Good to Great and then the End

Dears,

When I look around and see the once great companies sliding and they hardly have nothing to sustain, it shows how important is to keep up the Innovation quotient in an organization. The inspiration for this article has come from an interesting hypothesis by name Technology mudslide. What makes an individual or organization a great innovator? If you are at Harvard, it’s not a single person that makes you better, it’s the System.  The innovation is a function of a model which enables you to dream, imagine, feel excited and be passionate about your idea. The organization failed to innovate when the people in the top management distance themselves far away from Innovation (R&D). The top guns should have a direct link to the people behind new ideas and innovation. Any organization no matter how small or prosaic its business can make the grassroots transformation if it really wants to. The best creating thinking happens on a company’s front lines. The next level leaders are the Innovation catalysts and the sphere around them watching them grow and achieve are the Innovation Sponsors/Leaders.

There are 2 types of innovation paths Sustained and Disruptive innovations. The sustained innovations are the improvements to the current technology that continuous to improve the service/product performance. Disruptive innovation is challenging the current service /product performance and bound to create new uses, new markets and disrupts the current technology. Today every organization requires continuous innovation to survive.

Nokia has sold three million units of its Lumina phone since October 2011. That may sound quite good, but over the same period Apple sold over 72 million iPhones and Nokia is going through its 4.9 billion euros cash mountain at a pretty scary pace. It blew 2.1 billion euros over the last five quarters and few weeks back announced 10,000 job cuts, but that may well be insufficient.

All is not lost. There is talk of a new operating system called Tizen that involves Nokia technology that may rival Android. But the truth is that Nokia suffers from what’s called innovators’ dilemma. To put it in other terms, it is what Clayton M Christensen called the “technology mudslide hypothesis.” In his model, established companies in a position of market dominance reinforce their position of strength through their specialization, but when a new so-called disruptive technology emerges, they miss it. They get relegated to backwaters or go out of business.

Christensen himself took the disc drive industry as an example, and looked at every major change – for example from 14 inch disk drives used for mainframes to 8 inch   inches for mini computers, 5.25 inches with the emergence of  PCs and then 3.5 inch as laptops were developed. He showed that with the emergence of a new disc drive standard, there was a change in market leadership; previously dominant players started doing impersonations.

What is especially interesting about the Christensen study is that the companies themselves were often aware of the danger, researched the new burgeoning technology, but their existent client base showed no interest, urged them to stick to what they already knew.Nokia faces in its own innovators’ dilemma, but so too do the other Industry giants.

After all, they do say that “mud sticks” but for how long?

At its core of this hypothesis is about how successful, well-led companies carefully pay attention to what customers need. These same companies invest heavily in new technologies, delivering more performance to those clients but will still lose their market leadership suddenly.

This can happen when disruptive technologies enter the arena. Most technologies improve the performance of existing products in relation to the criteria which existing customers have always used. These technologies are called sustaining technologies. Whereas, disruptive technologies do something different. They create a completely new value proposition. This will often entail worse product performance per se, but improved product performance in relation to new criteria; for example:

• smaller ( handy )
• more user friendly (convergence of phones and video streaming cameras)
• Cheaper (storage devices).

That is to say…

1. Customers and investors will dictate their resource allocation; i.e. middle managers will tend not to invest in technologies that are not directly appreciated by significant clients because they will not be able to get the quick ROI that investors require.

2. Small markets cannot fulfill the growth need of large companies. Bigger, more successful companies will look at smaller niche and emerging markets (full of those early adopters and pragmatists) as simply not large enough to fulfill growth requirements.

3. Markets that do not exist cannot be analyzed. Well-governed businesses will discount such opportunities for the risk of likely failure.

4. Technology supply does not always equal the market demand. Due to its speed, technological progress often overshoots customer demand. This opens the door to products today that underperform the market, but which might meet customer demand tomorrow, particularly when delivered as a new value proposition.

Success breeds failure &   Innovation is the oxygen that keeps the Organization growing.

Your P&C

DC*