More companies fail due to lack of innovation, more will follow.
It’s a sad and cold week for the employees of Toys R Us and Maplin. As the administrators are called in it is worth reflecting on the failure of these businesses to see if lessons can be learned elsewhere. BBC news notes that Toys R Us lacked imagination and a strong digital presence in their article: http://www.bbc.co.uk/news/business-43210854 The reality of the situation is that this is a classic case of failure to innovate, which reminds me of the stark phrase ‘Innovate or die’. This was a failure to look at the business in relation to the market, identify improvements and opportunities and dedicate financial resources to testing and implementing those ideas. Had the businesses invested heavily into innovation in its online presence, brand improvement and customer experience we might be looking at a different story in the news. Toys R Us and Maplin will not be isolated cases, we are living in times of rapid change. New technology such as blockchain, artificial intelligence, robotics, big data, the internet of things and digital augmentation will change customer preferences and markets rapidly in the coming years. Now, more than ever, it is essential for organisations to innovate to create new and sustainable business models. Organisations that fail to innovate will fall out of favour and quickly lose market share.
Embed, don’t isolate your innovation
Attempting to push through innovation by implementing departmentalised innovation teams or separate start-up accelerator businesses that are isolated from the core business is not the answer to innovation and business success. Innovation must be deeply embedded into the culture of organisations and every employee must recognise the value of it. This can only be achieved through a shared understanding of what we mean by innovation and having tangible goals that ensure innovation outcomes are realised. It’s simply not good enough to give innovation lip service without actually doing much to embrace risk and drive business change.
Focus on customer experience and embrace risk
The Lean/six sigma approach to innovation does not go far enough to create sustainable businesses. You can cut costs and improve quality all you want, but if you aren’t selling an experience that customers love, you will quickly be usurped by businesses that are. While it is essential to keep control of costs and quality, it is markedly more important to continually reinvent the business to keep pace with market changes. This requires speculative investment and a culture that embraces risk.
Some questions to consider
As you consider your own businesses in relation to these recent failures some questions that you might consider are:
– Are you adding value to your customers and offering them an experience rather than a product or service?
– Are you looking at how technologies such as blockchain, artificial intelligence and the internet of things (IoT) will impact your business in the future?
– Is your entire workforce educated and informed about innovation and do they understand what is expected of them?
– Are you prepared to accept the failure of some projects in the search for new ways of doing things?
– Who are your unforeseen competitors; those new entrants that will revolutionise or reinvent the market?
Market conditions are likely to get more difficult before they get easier so perhaps now is a good time to re-evaluate your approach to innovation, before it’s too late.
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