Fostering a Culture of Innovation - The 10 Commandments for the New Age Businesses
When it comes to innovation, you are never fully done. Continuous improvements and not letting complacency creep in keeps the innovation oil burning.
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In today’s age, the pace of innovation is increasing at an ever faster rate. The old sources of competitive advantage - labour and capital are fading and new sources are emerging. The barriers to entry in most markets are reducing and unexpected competitors are swarming in.
Today we are cross connecting a number of fields, not only in new areas, but also in old disciplines like, biology, chemistry and economics. Some well-known examples are the innovations happening at the intersection of automotive sector and technology (driverless vehicles, drones), retail and finance, media and tech (video on demand), healthcare and retail and so on.
In this era of new age businesses, the key to success is to constantly innovate and stay ahead of the curve. We all have seen many examples of companies that were subject to innovator’s dilemma, chose not to innovate and now do not exist. A classic case is Kodak, the leading photographic film company of its time, their inability to keep pace with digital photography and innovations in the field of photography eventually resulted in them filing for Chapter 11 bankruptcy protection in 2012. Netflix developed better shipping and streaming technology forcing traditional distribution companies to revisit their businesses. Amazon did the same to Borders and Barnes & Nobles. And more recently, Yahoo which was once valued at USD 40 billion was sold at 4.5 billion a decade later.
The examples are aplenty, and it is a known fact that companies which are slow to innovate and adopt new trends will eventually die. The surprising truth is that over the last five years, almost all of the private sector jobs have been created by businesses less than five years old. And more interestingly, it is predicted that 40% of the companies on the Fortune 500 list will be gone in the next 10 years.
So, while there is no silver bullet for creating a culture of innovation, the 10 commandments listed below will certainly help in improving the odds:
Think Exponential: It is important to think big and set bold goals to achieve factors of 10X impact. It is imperative to defeat ‘incrementalism’ within your organization, increase risk taking and allow failure.
Customer First: Do not compromise on the customer experience. Make customer value and customer delight your first priority. Constantly collect customer feedback (explicit and implicit) and then work backwards to engineer products that users love. On the flip side, at times disruptive products have been built by visionaries without explicit customer feedback, however that is an exception and not the rule.
“If I had asked people what they wanted, they would have said faster horses.” - Henry Ford
Hire and Develop the Best; Constantly Raise the Bar: While hiring, one should always evaluate if the candidate has higher IQ than at least half of the existing organization and hiring should be approved only if this criteria is met. This ensures that the mean IQ of the company keeps rising till perpetuity. If one can achieve this, it automatically implies that the best talent in the industry will flock to your organization and it is very likely that the company will out-innovate its competitors.
Protect The People: The most important asset for a new age business is its people. And with people being the only assets that leave the workplace every day, the task for the business owners is to ensure that they are motivated enough to return the next day. It is important to delegate decision making and empower the teams to accomplish productive work towards the organization’s objectives, as well as to ring fence the teams from layers of bureaucracy, policies or other compromises not found in a start-up culture.
CFO: “What if we invest in people and they leave?”
CEO: “What if we don’t and they stay?”
New Ideas to Solve Old Industry Issues: Look for new ideas to solve old industry issues and customer problems without being blinded by the status quo. Typically, hiring young teams brings fresh thinking. Industry experts are often married to traditional solutions and tend to be myopic in their view. It is important to have SMEs in advisory roles to guide the younger members; but they should not be involved at the tactical / operational level.
Create Agile Execution: Learn to develop and try ideas in short iterative sprints with empowered teams. Treat digital initiatives like R&D.
Design Thinking: Design is the new differentiator. Diverse teams led by design thinking will create an amazing impact.
Focus on Value: It is important to focus on solving the problem and delighting the customers and not get distracted. If one can figure a way to add value, the business model will evolve to appropriately share that value between various players within the value chain.
Data Driven Decision Making: Big data, small data, internal, external, experimental, and observational— all information should be captured, quantified, and used to make business decisions.
It’s Never a Finished Product: When it comes to innovation, you are never fully done. Continuous improvements and not letting complacency creep in keeps the innovation oil burning.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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