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The Innovation Triage: Protection or Profits?

The Innovation Triage: Protection or Profits?

 

For most of the 20th century, innovation was the territory of large organizations as it required significant resources, which only large organizations had. Although, in 1960, after the first venture capital efforts, small companies and startups started to take hold. The internet and the venture capital model gave a competitive advantage to fast-moving startups. For nearly two decades, startups have had much of the limelight when it comes to breakthrough innovation, dwarfing the efforts of the large companies which are unable to catch up.

 

Lack of Innovation

 

We all have heard the phrase "Rest on Your Laurels," which means unwillingness to change one's mindset and be satisfied with whatever you have done so that you don't have to make any further efforts. In other terms, lack of willingness to innovate. A reluctance to innovate in a business might leave you limping behind competitors soaring just because they decided to innovate their business model. Let's take a look at a few companies to understand it better: -

 

Netflix attracted millions of customers who wanted to watch their movies & shows on their devices while soaring past Blockbuster Entertainment Inc. (an organization that provided films and video games on a rental basis and was quite popular in America). However, as the world became more technologically oriented, Blockbuster failed to follow the route and catch up. It continued to offer its store service for several reasons, such as people liked and preferred- going to their stores, resulting in a reluctance to innovate. This reluctance to update their sales strategy eventually led to their demise in the market.

 

Nokia was a fine-tuned machine when it came to grabbing the latest trends in mobile phone use and translating them into a novel and profitable designs. Techniques ranging from ethnographies and early prototyping helped the company keep its healthy lead in mobile communication. Incremental innovations – regular improvements & amendments to existing products and services allowed Nokia to maintain its position in the cellphone market.  

Berkeley HAAS, Open Innovation 2014

What could go wrong?

 

Like Blockbuster, Nokia's value in the market also fell apart when the smartphones were introduced and became the device of choice. Nokia did not just lose the market share but also lost all hopes of making a dent in the smartphone market, allowing companies like Apple  and Samsung to establish themselves. The failure to see mobile phones as mini computers cost them the pole position, and eventually the market. Perhaps, those of you reading it would want to see where Blackberry failed in the innovation triage? 

 

During research stage the lack of focusing on commercial needs and balancing the development among business versus technology advancement according to market needs. Failure in translating the IP into commercially potential innovation. These factors amongst others could be why both Blockbuster and Nokia which were huge companies, and they enjoyed massive amounts of success. They failed to scale commercial innovation in a disruptive environment.

What if you Innovate and still fail in the market?

 

International Business Machines (IBM), a technology corporation, is also a leader in patents for the last 28 years and filed 9,130 US patents in 2020. IBM is considered one of the most innovative companies in the world. However, even after being most creative and filing most patents, its revenues have been declining for the last decade, and so have its stocks. In 2011, IBM revenues were at an all-time high of $106.92 billion, which in 2020 declined to $73.62 billion.

 

As it is evidenced that operation excellence and innovations feed success within the existing business models. 

 

Defining Incremental and Breakthrough Innovation.

1.    Incremental innovation is about employing creativity in existing strategies and industry structures. It operates with relatively low levels of uncertainty, benefits from established processes and is extremely important for sustaining corporate advantage in the market.

2.    Breakthrough innovation deals with much higher levels of uncertainty and risk, lower levels of knowledge, but needs to be managed. It redefines paradigms and offer new ways to look at the world.

In light of the above a book that can help you make sense of the ever changing and paradoxical wold of innovation is Professor Clayton Christensen's classic study of disruptive technologies (incidentally he coined the word in 1995!), The Innovator's Dilemma, if you have read it, it is worth a re-read. 


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