Wednesday, July 20, 2011

The Paradox of Driving Innovation

If a company wants to grow organically by driving new revenue streams, innovation will be key. Innovation, however, can be disruptive and difficult for a company and its employees to make the adjustment. Consider Apple Computer, a company whose business model was built around selling computers. If you can imagine, one day Steve Jobs decided that they were going to find a way to make the Walkman obsolete. To employees, this may have sounded absurd. How does a computer company compete with a Walkman?

In hindsight, Steve Jobs looks like a hero and everyone thinks that it was so easy. Yet, creating the I-pod required Apple to look at their target market, their technology and resources differently.

Asking people to completely change their perspective of their job and their target market usually requires employees to develop new skills and competencies. However, the dilemma is people generally do not want to leave their comfort zones. We are taught change is hard. In fact, some people will try to resist the change because they rely on the stability of their current position. In the beginning, innovation can be disruptive to the organization’s existing business model. Except, the same disruption allows for new revenue growth, job growth and career growth for existing employees. The I-pod for example, targeted an audience that was a completely different from Apple’s existing customer demographic. Instead of selling $1,500+ computers to creative advertising agencies, they were selling I-pods to thirteen year-olds. Without question, this move required a transformation of the way staff and management thought about customers and competitors.  

In general, transformation is not a walk in the park. For most people, innovation that causes transformation can look risky. In addition to having to learn new skills and competencies, people are often hesitant because of the fear of the project failing. In other cases, perhaps one of the biggest fears is the set of presuppositions employees have about new projects, “If I launch this new initiative and I don’t develop the necessary skills and competencies, will I still be relevant to the organization?”

It is imperative that leadership be able to guide employees through uncomfortable yet potentially rewarding circumstances. One good way is to hold a town forum in small groups or divisions and ask people their concerns and address them. Find out what people’s fears and concerns are as well as the changes that appear uncomfortable. That allows people to voice, be heard, and have an opportunity to contribute to the new initiative. Otherwise, people could feel like they are going down a dark alley and they have no control and have made no contribution to the outcome.

To survive, companies need to be able to work around the risks and threats posed by disruptive innovation. The market will always give you the power to be innovative. Once Apple had the I-pod, they turned it into a phone. As an additional consequence, computer sales are up. They continued diversifying even though the company was doing well. Whatever the situation may be the greatest risk to the company is often standing still. 

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