Many companies are very proud of their achievements, and usually with good reason. There are very few enterprises that have reached a strong market position with a profitable business through luck alone. Everybody likes to be associated with success, particularly if they really have made a contribution.
The challenge for successful companies is to keep the trend line moving in the right direction. This is usually done by a strategic mix of incremental innovation (renovation) with the existing products, extending existing products into new markets, and new products for existing markets.
Occasionally companies can become suppressed and blinded by delivering the existing strategy at the same time as incremental growth in every single quarterly earnings statement. They try to avoid upsetting the apparently successful trend line. This can lead to avoiding “risky” innovation.
But sometimes it’s much more risky to ignore or delay big innovation. What if your market is on the path to oblivion? There are many examples where markets and technologies take the legs out from underneath previously successful companies. Blockbusters. EMI. More recently in the UK, Clinton Cards, a nationwide chain of greeting card stores, have just gone into administration as their business switched to supermarkets and online cards. This wasn’t a sudden and rapid trend, but Clinton had no response other than to doggedly persist with the current business model.
Who wants to be another Kodak? For most of their life they were a great company with an iconic brand, fabulous products and financials to induce universal envy. And then complacency set in. I don’t claim to be an expert in the Kodak story, merely a reader and observer, but it seems they were unable to face the reality of the disappearance of the film market. They couldn’t face the loss of those juicy gross margins. They didn’t have the courage to cannibalize their own market, so other people just went ahead and did it for them.
In short, Kodak didn’t innovate. What’s that I hear you say? Kodak invented digital photography and had products in development way before competitors? Of course, but nothing hit the market until it was way too late; they had CREATED, they hadn’t INNOVATED. They became complacent and locked into a redundant business model, leaving them behind the curve instead of ahead of it.
That’s why complacency is the enemy of innovation, leading to some companies becoming a prisoner of their past. They succumb to the temptation to believe that their market will last forever; that competitors will never be able to take the number one position; that all they need is sustaining innovation for the mainstream business.
It’s an old business adage that only the paranoid survive. If you’re paranoid you’ll be watching competitors, both current and potential, very closely. You’ll be looking for early signs of market decline. You’ll be on the lookout for technologies that could either threaten your business or provide it with opportunities. You’ll have anticipated decline as well as seeking opportunity by investing in a portfolio of new market/product growth options.
So healthy paranoia is the friend of innovation. Complacency is the enemy – be ruthless in driving it out of your business.