Knowing what to Innovate
most innovative companies. And, I think this is just the moment to talk about how people and enterprises can learn all those skills to improve their own "innovator's DNA".
What stands out is that enterprises innovate differently at different stages of their life cycle. Early stage companies typically bet on a winning product idea to gain both entry and visibility in the market. Accordingly, their focus is on innovating product design and development, rather than on improving operations, marketing or processes. This is not to say that early stage companies don't care to innovate on "peripheral activities". There are some - like Simple for example, which puts intuitively designed web interface on top of the back-end of traditional banks to create a simple user experience - the value proposition is essentially a better alternative to an existing way of doing something. But more startups are upstarts when it comes to innovation, seeking to upset, to change status quo, and to up the ante. That's why a two year old company like Square has the audacity to try to radically disrupt a payment ecosystem dominated by giants such as Visa and MasterCard, with a smartphone plug in card reader hardware that allows anyone to accept credit-card payments.
On the other hand, established companies, which already have a blockbuster product accepted by the market, look to differentiate their offering from lookalikes through innovative service delivery and consumer engagement. Consider the case of leading logistics company, UPS, which recently introduced a unique service called MyChoice to resolve a pet peeve - the missed delivery. Customers signing up for MyChoice are notified about an impending delivery a day in advance, and for an additional fee, can reschedule or reroute it as per their convenience.
What's also apparent is that the innovation agendas of startups and established companies are driven by very different things. Think back to the number of startups inspired by a bad experience - what their founders did was to make a statement against what they thought was an unacceptable status quo. That they altered the industry dynamic in doing so was a bonus. The Occupy Movement is one example of this, whether you believe in its ideals or not. That it's not a commercial enterprise doesn't matter; it still embodies all the attributes of a classic disruptive innovator - transparent, socially and technologically savvy, agile, and an absolute game changer. In contrast, large or steady state organizations - which are usually the source of the status quo - are driven to innovate by the need to accelerate growth and fend off competitive threat.
Then there's the question of risk appetite. Startup companies, with nothing to lose, are more gung ho about risky maneuvers; but there's no way that an established firm will find it easy to throw caution to the winds. This scenario has played out time and again (with very few exceptions) in high-stakes innovation, such as legacy transformation, where the smaller institutions occasionally take the high risk-high reward big bang approach, but the leaders invariably transform in increments.
No matter what the approach to innovation, the role of innovation as a strategic priority is growing increasingly stronger - for both startup and veteran firms.