Innovation is moving faster than ever: Is your company keeping up?
You’d be hard-pressed to find a company that doesn’t want to own innovation in its space. The word innovation comes from the Latin novus, meaning “new,” and it’s about creating something new: a totally new product or a new way of doing something or thinking.
While the pace of invention itself may not be accelerating, according to The Brookings Institute, we are seeing the rapid acceleration of the time between invention and widespread implementation. That in turn makes the innovation process faster.
For example, measured against the steam engine, which took a full 80 years from invention to widespread adoption, electricity took 40 years for the same; information technology took 20 years and Artificial Intelligence — already underway — could take just 10 years.
The companies seizing those fast innovations are finding success faster as well. McKinsey & Company reported that the median age of a corporation on the S&P “Top 10” in 2000 was 85 years old. In 2010, it was 33. By 2037, they say it will be 12 years. Similarly, Inc. magazine reported in 2016 that half of the S&P 500 would be replaced by 2026, with an average life expectancy overall of 14 years. And the pandemic is accelerating that pace even more.
The canary in the coal mine might have been the traditional media industry — an area I know very well, having gotten my first broadcast job at age 17 in the early ‘80s.
When I started my first television job with Gannett in 1989, Gannett ranked No. 134 on the Fortune 500 and was valued at about $6 billion. When I left in 2009, it had fallen to No. 371 and was valued at less than 1/10th of its 1989 value. Today, Tegna (Gannett’s broadcast spinoff) and Gannett have a combined market value of $4.85 billion — a 63% reduction in market value over 32 years when adjusted for inflation. If only Gannett had invented YouTube!
Broadcasters were fixated on — and very good at figuring out — how to manipulate ratings in 5-minute increments. But they missed the bigger customer reality: There would soon be no logical argument for a 5 o’clock news. They were approaching innovation as if it was about them, the media companies. And they were missing the larger point that innovation should ALWAYS be about the customer.
Leading with a Customer-First Approach
Customers can lead you to the next innovation by helping you understand what’s not quite right with the status quo, and specifically helping you understand what they need, what are their challenges? “Framing the challenge so that the focus is both external (on customers) and on the desired end (the creation of value for those customers) dramatically increases the chances of success,” wrote Jack Springman in the Harvard Business Review — 10 years ago. It’s every bit as true today!
But innovating with your customers in mind is not the same as expecting them to have the answers. “For innovation to work, you have to understand that the customer is NOT always right, and that’s because they simply don’t have the insight or necessary context to describe a better future,” says Chuck Svoboda, Innovator-in-Residence at Marquette University. “A customer can’t ask for something that they don’t yet know is possible.” That part is up to you.
Finally, success comes in owning your innovation strategy. Senior leadership must define: the type of innovation (incremental v. fast follower v. radical); the people dedicated to innovation; their roles; and how your strategy is tethered to each corporate vehicle. And there need to be clear objectives that are measured regularly — as well as consistent funding. Because if your innovation work is subject to quarterly pullbacks to hit other numbers, you really should re-think whether you have the right innovation strategy.
Your success is predicated on “being real,” certainly in making a financial commitment but also by owning up to how long it will take to rationally get from where you are to where you want to be.
Rick Kupchella is CEO and Founder of the Informed Engagement Network. This article has been adapted from a presentation to the 70th Annual 3M Tech Forum.