Marketing and innovation produce results; the rest are costs. Thus spake Peter Drucker.
In the digital economy and society that we are moving into, innovate or perish is the new mantra.
Improve and improvise is passé. Incremental tinkering is out of sync with the hyper-competitive world that is emerging. The window of opportunity is so short that even before you say ‘knife’, you are stabbed and dead.
Lea Iacocca famously said: ‘Lead, follow or get out of the way’. It is now just ‘Lead or get out of the way’. Not much scope to just follow and succeed.
Innovation is what ‘Unicorns’ do. What do you do if you are a dinosaur from the 20 th century?
Look at the latest list of top companies in terms of market cap. Alphabet, Apple, Google, Microsoft, Facebook, Whatsapp and LinkedIn have gate-crashed the party. You don’t see a GE, Walmart or a General Motors in the top 10 list. Innovation is what has made the gate-crashers succeed.
How should the traditional giants go about cracking the innovation challenge?
New products
Innovation happens in many ways. Historically, innovation focused on products and processes. You have the famous 3M model. Many companies started mandating a certain proportion of yearly revenue coming from ‘new products’ (typically defined as those introduced in the last three years). Others focused on process innovations, newer and better ways to create the same, or similar, value propositions. This worked when the competition was kinder.
Companies like Apple, Uber, Whatsapp dramatically changed the landscape. Overnight, existing companies and business models were made redundant and irrelevant. For some telling evidence, one has only to look at Steve Jobs’ decision to put Mp3 in the smartphone, practically cannibalising the $5-billion revenue of iPods. He had such confidence in the innovative abilities of the company.
What it takes large, old companies to innovate
Introduce a ‘small’ company kind of agility and thinking in a big company environment
Create an entrepreneurial culture amidst bureaucracy
Foster ‘quantum’ changes as against ‘incremental’ ones
Imbue a ‘young’ risk-taking mindset, even in the ‘older’ veterans
Uberisation (innovating business models) is here to stay and is likely to be the way of future competition. So it’s time for the big companies to realise that they need to ‘Uber’ or be ‘Ubered’.