ISSUE 03 2014
INNOVATION
19
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nnovation is difficult for many CSPs for a number of different reasons. It involves numerous factors, such as a company’s culture, its attitudes to risk, its view of itself, its relationships with its customers, its leadership and how they communicate with their employees, its corporate ambitions, and the often complementary arrogance and complacency that come from being a major brand with a long history. In this article – an excerpt from my new book, Delivering the Digital Economy – we’ll explore some of the problems in this area and what the best strategies are to support it within your own company.
For a start, it’s not big versus small
The communications industry has begun to believe a myth that a company’s ability to innovate well is inversely proportional to its size – and that innovation can only come from hungry young companies, squatting in garages in Silicon Valley. So let’s start by first debunking that.
Size doesn’t matter and there are many truly innovative large companies out there. All you have to do is look at the annual Most Innovative Company awards that are regularly run by Forbes, Business Week or Fast Company and which show a healthy mix of companies ranging from the tiny to the global.
Additionally, excellent innovation doesn’t have to involve new products with more bells, whistles and buttons. In 2013, Amazon got into the top five in the Most Innovative Company list through innovations in logistics and shipping that allowed it to start offering same-day shipping to its customers. Innovating in processes, in staff, in marketing and in product manufacturing can be just as viable – and in many cases more valuable – for the enterprise as adding yet more features or launching a new device.
Google too innovates ceaselessly. It allocates 20 per cent of each of its engineer’s time to be spent on innovation, and has a long list of projects completed successfully or that are underway. Buried beneath this is a hard-nosed approach to innovation that closely mirrors some of the key elements of strategy for Amazon, Apple and Facebook: develop platforms that are able to enter and exploit adjacent industries and complement these with a parallel excellence in service and device design.
If you are either a small player in the market or just an aspiring newcomer, you’re likely to invest all your time and effort in developing an offering that’s going to be as disruptive as possible to the established order
Barriers to innovation There are different types of innovation and sometimes it’s hard to tell them apart. Clayton Christensen, the Harvard- based business guru, talks about two different types of innovation: ‘sustaining innovation’ is all about becoming better at what you already do, while ‘disruptive innovation’ involves creating entirely new industries or a new generation of an existing industry.
In general, sustaining innovation tends to be adopted by companies that are already at the top of their industry. They have a strong pool of existing customers, each of which expects better and better versions of the current product or service. These customers are an important source of revenue for the company and so the business case for sustaining investment in innovation is relatively easy to make, while the business case for truly disruptive innovation often takes a back seat.
Conversely, if you are either a small player in the market or just an aspiring newcomer, you’re likely to invest all your time and effort in developing an offering that’s going to be as disruptive as possible to the established order. Ideally, you need to create something that’s going to have a subversively disproportionate effect on the wider marketplace. This is certainly a riskier proposition, but necessary if you want to unseat the market leaders in the commercial equivalent of a political coup.
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