“Innovation” has become one of the hottest buzzwords in business. Everybody is talking about it and everyone is doing it. The term gets thrown around so much these days that it’s become quite easy to dismiss its importance to the survival of any company, large corporations in particular.
Even companies that actively engage in efforts to innovate their corporate strategy can sometimes end up with results that are way too incremental to match the rapidly changing demands of their client base.
Today’s business ecosystem is moving faster than it ever has, making it more important to adapt, evolve and grow along with it. Corporate innovation is simply a MUST.
So the real question here is: How can you tell if your efforts to disrupt and innovate are working?
In this article, I’ll tell you how to identify the 5 key warning signs that show you need to seriously step up your corporate innovation game.
But first, a little bit of background…
So, what is corporate innovation and why is it important?
Simply put, corporate innovation can be described as a deliberate and ongoing effort to foster out-of-the-box thinking within a corporate setting. The goal is not just to build upon existing processes, but to shatter them completely and make room for fresh new schemas that are more in tune with the rapidly changing markets.
There’s a quote by John F. Kennedy that really captures the need for constant innovation:
“There is nothing as certain and unchanging as uncertainty and change”
Corporations have to be proactive and meet the in-coming market shifts head-on. The bottom line is, you can’t expect to dominate a whole new set of challenges with the same strategies that did the job 5 or even 3 years ago.
That’s why corporate innovation is so important…
5 signs that it’s time to innovate and accelerate growth
Business strategies don’t become outdated overnight. It’s a long and gradual process that’s difficult to recognize, in many cases until it’s too late.
Here are 5 common signs that I’ve been able to identify during the course of my work with over 200 corporations during the past few years. Any one of these signs is a sure indicator that disruptive innovation is urgently needed and that a dedicated team should be assigned to work on it.
1. You are losing touch with the younger generations
Millennials and the often elusive generation Z have become quite a dominating force in today’s markets. They’re entering the workforce and becoming more significant as consumers.
The problem is they have a whole different set of values, demands, and needs than previous generations. This means that the same old products, services, and marketing techniques will no longer work.
In order to stay competitive, corporations need to find new and creative ways to re-invent themselves and change their image to match the changing times.
So, how can you tell if you’re losing touch with younger clients?
These are the symptoms:
- A loyal, but aging client base;
- Difficulty attracting clients younger than 30;
- A small younger demographic, introduced to your brand through their parents;
- Trouble marketing your brand to newer generations (e.g. Gen Z).
Want to know more about Gen Z, your customer of tomorrow? Check this article!
2. Your product or service is becoming a commodity
Many corporations started off with a product or service that was somehow unique in the market, making it attractive to a large client base.
The problem is that as the years go by, competitors will find ways to cash in on that idea and duplicate it with a few additional bells and whistles. Businesses that fail to evolve from their original product or service, can find themselves losing market share and becoming just another provider in a sea of similar companies.
These are the symptoms:
- Your product is no longer unique and there are plenty of look-alikes available;
- You’re struggling to compete in a saturated market;
- Branding and marketing are the only ways to stand out;
- Your client base is no longer brand loyal because they perceive no difference between you and other industry players.
3. Your business model is outdated
Many corporations make the mistake of focusing their innovation efforts solely on products and services. But that’s only part of the innovation journey.
The more profound challenge for most companies today is trying to envision and apply a new business model that answers a very fundamental question: How can we create new and disruptive customer value?
Here’s how can you tell if your business model is outdated:
- Your once invincible business model is no longer as effective, resulting in decreased profit margins and disinterested stakeholders;
- New players in your industry have come up with creative strategies to move in on your client base;
- New and innovative business models outside your industry are causing your once satisfied client base to challenge your way of working.
4. Your market is under attack by startup disruptors
It’s inevitable. If you have a winning product that’s doing well on the market, it won’t be long before you have competitors trying to one-up you and get in on the action.
If things are REALLY good, you’ll even begin to notice a few startup disruptors moving in on your turf by building on your winning idea and pairing it up with a revolutionary, new business model (e.g. Netflix vs Blockbuster or Airbnb vs Marriott).
So, how can you tell if your market is under attack by startup disruptors?
- New startups are stealing away huge chunks of your market;
- New startups are building a business model on top of your company, gaining significant market traction over you and your competitors;
- New startups are able to deliver what you deliver, but more efficiently, in a way that is more customer-focused, and at a much cheaper price.
5. Your market boundaries are blending with other markets
Technological advances are radically transforming the way we do business by enabling companies to expand and evolve past their traditional scope of services.
Take Amazon for example, which started out in the ’90s as an online bookstore, but quickly expanded to compete in other industries (e.g. Amazon Prime Video vs Netflix, Amazon Fresh vs traditional supermarkets, Amazon Echo vs Apple Pod and Google Home, etc.).
Many of the companies currently competing with Amazon are struggling to maintain their footing despite their traditionally dominant position in the industry (e.g. Blue Apron, UPS, FedEx, Walgreens, Etsy, Foot Locker, etc.).
Now imagine what happens when a handful of startup disruptors like Amazon start moving in on your industry.
These are the symptoms:
- You notice players from other industries dabbling in your market. Think about how Apple has suddenly moved into the banking industry with Apple Pay;
- Your product or service has become insufficient to serve broader customer demands. Think about how the smart home industry has evolved from offering mostly smart locks and light switches and how it has expanded since then to become a completely different ball game.
The 5 warning signs described in this article are just some of the more common and significant ones I’ve been able to identify during my work with various corporations, but of course, there are many more.
Here are a few key takeaways:
- If you recognize any of these symptoms in your company, my advice is to act quickly towards finding out what your weak points are and making the needed improvements.
- Make good use of the resources at your disposal to kickstart your very own innovation projects, e.g. research & development, internal corporate innovation teams, corporate innovation labs, and external accelerator programs.
- Don’t make the mistake of prioritizing innovation only after things start going south in terms of lost profits and market share. If you wait too long, your efforts might not pay off in time to make a comeback.
In other words, the best time to start innovating is now.