Platt Perspective on Business and Technology

Balancing a focus on your competition with one on your innovation 4: building a balanced innovation approach into ongoing operations

Posted in strategy and planning by Timothy Platt on September 21, 2013

This is my fourth posting in a short series on understanding the nature and scale of change, here very specifically focusing on the nature and quality of innovation (see Business Strategy and Operations – 3, postings 422 and loosely following for Parts 1-3.)

I began explicitly discussing the strategic side of building and running a business to be more innovatively competitive in Part3, where I framed my presentation in terms of the marketplace and competitive contexts that a business operates in. And my goal there was to at least briefly outline some of the issues that would go into determining the right blend of the three basic categories of innovation that would be pursued: cosmetic innovative change, more genuinely significant evolutionary innovation, and disruptive and market changing innovation, couching that in terms of risks and costs, and benefits and profit potentials.

My goal for this posting is to at least to begin a process of operationalizing that, and the best way that I know of for doing so, is to plan and develop in terms of complete business systems, and certainly when preexisting legacy systems are not an issue and there is little if anything in place that would simply have to be accommodated and developed from. I assume that here, though I will challenge that assumption in my next series installment where I will add in legacy systems and processes, and at least begin to address the issues involved when evolving out of or more disruptively breaking away from them. But as stated above, as a simplest baseline system I begin here, building a strategic innovation portfolio approach into operations, starting from a clean slate. And I begin with a very simple strategic goal that would be operationalized:

• The business in question seeks to maximize both short and long-term gain while controlling and minimizing associated risk, by dynamically balancing its mix of cosmetic, evolutionary and break-away disruptive innovation initiatives.

The basic mix that would generally work, and even work best can and does differ, and depending on both the industry that businesses compete in and on the marketplaces and market demographics that they compete for business with. A business, for example, that primarily competes in a marketplace where the key demographics are skewed more towards late adaptors of the new and innovative, would probably do a lot better limiting itself to cosmetic and more gradual evolutionary innovation than they would expending crucial resources into a race for the disruptively break-away New. And a business that operates in markets where the skew is towards consumers who are in effect always looking for that Next Great Thing, is more likely to find itself in the position of the Red Queen in Louis Carroll’s Through the Looking Glass, where she says:

• “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

They would in effect by forced by marketplace dynamics and consumer preferences to skew what they develop and offer much more towards rapid evolutionary change with a steady flow of new model releases, and with a significant effort made to develop and offer break-away innovations too.

The right mix at any given time can and will change as for example when a direct competitor suddenly improves its competitive position through introduction of a new and attention-grabbing innovative offering that consumers suddenly want. That would increase the pressure on every other business in that industry sector and marketplace to become more creatively innovative too, and would even force businesses in otherwise slower moving industries with basically more conservative adaptor customers to shift their balance more towards the new and innovative if they are to remain competitive too. But across the board and for industries and marketplaces in general, this is always going to call for a dynamic balancing act. And effective operational systems here, provide stable and readily performance-tracked processes for managing all of this, and both day to day and over longer timeframes (e.g. business quarters, etc.)

• Looking at this from the complete systems perspective, this means thinking through and optimizing systems of business defining process cycles. I will arbitrarily begin my discussion of such a cycle with market research, and marketing and sales.
• Know your markets and your customer and potential customer demographics – and who your business might reach as defined by their characteristics as they would shape their purchasing decisions, for the types of products or services that you offer.
• Know where they fit proportionally on an early to late adaptor scale, and monitor on an ongoing basis for change in this.
• Design, and update and replace your product and service offerings with this pace and scale of change-insight in mind.
• For manufactured products, and here I summarize in cartoon fashion what could be developed as a complete series in and of itself, build out and maintain your production systems and capabilities with the flexibility needed to adapt to new and for providing it as makes sense, and cost-effectively and at a competitive price points.
• This has to include parts development and/or acquisition and inventory and distributions systems management for any pre-production steps related to them, finished product production steps, and finished product inventory control and distribution systems with all of the costs that all of these processes entail. This complex of processes can in and of itself be strategically and operationally broken out as a significantly self-contained operational subsystem, and in most cases it should be.
• And this brings me back to marketing and sales, and whether they take place in a business to business or business to consumer context, or both. I have, up to here at least, simplified by phraseology by labeling both of these basic target market categories as “consumers,” where a consumer per se could be an individual or a group or organization.

I am going to finish this posting at this point, simply repeating as noted above that I will be adding in some of the complexities of legacy systems and processes in my next series installment. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 3 and also see the first page and second page listings to that directory.

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