Are you Innovating or just Improving?
The process of translating an idea or invention into a good or service that creates value or for which customers will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need.
We All know that Innovation is more than a buzz word or management slogan.
The Challenge is doing Innovative things.
Clay Christensen of Harvard Business School explains why Large companies fall into the Incremental Innovation Trap, and why small businesses have a significant advantage in the Disruptive Innovation Game.
Large companies have a "Brand Image" or "Reputation" to uphold. They cannot afford to fail. Thus they focus on the margins of current offerings.
The existing Cost Structures in large companies offer incentives for them to abandon low-margin sectors for prestige markets.
The Metrics in Large companies focus on executing current business, not developing new markets and products. The name of the Incremental game is higher performance at lower Cost.
Small Companies can be profitable in low margin sectors because of their unique cost structures. Small companies can target small niche markets or less desirable, lower margin markets, and still be very profitable.
The customer segments of disruptive innovators are enthusiastic about MVPs (Minimum Viable Products). "Good Enough" is more than enough for niche markets.
Small companies are not restricted by status quo or brand expectations.
The Barksdale Insight
Modern management theory and practice are focused on improving today's offerings to customers:
Increase features to increase price...and hopefully profit
Decrease costs at the same price
This was a fine strategy from 1950 to 1999, when the barriers to entry were high.
Since the turn of the century, the barriers to starting a new venture have virtually disappeared. Venture capitalists, technology advancements, outsourcing knowledge work, and the new workforce's entrepreneurial mindsets mean that Disruptive Innovators are already at work in your market segment.
In many cases, they are as well equipped as you.
How can you turn today's REALITY into your future?