Destructive Innovation

Today some of our most prominent industries are dealing with new competition which threatens to erode revenue and profitability.

These constant pressures are asking everyone within the business units to do more with less and then make it cost less again.  These industries need to change how they do business to deal with a world stage, whether they see it or not.  And one of the best ways is "Destructuve Innovation". 

So what does this have to do with Destructive Innovation?
So why is it so hard?
And most imporantly WHY?

Because if you do not do it, someone will be doing it to you, and there is no time left for complacency.

Today some of our most prominent industries are dealing with new competition which threatens to erode revenue and profitability.

These constant pressures are asking everyone within the business units to do more with less and then make it cost less again.

Take two different regulated industries in Canada:

  1. Financial Services:  Emerging market competitors going into new market places that are regulated.  Whether it is the cross pilar or merger and acquisition desires by Banks and Insurance companies.  These organizations can only grow revenue by expanding into the US, which they are trying hard to do. But in the meantime, ING, HSBC, ICICI Bank, RBC of Scotland among others are eroding marketshare slowly and may see it erode faster.
  2. Telecom:  With existing infrastructure and operations, the evolution to IP brings new opportunities for non-regulated and regulated competitors.  Take Bell and Telus who together own the lion share of Telco, what happens now that Rogers, Videotron, Vonage and others come into the market.  Telus and Bell will only lose market share and revenue to these new players.  Check out a good conference BMO put on @ 2005 Media & Telecom Conference for some of the predictions.

So what does this have to do with Destructive Innovation?

These industries need to change how they do business to deal with a world stage, whether they see it or not.  And one of the best ways is "Destructuve Innovation".  So why is it so hard.

The Competency Trap:  Ability vs Time and the perspective to break the mental models,institutional and social practices.  How do you see the forest for the trees.

So we now need to learn to manage on the edge of chaos, shift from managing status quo to managing discontinuity.  Some of the keys to this are:

  1. Look at things differently
    1. Step outside your comfort zone.
    2. Think like the customer, no really (I had a client who would take cardboard cutouts of the client and ask them what they thought)
    3. Rethink the nature of your business and it’s strategy
    4. Involve the customer
  2. Leverage do not abandon your employees
    1. Create a new learning environment to support the evolution of your talent pool
    2. Knowledge Management strategies to harness the knowledge of your customer.  Go deep.
    3. Build Innovative Value networks – both inside and outside your organization
  3. Get close to the customer
    1. In the book "The Power of Productivity" by Bill Lewis talks about productivity improvement becomes very strong when you get really close to the client.
    2. You are the incumbent, you know and have access to the client.  Leverage your data and your interactions.
  4. Promote the Culture
    1. Create dialogue
    2. Take chances and reward the correct behaviour
    3. Create dialogue based on mutual respect
    4. Involve your supply chain – Innovative Value Networks

This creates new mind sets, that funnily enough are being mirrored in the technology world:

  • Customer Focus – if it doesn’t create customer value, then don’t do it
  • Process Flow – You have to be very disciplined to be very fast
  • Local Responsibility – Insight is found close to the customer and where the work is being done
  • Data-based Decisions – Learning and Fast Innovation trumps Planning and efficiency
  • Trust – be, act and grow trust in yourself and others, Participate.
  • Value Based relationships – Exploration versus exploitation, create networks as more voices does mean more wisdom
  • Loose Coupling (sound SOA like) to both ideas, processes and approaches.
  • Get the Business and Technology to work together.  IT can not just be a follower.  They are shareholders in the business.

Because if you do not do it, someone will be doing it to you, and there is no time left for complacency.

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