Why There is an Immediate Vital Need for Business Innovation
It is not an exaggeration to say that the world in which you are operating your business in today is changing rapidly, exponentially so. There is plenty of writing on the wall that the power and applications of our technology will increase roughly as much in the next 3–5 years as it has in the last thirty years: billions of dollars per month funding new financial technology companies, growing sophistication of artificial intelligence and advanced analytics, an imminent integration of virtual/augmented reality systems, and the oncoming wave of the internet of things. Ponder that amount and speed of change for a moment.
Both the business environment and the greater cultural environment around your business will be substantially altered by these accelerated rates of change. This will affect your clients and prospective customers. It will shift their perspectives, expectations and decision-making, namely whom they will seek out to engage for goods and services in the future. Look around you at the already rapidly changing context in which you are managing your business. This is the #1 challenge facing all business leaders today!
“ After a decade of talking about innovation, it’s time to close the gap between rhetoric and reality. To do so, we will need to recalibrate priorities and retool mindsets. That won’t be easy, but we have no choice, since innovation matters now more than ever.” Gary Hamel, What Matters Now
Change is nothing new. But the speed of change, to borrow a key financial services principle, is now compounding. It has crossed that inflection point curve on the compound interest growth chart and is starting to look almost straight up. This is a very different rate of change than we are all used to facing. It is a non-linear, business dynamic that we are not equipped for or trained to deal with. I put to you that our traditional management tools and business thinking that is focused on command, control, efficiency (e.g. 5yr business plan) will not be of substantial help in today’s new operating environment.
“Business has only two basic functions — marketing and innovation.” Peter Drucker, Innovation and Entrepreneurship “
The good news is that under the banner of “innovation” there exists a proactive business management toolkit of best practices, processes, ways of thinking, and tools (e.g. business model canvas) specifically designed to help you deal head-on with this kind of changing environment. The innovation mindset behind these practices is focused on the need to create new solutions, new business models, new ways of thinking about your business. If you are a business owner or business leader, if you work for a business, if you want to take advantage of this rate of change versus being run over by it, it is in your self interest to be fully aware, actively explore, better understand and, ultimately, strategically use elements of this business innovation toolkit.
You now have to make a very important decision.
You can either explore and start implementing business innovation best practices or purposely choose to ignore them. And doing nothing about them is a decision. Be aware that others before you faced this same exact decision point and chose the latter — the leaders of Kodak, Borders, Blockbuster, the music industry, to name but a few. While maybe originally being innovative, they did not utilize the innovation best practices of regularly challenging their thinking; systematically reviewing their business models and value propositions; and intently building effective mechanisms into their regular business planning process to keep close to their customers to uncover unarticulated needs. These were extremely smart people — credentialed, knowledgeable, and successful. They just chose to strictly focus on their current success, current earnings, and making their current business models more efficient. The financial services industry stands in the same position — and we have to choose. What will you choose?
“That’s why we need to continually re-evaluate how we create, deliver and capture value. In an age of disruption, the only viable strategy is to adapt.” Greg Satell, digitaltonto.com
To reaffirm the core difference and benefits of innovation, know that traditional management tools and ways of operating are very useful but are geared for focus and control and were developed for a slow changing, stable business environment. Note that many traditional management principles were invented in the 19th and early 20th century in response to the industrial revolution and mass production, with refinements made along the way. They support consolidation and efficiency strategies.
Innovation management tools and ways of operating are designed to specifically address change, differentiation and developing new ideas, new approaches, creating new markets. Many innovation resources have been developed over the past 2 to 3 decades fueled by advances in social science, brain/creativity studies, and born from the business need to respond to rapid change. They represent a growth and a differentiation strategy.
Bottom-line: For today’s business and cultural dynamics, while efficiency is important, innovation and dealing with change are now essential.
“Innovation is… the act that endows resources with a new capacity to create wealth.” Peter Drucker
So what does “innovation” do for you in your business arena?
Innovation provides a toolkit of proven processes, tools, ways of thinking and guideposts for running your business in an environment of constant change. Like the six sigma process, but from a very different perspective, innovation processes give you focus and direction on making key business decisions and where to invest your time, money and effort for maximum strategic benefit of your business and clients to thrive in a changing environment.
It will develop a habit of looking for alternative ideas, not just focusing on the most obvious approaches. During your normal business planning, it will force you to ask different sets of far-reaching and challenging questions, to discover and challenge the assumptions you have been running with.
It will provide you with steps to take in order to come up with new ideas, new approaches, new value propositions, new best practices, new ways to do business to attract new and changing clients.
“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.” Peter Drucker, Innovation and Entrepreneurship
The Institute for Innovation Development agrees wholeheartedly with the above comment by Peter Drucker. Subsequent research and cross-industry experimentation have further proven that innovation — as a mindset and business practice — can be learned, honed, and is readily available to every person, in any position, in any size company, in any industry, anywhere in the world.
We are inviting you — members of the Medium community — to participate in this exploration and, especially, to comment in an open dialogue on this site on understanding and applying more business innovation management practices and new technologies on an ongoing basis. Open discussions and an exchange of ideas and perspectives are fundamental to the innovation process.
We acknowledge that this topic may not be for everyone. There exists a huge chasm between traditional business thinking and practices and the new innovation mindsets needed — which require cognitive and behavioral change. But it is increasingly important to cross that divide and have that dialogue now that we are at the cusp of such radical change in all industries and for our businesses.
So what are your opinions or experience with business innovation?
