Innovation is all the rage now in corporations, as new technologies have broken down barriers to entry in previously “Safe” industries. On paper this should be an easily attainable goal - challenge your current leaders to innovate in their specialities, hire consultants who can teach you “the way”, acquire your startup competitor, or the final option, do nothing. Today we’re talking about the merits of each possibility, so that you can decide what is right for your organization.
Challenge current leadership to “think different”
This is a very attractive option, because you take people who already know the business, ostensibly work well together, and are bought into the company’s success, to lead the effort. The challenge companies face with the current leadership is often that they have a vested interested in maintaining the status quo - quarterly or annual bonuses are at risk if the company changes operating procedures and does not deliver results equal to or greater than past performance. In most cases, unless the company is in crisis mode, there are probably a few quarters left before the company collapses, so surely the changes can be slow-rolled until after earnings season? Or until we convene the board to present some ideas? Or we’re sure that the winds are truly blowing in another direction? Or…?
Hire consultants who can teach “the way” to innovation
Great option! I’m biased here, because this is the work I do in product strategy and innovation, but there’s a key issue here we will see. You hire someone who is already an expert in developing cultures of innovation or innovating specifically within your industry without taking on the long term commitment of a highly compensated executive leader. This person comes in, analyzes the current situation, prepares a report, and may or may not lead hands on development to enact the changes you need. Plus, this person is outside the current organization and is a great objective observer who will not long-term upset egos and political alliances. The problem arises when this person leaves and organizational inertia returns direction and maintenance back to the same people who did not lead the change in the first place (see above).
Acquire the company challenging you
As a larger, ostensibly better funded company, you can always opt to buy the competition before it gets too big and threatens you. This is the model Facebook took when purchasing Instagram and What’s App (although Facebook has made 77 other acquisitions as well). This has the benefit of immediately removing a competitor from the market, gaining intellectual property and patents, and the employees who worked for your competition (this is often called an “acqui-hire”). The challenge here is that the you now have to manage the combination of two distinct company cultures into one cohesive culture that is different from either company. This is non-trivial work, and one of the reasons why most acquisitions fail to deliver the expected value.
Do nothing and wait
As I said, this is a viable option. Much ink has been spent on the dollars wasted trying to avoid a business boogie man who never actually appeared. Many companies hire public relations firms to broadcast their success or coming domination in a marketplace, and then years later, the world-changing product or service never actually made it to market. Or, if it did, then it was sadly underwhelming. The company trying to innovate is then out the millions of dollars in R&D and is ultimately forced to shut its doors or be acquired by the more conservative company. The downside with the passive approach here is that you’re putting the fate of your company in the hands of your competition - hoping that they fail or something else changes to make innovation easier when you decide to move forward. It’s highly likely that your investors will ask for a plan to succeed and indefinitely stalling to wait on the market is probably not going to be well accepted.
What’s the right answer?
The way forward may be one or even all of the options listed above. Perhaps you need to wait for a bit to train your leaders, investigate the competition and tech trends, and then hire a consultant to help lead change process. The right answer for you company will depend upon the abilities, interests, and appetite for risk that you have cultivated in your company. One thing to keep in mind, to avoid analysis paralysis is that choosing to do nothing is actually making a choice to follow the “Do nothing and wait option”, so be careful with what you choose to do (or not do).