Platt Perspective on Business and Technology

Rethinking exit and entrance strategies 11: keeping an effective innovative focus while approaching and going through significant business transitions 1

Posted in strategy and planning by Timothy Platt on June 28, 2016

This is my eleventh installment to a series that offers a general discussion of business transitions, where an organization exits one developmental stage or period of relative strategic and operational stability, to enter a fundamentally different next one (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 559 and loosely following for Parts 1-10.)

I focused in Part 9 and Part 10 on performance review and analysis tools that can effectively be used in both mapping out and understanding more normative business systems, and businesses and their systems as they approach and enter into significant transitions. And in the course of writing Part 10, I raised the issue of innovation: an intentionally entered into source of significant change that by its very nature can directly lead to a significant business transition.

I wrote at the end of Part 10 that I would address innovation here, and the issues of fostering and developing it in a business, and I will do that. But to set the stage for that, I am going to start here, by addressing the fundamental relationship between innovation and business transition as basic processes. And I begin that with the fundamentals:

• An accumulation of individually small but collectively significant innovations in products and services offered, and even more significantly here in business processes that enable them, can and with time probably will reach a tipping point for their overall impact. And that tipping point represents, among other things, a point where a true business transition of the type I write of here, becomes inevitable too.
• And a single disruptively novel and significant innovation can bring a business that achieves it to such a tipping point all by itself, demanding change if this innovation is to be effectively developed and capitalized upon.
• On the other hand, a failure to effectively innovate and at least as actively as the competition does and as the overall marketplace demands can lead to a business transition too. In this case, it is more likely to be a downward turning transition possibility that will have to be reactively responded to as a matter of course correction or even change management effort.
• And when a competitor suddenly brings forth a disruptively new innovation, and one that really captures the imagination and interest of the marketplace, that can have the relatively immediate impact of forcing every other business in their industry or sector to response, and often in ways that amount to facing and addressing business transitions too.
• Not all business transitions are innovation driven and either through successful innovation on a specific business’ part or from failure to innovatively keep up, or through some combination of those possibilities. But innovation can and does very specifically and directly lead to and shape business transitions, and if for no other reason than from how it creates fundamental need for taking that type of business development step.
• And to clarify a point that I just made here in passing in my first of these bullet points, I noted that business process innovations can be more impactful than product or service innovations. A product or service innovation: a marketable offering innovation more usually has a lifespan for offering special value to a business that lasts until a competitor can bring to market a newer alternative for catching the customer’s eye. And in a fast-paced industry and for a change-demanding market, that can be quite brief. But a real business process innovation that increases the efficiency and competitive effectiveness of a business that owns it, tends to persist for its ongoing value. And if such an innovation and the thinking that led to it, lead to next step business process innovations that work synergistically with it, an innovation of this type can gain new value with time and in ways that are much rarer for marketable offering innovations to achieve. From the perspective of this line of discussion, it can be easier for business process innovations to accumulate until a business transition-demanding tipping point has been reached, than it is for product and services ones and particularly where they are individually more minor for their innovative impact.

And with that basic framework laid out as a foundation for this posting’s anticipated line of discussion, I turn to consider the issues of fostering and developing innovation per se in a business, as that relates to and informs business transitions. And for purposes of this phase of this overall discussion, I would put marketable innovation and more behind the scenes business process innovation on an equal footing for their potential value and significance, as ultimately it is the consumer and their evaluation of a business that sets its true value – and that is most directly seen as a measure of how consumers evaluate a business for its marketable offerings, and on a here-and-now, point of purchase basis. So I will simply refer to business-enabling innovations by the single label for the balance of this posting.

And turning to consider transitions per se, I will maintain a dichotomy here, but one in which I loosely categorize these periods of change as being:

• Positive, break-through in nature as for example when developing and benefiting from a positive new innovation,
• Or as being positive but recovery in nature when having to in effect reactively catch up with the competition. Here, new innovation and change on a business’ part are intended to match and if possible move past competitors who have come to hold a competitive lead.
• Yes, if successfully carried out, both of these business development efforts should be considered positives.

Business-enabling innovations, or at least the innovations that I would include here in this line of discussion, facilitate or even directly lead to any of a long list of potential benefits. They can, among other things:

• Facilitate a business and its managers and staff in identifying strengths, weaknesses, opportunities and threats (SWOT), and where a transition-oriented business development approach might make the most sense,
• They help to define and parameterize what should be done and with what priorities in entering and passing through such a needed transition,
• They help shape and define the business as it emerges from this period of intense change,
• They serve to maintain or advance this enterprise for its resiliency in all of this, and
• They serve to maintain or improve its value creating potential and therefore its overall competitive viability.

Cutting across product and service, marketable innovations, and business process innovations, think of these collectively as transition-enabling and facilitating innovations (transition innovations). And I will continue this discussion in a next series installment where I will explicitly discuss them. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory.

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