Join Anil Gupta for an in-depth discussion in this video Competing through innovation, part of Developing a Competitive Strategy.
- Apple, Pixar, Google, 3M, P and G, are some of the companies with a track record of ongoing innovation spanning years and sometimes decades. Think about Apple under Steve Jobs. Jobs singlehandedly transformed several industries in quick succession, PCs, music selling and distribution, mobile communications, and video games to name just a few. Innovation refers to the creation of a technology a product, a service, a process, or even an entire business model that is new and potentially superior.
I say potentially superior because the value of an innovation may not become evident until years later. Take Corning's Gorilla Glass. Corning had invented the tough, extremely scratch resistant glass in the 1960s. However, decades later it was only when Steve Jobs came looking for such a glass for the iPhone that this innovation found a valuable use. Opportunities for innovation exist in almost anything and everything that a company does.
Look at, for example, genetic engineering, a technological innovation, Apple's iPhone, a product innovation, Facebook, a service innovation, Toyota's lean manufacturing, a process innovation, or Amazon's e-commerce, a business model innovation. By definition, innovation gives the company a first mover advantage, sometimes this can become long lasting and durable advantage. Examples would be Facebook, Twitter, and Toyota.
Sometimes however, the innovator is forced to seed ground to a fast follower. Netscape, which launched the world's first commercial web browser around 1993 is a perfect example. Netscape singlehandedly launched the internet revolution, however by 2000, it was Microsoft's Internet Explorer which dominated the browser market. Navigator had been relegated to history.
Whether or not first-mover advantage becomes long lasting depends on a number of factors: Can the innovation be patented? If not, how easy or difficult is it to copy? What complementary strengths do the innovator and the fast-follower possess? Last but not least, does the innovator continue to innovate further or become complacent and rest on past laurels? How does a company build innovation advantage? The starting point is for the CEO to promote an ethos that says think different.
However, mere talk can never create a company that excels at innovation. Top leadership also needs to provide people the requisite freedom and the resources to experiment. Since many experiments will, by definition, fail, top leadership also needs to accept that asking for and rewarding only those experiments which succeed is the same thing as basically prohibiting experimentation.
Finally, top leadership needs to put in place systems and processes whereby potentially valuable innovations are recognized, supported, and scaled up. Within existing companies, innovation often disrupts the power structure. Thus, resistance from those whose future is tied to the status quo can often be fatal to the recognition and scaling up of innovations.
Google's approach to nurturing innovations provides valuable lessons for most companies. For much of the company's history, Google's leaders have followed an 80 20 rule, whereby engineers are expected to spend 80 percent of their time on well-defined tasks, but 20 percent of the time on projects of their own choosing. If the engineer can entice other colleagues to also use their 20 percent slack time to join his or her team, they have the ability to create a new company within the company.
In addition, Sergey Brin, one of the company's cofounders, runs Google X, a skunk works located away from the main campus to pursue radical innovations such as driverless cars and Google Glass. Now, analyze your own company's culture. Does your company have a culture that recognizes, supports, and scales up innovation? What can you do to remove the bottlenecks and become far more innovative than you currently are?
Skill Level Appropriate for all
Q: This course was updated on 08/19/2015. What changed?
A: Due to member demand, we've added three movies to take you even further into competitive strategy: Competing through disruption, Managing complementors, and Understanding industry dynamics