Be ready to innovate or be ready to vacate
In order to grow, all industries must undergo significant disruption—the business world’s equivalent of a wake-up call. Business professor Clayton Christensen first used the term ‘disruptive innovation’ back in 1995, to describe the process by which a product or service starts out in its simplest form at the bottom of the market, before moving up to eventually displace established competitors.
Creative disruption: It’s unavoidable
The waves of creative disruption – technological or digital – have caused the acceleration of change across industries. For example, 3D printing has revolutionized the manufacturing and healthcare industries, and companies such as Netflix have changed the way we consume on-demand media. Leading disruptive innovators recognize the need to move away from the beaten path of success and security, in order to connect with the engaged and empowered consumer: Apple’s takeover of the mobile phone industry, after starting out with computers, and Google’s expansion into ads, causing advertising giants to sit up and take note, are just some examples of the direction innovation has taken over the last decade alone.
How to become a leading innovator: collaboration and continual reinvention
As creative disruption continues to blur the lines between industries, and organizational leaders come to realize that they cannot continue business as usual – a concept referred to as Innovator’s Dilemma – innovation is affecting the way many organizations operate. The life expectancy of companies has been compressed by 80% since the 1920s, and by 2021, 40% of Fortune 500 companies will simply disappear.
The threat of death at the hands of tradition and custom is pushing companies to collaborate in order to stay relevant, and forcing the CEOs of leading companies to ask: do we have innovation in our bones? After selling off its low-end server business to Lenovo, tech giant IBM entered into a partnership with Apple, distributing iPads offering industry-specific enterprise mobile solutions—a smart move by IBM to exploit the power of one of the world’s most powerful brands.
Another method of innovation being employed by companies is one of continual reinvention, explained by the Three Horizons model—Horizon one: extend and defend products; Horizon two: drive emerging products; and Horizon three: create new, viable opportunities. The unwillingness to let go of the old and look beyond past and current successes is something Bill Gates summed up perfectly, when he said, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” Past success doesn’t guarantee it in the future, so we all have to be lifelong learners, beginning with the CEO.
Be brave, innovate
When it comes to innovation, courage yields the best results—and the pay-offs have been huge. Consumer goods giant Proctor & Gamble’s open innovation initiative, Connect + Develop, reaches out to external talent in order to innovate and improve. The lean startup approach adopted by General Electric allows the company to act like a start-up, by “unlearning perfection” in order to manage new product development—effectively disrupting the market with faster, smarter decisions. Digital innovation is another area Nike has influenced for some time now. Collaborating with Apple to create the Nike+ Fuelband allowed Nike to merge fitness with smart mobile technology—a bold move in uncertain times, and something competitor adidas has been slow to adopt.
Whichever form of innovation an organization decides to take, the result will be surprising, if not shocking. From tapping external talent to thinking like a
start-up—the constant desire to become better and smarter – not just successful – in the face of risk is what pushes an organization to fulfill its potential. As Christensen puts it, “Innovation almost always is not successful the first time out.” His words couldn’t be truer.
This article is a summary of Hult International Business School’s entrepreneurship webinar. It is part of a series of webinars covering innovation, entrepreneurship, marketing and leadership. You can view the entire webinar at hult.edu
About Hult International Business School – The world’s largest ranked graduate business school, Hult International Business School equips students with the hands-on business experience and soft skills required for success on the global stage. Highly ranked by The Economist and the Financial Times, Hult offers undergraduate, full-time MBA, and Executive MBA programs, plus Master degrees in International Business, Finance, International Marketing, and Social Entrepreneurship.>