Abundance is actually the root cause of many business and corporate struggles with innovation. Too much time or money often leads companies to continue following fatally flawed strategies.
Their leaders create overly complicated solutions that overshoot customer needs.
In contrast, constraints often enable innovation in the retail industry. Over the last century, there have been numerous significant business-model innovations:
• Woolworth’s in-house “Select” brand model
• Retail franchise models, such as Boost Juice and coffee/café outlets
• Amazon.com’s collect-cash-before-you-contact-suppliers model
One explanation for the retail industry’s inventive business models is scarcity. The constrained retail environment leads them to funnel creativity to where it can best be applied.
Looking to other industries, in the last five years we have seen other 'disruptive' business models come to the fore, exhibiting innovation and looking to transform life as we knew it:
- Air BnB, in the accommodation industry worldwide,
- Uber in the taxi industry, and ...
- Excitingly, the soon to be self-driving car.....
These business entrepreneurs are another example of flourishing innovators. They have no choice; if they fail to rapidly adapt, they run out of money. Difficult times force self-discipline and focus.
The Transformation Imperative
Survival really comes down to change or die. In the ‘Great Disruption’, companies have two choices: Live with shrinking profits and increasing chances of extinction, or follow a completely different approach.
To develop a ‘disruptive’ mindset, managers must master four areas:
1. Liberate resources for promising innovations by prudently shutting down dead-end projects and declining businesses.
2. Drive fresh growth by re-featuring existing products and services and reinventing outdated processes.
3. Mitigate risks by conducting strategic experiments and forging alliances with customers, competitors and suppliers.
4. Appeal to value-conscious consumers and fend off low-cost attackers by delivering “good enough” offerings at an affordable price.
The Business Owner/Executive Challenge
Methodical planning of disruptive innovation is a different beast. Business owners and leaders must think and act in ways that run counter to everything they have done to succeed in their careers. How do you simultaneously manage two different instincts: one operational, the other entrepreneurial?
Business owners and executives who encounter tough times naturally become more conservative. It’s hard for them to tolerate creative thinking when they face the prospect of downsizing. But companies that play it too safe can wind up in trouble down the road, and frustrated managers may quit, leaving their firms ill-equipped to function effectively once the downturn ends.
Innovation practitioners need to strengthen their creative muscles by:
• Developing an awareness of themselves and others
• Creating a personalised program of developmental leadership with a business or executive coach
• Striving to improve their ability to spot hidden opportunities and act in more entrepreneurial ways
• Scheduling regular excursions into the marketplace to observe how certain customers use a product or service
• Attending a conference in a different industry
• Learning to ask more “what if...” questions.
