Corporate Dilemma: Current Business vs. Future Business

2008-07-22

It is not easy for the senior management team of an existing company to navigate the whitewater conditions of a dynamic marketplace. Everything seems to be constantly changing—products, technologies, competitors, customer needs, distribution channels, and so on. How should the company respond? Is it better to take action or wait for the market to settle down? Should the company stick with their current strategy or move to a new one?

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Service Innovation: Client-Driven Modes of Value Co-Creation

2008-07-21

Client-driven modes of value co-creation exemplify an unbalanced innovation context. In these situations, clients’ needs and expectations of service innovation exceed the service providers’ current offerings. Recognized dissatisfaction with current services gives service providers a strong incentive to listen to their clients. However, an excessively strong focus on current clients’ immediate needs may create myopic innovation activity. It may limit future business potential by reducing service scalability and reproducibility with other clients.

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Core Competence and Competitive Advantage

Some types of competitive advantage, such as those associated with the economics of scale and scope, are rooted in market positions. Others are rooted in business models; still others in the processes or competencies of organizations. Although the value of market positions and the relevance of business models can wax and wane, “tacit” competencies - internal processes - have been thought to be more enduring because they are harder to copy. Nevertheless, it turns out that competence residing in proprietary processes is also built upon temporary underpinnings.

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Partnership with Outside Innovative Entities as a Strategy to Stimulate Innovation in Large Corporations

The external strategy that stodgy companies have tried to employ is to acquire or purchase radical innovation. If innovations could not be bought, large companies tried to form alliances and hybrid ownership arrangements with innovators. Unfortunately, most mergers, acquisitions, JVs, and other kinds of external alliances have failed to generate an ongoing stream of commercial breakthroughs. The innovation-hungry company usually saw itself as acquiring a new product, rather than acquiring a new capability. Even when they realized that the radical innovation involved more than a specific product, they did not know how to learn about the capability. Too often, when this was the case, the acquisition or alliance created less, not more, innovation in the core business.

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Production Pressures: Creative Destruction

Once the petroleum companies recognize the customer-satisfying logic of what another power system can do, they will see that they have no more choice about working on an efficient, longlasting fuel (or some way of delivering present fuels without bothering the motorist) than the big food chains had a choice about going into the supermarket business or the vacuum tube companies had a choice about making semiconductors. For their own good, the oil firms will have to destroy their own highly profitable assets. No amount of wishful thinking can save them from the necessity of engaging in this form of “creative destruction.”

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The Characteristics of a Requirement Statement

Companies do not understand that to succeed at all these innovation strategies, two very different types of customer inputs are needed — in other words, they do not realize just how a “need” must be defined given the type of innovation initiative being pursued. Only when companies learn what needs are will they be able to consistently uncover hidden opportunities for growth through innovation. To make customer input useful to the entire company, it must possess these six characteristics.

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Innovation Begins with an Eye - Cross Pollinate

So many products and services have flaws that we start to assume that’s just the way things are. But if people are frustrated or confused by a product or service you offer, eventually they may be wooed away when a better product or service becomes available. At the very least, rather than creating positive buzz about your product, they will say nothing at all or complain about it. That’s why it’s critical that you continue to innovate and improve. And the best way to do that is to watch people use your products.

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