In Innovation

Disruption and the need for continuous innovation.

There is often a sense of outrage from mature businesses when new competitors arrive. Upstarts usually bring a lack of history, no respect for the incumbents and a flippant disregard for those too slow to move. So how do you cope when YOUR business has an Uber start right next door? How do you cope with disruption?

Technical problems encountered in the 2016 Australian Census dominated industry press, with claims of poor testing and over-priced suppliers. Multinational tech firms were dragged through the mud, and government was pilloried for a lack of competence.

Census pic from news.com.au

Picture source: news.com.au

In the midst of this process, an enterprising trio of university students built their own version of the Census system they claimed to have the same functionality, MUCH better performance, finished in just one weekend, and built for less than $500. Compared with the rumoured $9M that was expended by ABS on their troubled system, it was a very popular news story, and it made the suppliers and government look foolish.

For industries with complex operational and regulatory environments or a mature product line, these stories are common. An upstart competitor with no track record, no overheads and no credibility creates an alternative to the established products that captures the interest of customers. Even if the alternative isn’t as good, it brings into question the whole structure around the status quo. Disruption happens right here.

There is almost always a long series of decisions that precedes a market disruption. An incumbent too timid to touch the cash cow for the business in case of damage, the dismissal of new entrants as being both inexperienced and limited in function, and an insular view that history is the best predictor of future sales.

Companies that can stay at the forefront of their industries work very hard to stay there. Continuous innovation is the key. The best time to compete is before your opposition can even see that there is an opportunity.

In particular, the voice of the customer must become the strategic windvane for product development. When product managers become focused on just adding 2% more to last year’s product to sell it anew this year, customers will quickly seek alternatives when the services decline.

Vibrant businesses generally have a strong innovation function that allows new ideas to quickly germinate and flourish. A minimal viable product, trials with small groups of customers and a strategy to move from low levels of technical readiness to “flight proven” are essential in keeping a mature business at the forefront of the market.

It is certainly possible to lead a fiercely competitive sector for a long time; companies such as Nike and Disney are proof that established brands can keep learning new tricks. But these businesses work very hard to keep their products moving, and to stay ahead of their customers’ expectations.

There is a perfect quote from Eric Hoffer that captures this theme:

“In times of change, learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.”

Learn to change your business and change your future.

In the next in our innovation series, we will consider the challenge of disrupting and innovating in government. The expectations of citizens are being pushed ever higher by online business; how can government evolve to deliver better services?

Connect with the author, Gil Carter, Partner, Cogility.