We have seen companies such as Nokia, Kodak and Polaroid, to name a few, that are now regarded as brands who went down. They were once the best in their respective industries they once dominated but that has now changed. We would think that they, being large and successful companies of their time, would certainly have had access to the best resources namely R&D, hired the top minds and had great knowledge of the markets they operated in.
Quoting The New Yorker on Nokia’s experience: “What happened to Nokia is no secret: Apple and Android crushed it. But the reasons for that failure are a bit more mysterious. Historically, after all, Nokia had been a surprisingly adaptive company, moving in and out of many different businesses—paper, electricity, rubber galoshes. Recently, it successfully reinvented itself again. For years, the company had been a conglomerate, with a number of disparate businesses operating under the Nokia umbrella; in the early nineteen-nineties, anticipating the rise of cell phones, executives got rid of everything but the telecom business. Even more strikingly, Nokia was hardly a technological laggard—on the contrary, it came up with its first smartphone back in 1996, and built a prototype of a touch-screen, Internet-enabled phone at the end of the nineties. It also spent enormous amounts of money on research and development. What it was unable to do, though, was translate all that R. & D. spending into products that people actually wanted to buy.”
-https://www.newyorker.com/business/currency/where-nokia-went-wrong
Does it always entail that a business enterprise must come out with an idea no one has suggested before? Are innovation breakthroughs always based on fascinating technologies? Not really. If we recall the story of Apple it did not invent the MP3, IBM did not invent the personal computer, nor was Amazon the first company to create an online bookstore.
Successful innovators learned to recombine. Apple certainly learned what other people did and recombined to produce the MP3 player.
Innovations that are successful also seeks to generate new revenue. Does it start with knowing who is the target market involved? (In Apple’s case, they wanted to create a new class of customers) What would you offer to them? How do we create value/experience to the customer? Bluntly, how do we make money from these innovations?
So it boils down to “Who”, “What”, “Value”, and “How to monetise”.
-https://www.campus.sg/you-wont-believe-what-kodak-and-fujifilm-are-doing-now/
One way will be to look at your current business model. We could ask the questions like who are our customers? What value do we give to them? What other things would our customers want or value? What other markets do we want to target? How would we generate revenue? That would form the first steps of “Foundation”.
Moving on, in startup parlance, would be “Ideation”. At this stage, one could look and review/identify existing business models being adopted in other industries. W. Chan Kim and Renee Mauborgne espoused in their celebrated book “Blue Ocean Strategy” that one should look (amongst others) at business models across complementary products and service offerings, and even across the chain of buyers. A combination may emerge after learning of their respective business models and how it may fit into this Ideation stage. Basic assumptions of the current model will be challenged when we use and combine analogies from other industries.
The integration, as the next stage, would seek to check the consistency of the business model and organisational fit. The culture of the organisation and propensity to accept these changed business model will need to be considered before considering implementation. The cycle of Foundation -> Ideation -> Integration -> Implementation -> Test would be a continuous one.
We can check if ideas may take off or not via a simple framework. We use our “Startup Fundamentals” framework to quickly assess companies:
Buy in and sponsorship from the Top Management is very important otherwise the innovation journey will fizzle out. Short term KPIs of those organisational team members cannot be over-emphasized as innovation takes time. The mindset of the organisation of “not invented here syndrome” must be overcome.
Funding must come from the top, ideally via the CFO directly. Business units funding corporate innovation projects can be a quick way to kill projects. The reason is simple. Business units simply do not have long-term goals that help to foster and nurture high growth companies in their early stages. Chasing after profits too soon will always kill off Startups as the chances of that happening in the early stages is simply close to zero.
Usually, there needs to be strong sponsors in order to see innovation projects through. The CEO, shareholders, or business owners should be very clear that without their support, this will have too slim a chance of working out.
For internal corporate innovation efforts like building up innovation capabilities, processes, and structure, the innovation team must be able to get strong support from business units. Without these benefits, they would not be able to give unfair advantages to their new businesses or revenue models - and that defeats the purpose of corporate innovation.
For external joint efforts in corporate innovation, resources like an entrepreneurial team is needed. Keep in mind you can’t just pick anyone for the job! They need to be self-driven by passion and not mostly the money in it. Let them have a large chunk of equity from the start and buy it up over time to support their growing performance. Give them with clients, revenues, market access, and any other advantages to help boost their growth.
Relevant departments must be extremely supportive of external Startups for this to work. Education levels need to be in place to prevent rejection via “innovation antibodies”. A good analogy is like blood types not matching - causing donated organs to be rejected and body system failure. Good entrepreneurs eventually produce results and value for corporates once they understand how to work with corporates. Good corporates also tend to give and get a lot of value with Startups keeping an open mind.
To stay competitive, businesses need to innovate. It not necessarily needs to be new technologies being created, nor always excessive R&D or completely new innovation. Most likely it is about learning and combining, and reinventing the way we do our business. Look around other industries to gain new insights and ideas. One example: I was involved in the office automation industry where the hardware (copiers) were sold at a relatively low cost but the consumables were the main revenue earners. That model was gained from the razor and blade business model perhaps pioneered by Gillette in the past. So perhaps we can seek to “copy” some other industry business models to improve our current business model?
For more information about corporate innovation, feel free to contact us with your corporate innovation needs.
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