Name a business that is more than 100 years old. Not many – I am sure!
Name a business you know that has realised its potential. Not many – I am sure!
Why is this? Why are so few businesses that old and so few have realised their potential. Because there are many more like Kodak than there are like Apple. Very few businesses truly understand the power of innovation.
This is well proven by the number of business people who complain about the lack of government subsidies for innovation in Australia. While subsidies are great – innovation is justified by its very power to drive a business forward.
There are three main types of innovation:
Efficiency innovation strips costs out of the system and increases margins. Sustaining innovation extends the product life cycle and offers some level of competitive advantage without fundamental product change.
Disruptive innovation identifies the next generation of a product or service and changes the competitive rules all together. It is the driver of new ways of looking at and interacting with the world.
Apple under Steve Jobs was driven by disruptive innovation – the mouse, the Mac, computers a furniture, the i-pad, the i-phone, i-tunes and so much more.
Whilst this was happening IBM and the others were involved in sustaining and efficiency innovation.
Even Samsung has been built on efficiency and sustaining innovation – hence its recent decline in profitability following the launch of the iPhone 6. Having said this, there is evidence that the operations focused leaders of Apple today are much less adept at disruptive innovation.
The situation in Australia is worse still. Our investment in innovation is very low indeed. Our investment in disruptive innovation is pitifully low. Overall our investment in innovation is one of the lowest in the OECD, perhaps explaining why we hang on so tightly to old technologies.
There is a significant opportunity for Australian businesses to invest in disruptive innovation. At the very least this would involve:
- Recognising the different categories of innovation and funding disruptive innovation through the increased returns from efficiency innovation
- Using sustaining innovation the extent the product life cycle but not to sustain and develop the business
- Recognising that innovation is much more than subsidies and taxation write offs
- Creating within businesses a culture of change that encourages lateral thinking, provides resources and time for all levels of innovation
- Embracing and encouraging failure as a pathway towards greater success and ensuring there are in place systems to learn from mistakes
- Ensuring boards have an orientation towards lateral thinking and innovation and engages a management team with a similar orientation
- Adoptive a practise across the organisation of looking over the horizon to identify the needs and wants of tomorrow
- Adopting an approach that involves developing products for markets rather than looking for markets for products as so many Australian businesses do
Apple addressed all of these issues. Kodak did not. Most Australian businesses have not.
We are a very conservative country with very conservative people running our businesses.
We can and should have an Apple, Google and Microsoft in Australia, but we will have none of these until we embrace disruptive innovation.
We are a country built on conservative industries like mining and agriculture where almost all innovation is efficiency or sustaining.
We can become a much greater country embracing new technologies and employing many more people in smart industries if we can develop an orientation towards disruptive innovation.
Whilst Americans are saying WHY NOT to new ideas – Australians are still saying WHY. As a nation we just don’t get it and those businesses that do are moving ahead faster than the rest.
We live in a nation where business still thinks marketing is all about price and promotion, when it is increasingly about place (distribution) and product (innovation).
We have a plethora of average advertising agencies and nowhere near enough people working in innovation – and to be clear, creativity and innovation are not the same thing and advertising agencies are no at all innovative – no matter how creative they might be.
The work of a marketing person or advertising agency is made easier and the cost is substantially lower where the focus is on the product – and specifically innovation first.
Just a thought.
This issue will be discussed in detail on THE D. JOHN CARLSON NETWORK –www.djohncarlsonesq.com/publishing
John Carlson is a behavioural scientist, strategic planner and lateral thinker focusing on branding, marketing, communication, personal advancement, business development and behaviour management.