How Organizations Innovate Themselves Straight Into Oblivion!
A Whole Lot of ‘Noise’?
There are a lot of business organizations in the world – some estimate 500 million or more. They all provide some manner of product or service that makes our world work the way it does today.
Nearly every one of these – based on our encounters with all shapes, sizes, and flavors of them – have some effort in place to innovate. There is without question no shortage of work going on these days in innovation. Everywhere we turn, organizations are working very, very hard to come up with their next great innovation. We see it and hear about it incessantly all around us – everyone is talking about innovation in one form or another.
But is it just a lot of noise? Are these efforts truly producing the long-term impact that business organizations need?
The answer in many cases is “no… they're not.”
A Shortfall in the Right Types of Innovation
The reason these efforts are not producing the long-term impacts they need to is because – while there is no shortage of innovation happening – there is in fact a dire shortage of properly-focused innovation happening.
What this produces is business organizations who think they are innovative – and in fact on some level are innovative – but which still fail to pass the test of long-term resilience in their markets. Lurking just beneath the surface is a reality these organizations fail to attune to… the reality of imminent structural market change… bends in the road… tsunamis… the sorts of change that left Blockbuster and RIM wondering what hit them.
What drives this shortage of proper focus is the lack of a well-considered innovation strategy – one that balances near-term, mid-term, and long-term efforts, including the environmental scanning and strategic foresight needed to recognize when major market shifts are imminent and how they must be navigated. Given the pace of change at this point in our history, not having such an innovation strategy with these listening posts in place is unfortunately a very irresponsible approach to business.
What ultimately happens in these cases is that we end up with organizations like Kodak producing the world's most innovative film, when film photography ceases to be relevant. Or Sony producing the world's most innovative portable cassette and CD players when cassettes and CDs cease to be relevant. Or even organizations like Segway producing the world's most innovative upright two-wheeled personal mobility device when such devices were never even relevant in the first place. Once the automobile took hold, it didn't matter how innovative your buggy whip was, because it was irrelevant… no one cared anymore; just like no one cares anymore how innovative your typewriter or desktop computer is. The world has moved on. And no matter what technology we are dealing with, the world will continue to move on. It will never sit still again.
Why Business Leaders Let This Happen
Looking back onto the business, we see this happens because business organizations – if they are even truly trying to innovate – are usually placing all of their focus, efforts, and investments into a purely Horizon 1 ‘here and now’ strategy. Maybe, if they are somewhat good, they have one or two Horizon 2 efforts in place. But there is no clear focus on the future beyond tomorrow… on Horizon 3. In other words, they really do not have a viable long-term innovation strategy that focuses them on where they need to be going today, tomorrow, and the day after tomorrow. What then happens is that the things they are working on end up being quite innovative in and of themselves, and yet at the same time quickly become irrelevant.
This is when organizations innovate themselves straight into oblivion, never to be remembered again.
Which begs a very prescient question… “Why do business leaders let this happen?” Why do they seem to be ‘asleep at the wheel’?
To pull back the covers a bit and reveal an answer to that, we like to ask executives this question… “What are you addicted to?” Every business leader is addicted to something – some favorite flavor of business result. In these cases, it is usually because they are addicted to short-term profit maximization. And thus all of their efforts end up focusing on profit expansion – cost-cutting, economies of scale, supply-chain squeezing, and so on. None or few of their efforts have anything to do with nascent future opportunities.
The Win Goes to The Courageous
It takes a brave business leader, therefore, to break out of that cycle of addiction and instead learn to become addicted to ongoing relevance and long-term resilience… to real market leadership. That's when the tide begins to turn and things start to come into focus. That is when the organization starts looking well out into the future to figure out not only how it will navigate the imminent structural market changes that someone else is plotting, but rather how it can become the market-driver who actually brings about these changes.
While a long-term focus like this can admittedly be the land of dreaming and imagining (imagining what an ideal future state might look like) – the land of moonshots and 10Xs – it is precisely these forward-looking, future-focused strategies that enable organizations to not only navigate the future, but to actually drive it in an agile and responsive manner. Without such a focus, organizations are likely to innovate directly into oblivion, making better buggy whips for the next hundred years (or not).
So Is My Organization Innovative?
Going back to the original premise then, the truth of whether or not an organization is ‘innovative’ can become a bit complex. There are a lot of organizations who believe themselves to be innovative, and who in the context of Horizon 1 and maybe Horizon 2 are innovative, but who in the context of Horizon 3 are actually woefully non-innovative. All they are asking themselves is how they can do better what they already do. They are not asking themselves the question of whether what they currently do will even be relevant ten, twenty, or thirty years from now. When that is the case, there is a really big innovation problem that needs to be fixed, and fixed sooner rather than later.
Finally, and ironically, the opposite problem often happens with new business ventures. They have a very strong future-focused Horizon 3 strategy, but no viable Horizon 1 or Horizon 2 strategy to get them from here to there. Which is precisely why their only lifeline is to be propped up by outside venture capital, in the hopes that the future will come fast enough that their strategy becomes viable and profitable before they run out of runway. Sometimes it does, and sometimes it doesn't, but short of very eager investors willing to continue pumping up each round of growth (however small), this too can be a risky proposition. While the ratio is unknown, it is very likely that as many new business ventures die this death as established businesses die the death of irrelevance.
Getting This Right — The Full-Horizon Growth Strategy
The answer, therefore, lies in what we at Strategy X call full-horizon growth strategies – viable strategies that span the full horizon of an organization's present and future.
As has been stated so often… the future belongs to those who create it. This is very true – regardless of industry. But if our innovation strategies are not aligned to creating the futures that our organizations need – and if they are not properly balanced to capitalize on today, tomorrow, and the day after tomorrow – then we will certainly never own those futures. We will simply innovate ourselves straight into oblivion – never, ever to be remembered again. Now is the time for organizations to commit to themselves that they will never let this happen!
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