Let’s start with the bad news. Since 1995, 90% of Fortune 500 companies have vanished. And according to the latest estimate from the John M. Olin School of Business at Washington University, 40% of current Fortune 500 companies will no longer exist in 10 years.
In an era of continuous change, the overriding message is `innovate or die’. Continuous innovation is the prevailing aspiration - but the road to good intentions is blocked by last year’s thinking, a mindset that says “We’ve always done it this way, so why not continue the same way?” That 90% figure answers the question.
At Atmosphere, we support leaders who have caught a glimpse of their current organisation’s horizon and wish to navigate towards a better business future.
Back in the day, the behemoths of business were everywhere. Successful start-ups were snapped up by large organisations, consumed and assimilated at the first signs of fresh thinking. Today, exponential technological change has turned that on its head. Start-ups with few resources but huge ideas now regularly leapfrog incumbents with huge resources but few fresh ideas.
In his 1991 book Business at the Speed of Thought, Bill Gates was already ahead of the game when he said this:
“... a company should not take its position in the market for granted. A company should constantly reevaluate.”
Fast business now consumes slow business, disruption now beats tradition. Yet some industries are still breathlessly struggling to catch up with their disruptively agile competitors. The hotel and taxi sector, for example, would love to offer some fresh insight… if they weren’t so busy licking the wounds inflicted by high-velocity innovators. If you want an organization that has breakthrough results, it pays to disrupt.
Look around your organisation. If it has an innovative culture you will be surrounded by people whom the late Robert Brands described as “corporate entrepreneurs”, also known as intrapreneurs.
“This realm is inhabited by people who - though they receive a paycheck signed by someone else - see the organization (or at least their small domain within it) as their turf. This is the most valued type of employee.” - Robert Brands (Inspiring Corporate Entrepreneurship to Fuel Innovation)
Innovation and intrapreneurship are inextricably linked. However, this doesn’t happen by magic or accident. Organisations must develop a culture that encourages entrepreneurial thinking and build structures that nurture innovation. Your people are key – but their achievements will be limited if company tradition, rigid hierarchies, resource constraints and (most of all) politics get in the way.
Where do your good ideas come from? More importantly, which valuable sources are you missing? There will be a wealth of innovative thought taking place within your organisation. However, you may be overlooking something. Going back to Bill Gates for a moment...
“Concentrate on your most unhappy customers.”
This figure is taken from research carried out by Robert G Cooper for an article Voice-of-Customer Methods: What is the best source of new product ideas?
“80% of the innovations which are developed by a company on their own are not successful. By contrast, 80% of the innovations initiated by customers succeed.”
Unfortunately, for most process-driven organisations there are few things more terrifying than talking directly to the customer. This is a mystifying anomaly - one that even the youngest start-ups would see as a bewildering blunder. Given the obvious fact that customers are on the receiving end of products and services, they are the unrivalled experts on likes, dislikes, pain points, problems and unmet needs.
Ultimately, the question is not `How do we innovate to stay competitive?’ It is `How do we innovate to create value for the customer?’ and `How can we innovate to win new customers?’
There are several ways to engage with innovation. Here are a few strategies being employed today:
Innovation begins with your customer. Their journey to sale is rarely linear, and the most successful organisations have a deep understanding of the market forces that influence customers’ choices. What should you begin? And what should you do next?
Which market forces are disrupting their experience? Do you need to develop new technical competencies… or new business models? Without an intimate understanding of both, your innovation strategy will be half-baked. When you start with your customer, it allows your organisation to think like a start-up – the very start-ups that are disrupting your industry right now.
Atmosphere will help your business steer the right path through innovation, self-disruption, new technology and your customer strategy. Talk to us today.