When Times Are Hard, Innovate

Posted by:

When Times Are Hard, Innovate


The crisis which Europe (mainly) is suffering the last couple of years has resulted in numerous negative consequences, as reported in most of the media. But it has also resulted in the emergence of new technology-based companies and an increase in foreign investment and alliances in various markets, as well as reforms to the financial, educational, and government infrastructure in the countries of the south part of Europe. It may be that the crisis will emerge as a ‘blessing in disguise’ if policy makers and managers continue to use it as a rare opportunity to push forward long overdue reforms.

Innovation management is defined as the development and implementation of new ideas by people who over time engage in transactions with others within an institutional order. This definition focuses on four basic factors focused on the today’s crisis era (new –innovative ideas, people, transactions, and culture management). An understanding of how these factors do related leads to four basic problems confronting most business entrepreneurs:
• Human problem of managing attention – Culture management,
• Process problem in managing new ideas into good currency,
• Structural problem of managing part-whole relationships,
• Strategic problem of institutional leadership.

One of the more frequent issues clients raise is the need to change organizational culture. Culture can be a critical barrier or a true enabler to innovation — it governs the hundreds of daily decisions that senior managers never get to make.
We believe that much of the conventional thinking about “creating” culture is deeply misguided. Culture is fundamentally a lagging variable, not a leading one. It is the result of a set of decisions, precedents, and supporting leadership behaviors around all aspects of organizational design, including strategy, structure, people, and processes, especially in the todays market with all the new factors, such as crisis on a permanent alert

From our experience, culture can in fact change rapidly, but only if management aligns the “hard” aspects of organizational change, including variables such as how:
• Ideas are sourced
• Opportunities are evaluated
• Risk is measured
• Success (and failure) is rewarded
• Initiatives are staffed
• Experiments are executed
• Commercialization is organized
• Learning is achieved

Given the myth noted above, we do not undertake engagements focused exclusively on culture change. Rather, we make cultural change an integral part of our work on organizational success. These kinds of engagements are typically undertaken while looking at sourcing, shaping, or commercializing actual innovation opportunities, as developing new behaviors with real projects tends to have far more impact than making abstract recommendations.

How to define an Innovation Strategy?

One of the most common opening questions we hear from clients is “how can we be more innovative?”
Most often, companies that say they need to be more innovative are facing a set of larger challenges within the business. They may have realized that growth has flattened or is threatening to flatten, their revenues have steadied, and the growth business that carried them through the last decade is being threatened by newcomers or has lost its luster, or even is in danger due to the current market situation.
The issue is that many are seeking a rapid solution to these challenges. They simply want to find that one new blockbuster that can carry them forward on a safe mode for another decade or so. We believe that being innovative requires going beyond winning once. Companies must develop bottomless innovation capabilities that will allow them to innovation governance repeat this new growth cycle again and again, an “Innovation factory” which will be producing at a never ending scenario.

Innovation must therefore be a key component of a company’s strategic planning cycle especially at these periods of crisis. Even if a company decides to manage the innovation program through an autonomous unit (an approach we frequently advocate), innovation will still play a role in the overall strategic and communication plan for the organization. In many cases, the company’s success may well be dependent on the innovation efforts. It will require resources and abilities, its performance will need to be measured, and it’s fit within the broader brand and offering portfolios will have to be determined.

Defining an innovation strategy therefore requires a balance of approaches deployed to ensure efficient distribution of resources and behavioral shifts among the leading figures, to allow the innovation program to develop and thrive without giving way to the corporate methods that can often cripple an emerging opportunity not in a holistic manner.

Develop New Business Models

Often the discussion of innovation is centered on new products or service offerings, the “what” part of the challenge. In many instances though, the biggest breakthroughs can be uncovered by asking “how”:
• How can we engage customers in a different way?
• How can we change our profit models to allow for new, more flexible pricing model?
• How can we allocate resources more efficiently to improve the value proposition for customers?

Business Model Innovation (BMI) is the introduction of a fundamentally new business model into an industry or enterprise of any kind. Great new business models aim to create new value and transformative growth by reaching untapped customers or serving existing (unsatisfied) customers in dramatically better ways. BMI is about changing the game, breaking the traditional “market rules” to define and deliver value previously unimagined. Whether combined with an enabling technology or not, a powerful new business model innovation can create new markets where none existed or transform existing markets in fundamental ways. Command of these concepts and their practical application empowers you to go beyond the uncertain exploitation of a new product, technology, or service and from the outset understand its true potential, to unlock transformative growth directly from business model innovation.

New Market Analysis

We believe that new markets are found by discovering populations of “non-consumers” especially at this market’s momentum— those who are locked out of a market due to a lack of skills, wealth, access or time — who have important “jobs to do.” A job is simply a problem a customer needs to solve. The most successful offerings target those customers who are frustrated with existing (or non-existing) solutions that do not adequately get the job done.

Our field experience has clearly showed us that companies rarely lack attractive ideas to create new growth businesses. But they sometimes lack the ability to systematically differentiate high-potential vs. low-potential opportunities, particularly those in uncertain new growth spaces outside of the core business. This challenge is compounded by the fact that an overwhelming amount of evidence suggests that companies entering into new markets tend to start with the wrong strategy. Although no one would willingly pour money in a fatally flawed strategy, companies time and again make this mistake when they step up investment in a strategy too early.

Commercialize a New Idea

Often a firm with new product/service wants to penetrate the major markets as prompt as possible. It dispenses resources into developing marquee accounts, and adapts the product to meet the needs of these very demanding customers (especially during a crisis all the customers are demanding, even the “easier” ones). It may even drop the price to get the business, or acquire a channel partner in an effort to push the innovation into customers’ hands. The results: long sales cycles, escalating costs, persisting low prices, channel conflict, and huge distractions.
We realize that a counter-intuitive route is much more successful. Firms need to get to market on a fast mode, with companies that will tolerate a less-than-perfect solution, and then learn by doing. Real feedback from the marketplace is infinitely more instructive than countless hours at a whiteboard mapping the hypothetical solution.

Firms should also seek clients and market segments that “starve” for new solutions, require short sales cycles, don’t see failure of the product as a major business risk, and can quickly prove the product’s value. Typically, these aren’t the biggest potential customers, and they may even be off the radar screen of most competitors in the industry. But they get points on the board, generate critical feedback, and serve as a “good enough” reference to other market niches that will welcome the new solution.
For an individual with an innovative mind, a desire to make a difference in the world in crisis (even if the difference to be made sounds petite), and the specialization in the innovation management could be the (partial) solution.

Innovation Management specialists can improve the circumstances of the focused markets with a step by step strategy and assist their clients to gain a better understanding of their benefits through innovative moves along with the corresponding dollar/euro value associated with their benefits.


About the Author:

Managing Director of PR&More

Add a Comment