The future for established brands is uncertain with studies over the past few years, with Innosight suggesting “75 per cent of S&P 500 companies will be replaced by 2027”.
So what’s driving the need for innovation? And how can you ensure that any innovation is successful? To fully appreciate why things must be different you have to glance backwards.
Our current models for success and business strategies were forged in the furnaces of the Industrial Revolution and refined in the centuries since.
They were built for a world that is stable and predictable and where change is incremental. For major corporates your strategy could effectively be one of, “be first”, “be the biggest” or “be the fastest”.
Big companies could effectively block or stem rapid innovation just by being more efficient and offering consumers a lower cost. Or, if you spotted an innovative product you could always get a copycat product out, faster or cheaper.
In short, big brands held all the aces and could muscle their route to market. Things were predictable and slower.
But the “Digital Revolution” is re-writing the rules of business and fundamentally altering consumer behaviours. Over the past decade we have seen seismic change impacting all industries.
Technology has caused mass disruption by making it easier and cheaper to enter new markets than ever before and harder for market leaders to maintain a competitive advantage. To ensure they survive the strategy now has to be “shape your future”.
Companies have to proactively adapt to this new, emergent world. They need to constantly innovate before someone else does and eats their lunch.
As WPP CEO Martin Sorrell said: “You have to be prepared to cannibalise parts of your operation; so I believe in eating your own children.”
Read more on innovation:
- How does your company carry out R&D?
- Five steps to become recession-proof: Economic gloom doesn’t have to spell doom for UK SMEs
- The business survival instinct: Innovation in times of uncertainty
- Innovative Businesses
How technology has changed the rules
The world is now in almost constant flux – you cannot win by just being the biggest or most efficient. Technological innovation is happening on such a scale and at such pace that you simply cannot predict what the world will look like in six months let alone five years.
(1) Created a climate of revolution not evolution
Technology isn’t creating incremental change – it is creating whole schisms. Massive step changes just as we underwent when we moved from the agrarian age to the industrial age.
And these changes will happen much faster and globally. This means you cannot use the past to predict the future. We can’t use normative models and past research and trends to set out strategies.
All our base principles and frameworks are next to useless. It would be like predicting what would happen in the industrial age using the agrarian principle of living by the rise and setting of the sun.
(2) Changed the world
Technology is all pervasive. It is not just changing industries which use or are reliant on technology, it is changing all businesses. As I’m fond of saying “we are all tech and data companies now whether we like it or not.”
It also pervades beyond business – technology is fundamentally changing our behaviours, how we use our time, how we process information and make decisions, how culture is created and shared, how we socialise and even our societal structures.
How market leaders can innovate
At Independents United we specialise in helping brands “make revolutions happen” and we talk a lot about the need to disrupt rather than just innovate. As Facebook wrote in their “Little Red Book” (a kind of induction manual): “If we don’t create the thing that kills Facebook, then someone else will.”
There are lots of examples of big and successful businesses who failed to heed this mantra and live to regret it. Think Kodak. Think Blackberry. Think Blockbuster.
We emphasise the importance of working with entrepreneurs and developing an entrepreneurial mindset. We believe this is one of the key ingredients in creating innovation successfully.
The ability to see beyond the current rules of the game and spot opportunities to disrupt. Witness Airbnb or Uber, of course, but also companies like Casper who are disrupting very old and traditional categories – in this case mattresses!
Continue on the next page for the top tips companies can look to employ for innovation.
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