In the ever-evolving landscape of the highly technological world we live in, some would argue that competitive advantages no longer exist, at least not for a prolonged period of time. But is this true? What if your competitive advantage is in fact not just a good or service, but your ability to be agile and adaptive to changes? What if your competitive advantage is to be innovative and cause change rather than just wait to be responsive to it? Well, that just might be the greatest competitive advantage of them all.
According to a McKinsey&Company article by Marc de Jong, Nathan Marston, and Erik Roth, “It’s no secret: innovation is difficult for well-established companies. By and large, they are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses.”
We are all pretty familiar with the companies who weren’t able to be innovative, and were stuck in their old ways. Companies like; Circuit City, Radio Shack, Blockbuster and Borders demonstrated their inability to change and thus was their ultimate downfall. But what about the companies who have proven they can be innovative?
Xerox is a household name, and the brand’s name even became a verb for the services it offered, “Can you Xerox this for me please?” According to a CBS Money Watch article, “Investors thought Xerox was a one-trick pony with little else to offer besides a copy machine. But now Xerox is on its way to becoming a business services company a la IBM (IBM), and most of its revenue now comes from service deals. Shares have risen 25 percent since February”, says article author Kim Peterson.
Amazon is another famous example. Amazon was founded on the premise of being an online bookstore, but very soon added movies, music, electronics, computer software and many other consumer goods. Amazon’s IPO took place in May of 1997 at $18 a share. The company survived the dot com bubble and now trades at over $200 per share and is #6 on Forbes’ most innovative companies list.
So how can other companies mirror the ones above to thrive utilizing innovation?
According to the McKinsey&Company article, “That question formed the core of a multiyear study comprising in-depth interviews, workshops, and surveys of more than 2,500 executives in over 300 companies, including both performance leaders and laggards, in a broad set of industries and countries (Exhibit 1). What we found were a set of eight essential attributes that are present, either in part or in full, at every big company that’s a high performer in product, process, or business-model innovation.”
These 8 essential attributes include:
- “Aspire – Do you regard innovation-led growth as critical, and do you have cascaded targets that reflect this?”
- “Choose – Do you invest in coherent, time- and risk-balanced portfolio of initiatives with sufficient resources to win?”
- “Discover – Do you have differentiated business, market, and technology insights that translate into winning value propositions”
- “Evolve – Do you create new business models that provide defensible and scalable profit sources?”
- “Accelerate – Do you beat the competition by developing and launching innovations quickly and effectively?”
- “Scale – Do you launch innovations at the right scale in the relevant markets and segments?”
- “Extend – Do you win by creating and capitalizing on external networks?”
- “Mobilize – Are your people motivated, rewarded and organized to innovate repeatedly?”
Agility is part of an Adaptive Mindset. This ability to create positive change is the flipside of Resiliency, which is our ability to productively deal with change forced upon us. TRACOM’s Adaptive Mindset assessments and courses can help individuals and organizations develop these skills.
Read the McKinsey&Company article “The Eight Essentials of Innovation” to learn more about the study