Innovation is essential, like it or not. You need to be in the business of innovation. The most successful businesses transform what they do in order to achieve domination over the decades.
WiPro started as a vegetable oil business and today stands as an outstanding 8 billion IT company. We all know Amazon’s story with selling books online not to mention the story of Apple. The most successful brands innovate, pivot, and shift in order to keep succeeding year after year after year. They identify strategic opportunities and then focus their efforts on innovating toward those opportunities.
Time, value and people
While the first order for any business is to relentlessly improve the current offering, it’s also true that at some point the returns from one business will plateau and drop. To survive, the business must reinvent itself in some way and get on board with the next curve of value generation.
I would say that in any business it’s easier to cut off expenses than creating a new future P/L. Creating new and innovation is also related to company culture.
Culture that is open to new generations, diversity and thinkers outside the box as we Finns call them “hankala tyyppi” aka unwieldy persons – the ones that usually take companies forward and challenge “status quo” but might not be the ones that are “easy” to get in line.
Innovation on products & services
Whether you believe the creation of new ideas, products or processes that cause significant leaps forward happens just through “this is it” moments, or whether you think innovation is achieved as a one-time project or special initiative, you’re so wrong. In short, innovation is the result of a well-thought operating model more than the product of that “culture of innovation” that has become a buzzword everywhere – as useful as such a culture may be once the proper model has been set in place. One way of looking innovation with business glasses on is Ansoff Matrix if your business is around products.
Focus your efforts – Case Amazon
I thought breaking down product development of Amazon would help you to understand how and where innovate using easily understandable matrix. The Ansoff Matrix is a classic strategic planning tool that helps devise and map growth initiatives. The vertical axison of the matrix represents our markets and the horizontalour products & services. Each sector corresponds to a different product-market strategy, and risk increases as we progress along each of our axes.
- When using our existing offerings in our existing markets, we’re pursuing a Market Penetration strategy.
- When using our existing offerings in a market that we’re not presently in, we’re pursuing a Market Development strategy.
- When using new offerings in our existing markets, we’re pursuing a Product Development strategy.
- When presenting new offerings in a market that we’re not presently in, we’re pursuing a Diversification strategy.
- In today’s competitive environment, we’re increasingly moving beyond products and markets that are new to our own organization and therefore need to be “developed” to ones that are new to the world and need to be “innovated”. We move beyond Market Development to Market Innovation, and beyond Product Development to Product Innovation. It also gives us Advanced Diversification, where we’re combining both Development and Innovation, and outright Industry Disruption, where we’re innovating deeply on both market and offering.
Amazon is known for its aggressive and innovation-heavy growth strategy. Amazon didn’t simply diversify beyond selling books to being “the everything store” – they went into digital media, with eBooks, streaming music and streaming video. They went into consumer electronics, with the Kindle Fire, the Fire Phone, the Echo, Tap, Dot, Dash and Dash Button. They went into logistics—hosting other businesses within their own warehouses and distribution networks. They developed an excellence in IT, and later launched Amazon Web Services, turning another core competency into a service offering.