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Elastic innovation

For many companies innovation has become problematic because, as well as trying to innovate, they are also responding to more intense competition by transforming their core business. Innovation is becoming transformation.

Leaders who get it see the enormous opportunity that agility and speed present them. Change is fast and constant so those that get this double act right will move ahead of their competition in a sustainable way. Companies that embrace this reality now talk about transformation as a way of life and they are happy with what that implies.

So, your instinct might be you need support in developing new services, or in creating that breakthrough product, or in shifting your company culture into a higher gear.

In reality the support you need will be strategic. How do you transition to a faster pace of continuous innovation? How do you develop the skills and knowledge of your IT function so that it can become a partner in supporting change elsewhere? How do you adapt your decision making? And what are the proven roadmaps to an agile future?

You have to make critical choices around these questions. As you contemplate them, the external environment continues to change.

A new business culture is evolving out there, driven by smaller companies with highly adaptive methodologies like lean innovation. Global markets are finally starting to look truly global, with participants from different parts of the world. And competition is not just keen, it can arise from surprising directions.

Companies are increasingly adopting quite radical adjacency strategies. Business school taught us adjacencies could be bad for the core. But right now adjacencies are a key business strategy. Disney, the animation studio, is now a leader in printed optics! McLaren, the Formula 1 racing car champions, are offering remote child health monitoring to the NHS. Intel, the computer chip giant, is a start-up in television programming.

These are all attempts to move beyond a core dependency on one line of business. Other companies are augmenting their skills’ base. Apple, for example, is now the world’s most successful retailer.

And finally the technological infrastructure of business is transforming too. It is becoming more mobile and more Cloud-based, meaning two things. When businesses become mobile first they tend to become more device-centric. When they go to the Cloud they become more platform-enabled.

By being device centric we mean that they recognize many of the transactions they have with customers will rely, in future, on some kind of device. A device is more than a product. It embodies hardware (the old idea of product), software, services and connection.

Example: Take a look at Philips’ new connected cooker. The idea is you can control your cooker through apps on your phone. The cooker has an embedded modem. That means Philips can ask developer communities to create cooking related apps. They can develop community so that people can share recipes. And they hope to monetize some of that in new ways – perhaps by selling ads on community pages or by becoming a publisher of useful apps and content. The product is transformed. It is no longer hardware because it has all these other elements; services software and connection that spawn apps, community, content and more services.

By becoming platform-enabled we mean they place some part of their offer in the Cloud, a hosted platform that will have simple ways to connect and combine other companies’ services. In a platform environment companies can plug-and-play each other’s content and services.

Example: Expedia hosts much of its travel related data in the Cloud so that its partners can make use of the data and sell specialist niche holidays under a different brand, combining it with their own content and know-how.
The upshot of all these developments is that you can think much more broadly about strategy than at any time in the past. Let’s look at some of that:

  • It is legitimate, and often necessary, to broaden the scope of your strategic vision and to seek new markets with new services and revenue streams;
  • Most companies need to move beyond their existing product dependency and introduce a much more service-centric offer but it pays to think device rather than product/service;
  • It’s likely that your thinking will have to touch upon the platform too and on combining your IP with that of other companies;
  • Therefore you need to work with IT to become much more agile;
  • But you can augment their competencies very quickly, if need be from a global talent pool but at the very least from the pool of freelance and service companies in design, prototyping and innovation management.

To manage change at this breadth and pace you need to be properly equipped. The techniques of innovation are changing and you have to keep up. In the past innovation was confined to the lab or it was an incremental process that helped improve quality.

Now you can innovate in hackathons and jams, you can do lean innovation, innovate through crowds (crowdsourcing and crowdfunding), innovate publicly through ideation platforms, do open innovation with strategic partners, do reverse innovation with the bottom of the pyramid or turn to content or developer ecosystems. There are many techniques. And they are necessary because innovation was never like this before.


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