A Balanced Approach to Innovation
In the past decade, the power of innovation has been in the spotlight. Technology entrepreneurs like Steve Jobs built their careers (and their companies) by developing and launching innovative products at the right time in the market— at least most of the time. Today, start-ups emphasize their innovative solutions when searching for financial support or recruiting new executives.
But not everyone is eager to join the innovation movement. In fact, many successful companies—in almost every industry except technology—have no desire to become a market innovator. That’s because they have developed a successful business model that’s working very well, and don’t want to disrupt things. “If it’s not broken, why fix it?” is a saying that encapsulates this philosophy.
Unfortunately, there is a long list of once-successful companies that resisted change until the bitter end, watching as innovative competitors captured their markets. Think about how the Internet killed traditional print catalogs, how music downloads undercut retail record stores or how low-cost airlines drove some traditional carriers out of business.
Since successful companies can’t ignore the potential for a disruptive change in their markets, they should consider their options for dealing with innovation. One strategy is to look for new opportunities, but within certain limits. In the consumer packaged goods industry, for instance, a Fortune 500 company might develop “new and improved” products like breakfast cereals and laundry detergents. This strategy is designed to capture the benefits of innovation, such as generating excitement among consumers, without disrupting the basic business model.
However, it’s difficult for many businesses—especially those in the professional services sector—to bring something new to market. However, there may still be opportunities to be seen as an innovator, in a limited sense, in how those services are delivered. And as consumer demand and technology evolves, it’s important to be able to spot opportunities to add new services.
In any case, successful companies need to pay close attention to innovations that could potentially disrupt their markets. That could mean a new product, like the first cellphone with a camera, or the entrance of a low-cost competitor that undercuts your prices, or an evolving technology that enables a new vehicle for service or product delivery. Recognizing changing market conditions and responding to the new reality is the key to sustainable business success.