’ personal passions. When employees can incorporate their personal interests into their work and work place, they are more likely to innovate and become more imaginative.
Help get rid of your own fear of altering, changing, and (dare I say) ‘innovating’ your business model:
A primary tip that can set you apart in your industry is to take a calculated path less traveled and go against the grain.
I say 'calculated' because it goes without saying that risks should always be calculated before being undertaken. But the neat thing is that today, and in the future, there is no definite calculation or formula, so that’s where focusing more primarily on innovation can fill in the gaps of your particular style and industry. Take three examples: Despair.com thrives in the corporate market by insulting it. Chicago Cabbie revved up business by using Twitter to book fares – point-in-case, they have focused on a more elastic business model. The Tamale Guy gained popularity by being hard to find. These are some very fine inspiring examples of venturing out upstream against the current.
Additionally, I suggest that you always put primary focus and importance on listening to customers. Whenever you seem to lack creative energy, do a focus group or take some sort of poll. This is a key to many of Procter & Gamble’s newer products.
Also, in the spirit of social-media, do not hesitate to join all of your customers’ conversations on many of the social media tools out there. Make an effort to go to them, and this even leads to clearing up possible misconceptions about your company in the social-media world.
For my last tip, I would suggest seeking help outside of the walls of your own business for innovation and ideas. One possible method is open-sourcing, or likely more specific method is crowdsourcing. For example, we could see the benefits by looking at Brazil. Author Jonathan Feldman gave a tour of his city’s IT facilities to a group of Brazil exchange students and when he mentioned their open source software, they were surprised, but for an unexpected reason – they were surprised he was not using open source everywhere. Supposedly, since 2003 Brazil’s government has realized hundreds of millions of dollars in cost savings from open-sourcing.
Therefore, crowdsourcing is one popular avenue to outsource via the internet, but the elastic economy also demands that you might keep a look out for websites that allow you to collaborate with others within and outside of your industry as a means to start to shift your business model elastically, which the future will demand more and more. As the great Franklin D. Roosevelt once said, “Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the things we must strive for today, begins where competition leaves off.”
Even if this was said in the context of the Great Depression, it has many similarities to the economies of today. Keep the necessary competitions that make this country great, but where that leaves off we might find the key to cooperate on making this country’s tomorrow a better place.
Where do you plan to innovate? What will your calculated risks be? Let us know in the comments!