Innovating in four dimensions.

The true price of market leadership

Since the start of lockdown, one of the drums I’ve been banging most frequently in all of my talks, seminars and articles, is the need for organisations to relentlessly innovate.

But what has become apparent, through the questions in those seminars and the feedback those articles have elicited, is that different people have very different interpretations of what innovation is, and of how well their organisations are set up to do it. So, let me break it down…

Innovation can be orientated internally or externally: an innovative process change for efficiency, or an innovative product for customers, it’s all good. And the degree of innovation can range from incremental to transformational: from continuous improvement to full-on market disruption. It’s all innovation.

If it helps, think of a two-by-two matrix: internal versus external on one axis and incremental through to transformational on the other. All four of the boxes on that chart are valid and valuable dimensions within the innovation space.

But they’re not all equal. Not remotely.

Fuji and Kodak regularly brought out new, improved types of photographic film, and both invested heavily in continual process improvements throughout their factories and supply chains. These were the innovation capabilities that drove both businesses for decades, but only one of them picked up on the digital wave - the other went out of business because they missed it.

And yet, despite their inequality, all four of those dimensions are important. To infer from the Kodak story that incremental improvement, whether of products or processes, is pointless, would be to miss the point.

Had Fuji failed in the film race, it wouldn’t have been around to ride the digital wave. It’s not a case of incremental or transformational, it’s both. It has to be if you want to lead in your market.

Incremental innovation is how we stay at the front of the pack while we watch for the “next big thing”. Which is why we need to be continually improving what we deliver, and how we deliver it, so we can stay in the game while we work on ideas that could change that game forever.

The danger comes when we focus all our innovation on the incremental, when we become so invested in improving how things are, that we stop thinking about how things could be.

Those constant tweaks to “make the boat go faster” are essential, but they will all become irrelevant once someone invents the airplane. And ideally, that someone will be you.

Apple will never stop continually improving its products, even while somewhere else in the same building, other Apple teams are working flat out to make those same products redundant. This is not wasted effort. It’s the price of market leadership.

So here is the question for you today. How do you intend to take and maintain leadership in your market?

Or to put it another way, how are you developing the capacity and desire among your people, not just to come up with the improvements we need for today, but at the same time, to imagine the revolution we could bring about tomorrow?