Better Isn’t Enough - You have to be different

Almost every corporation on our planet is on a quest to outperform its rivals in two key business activities – improve the performance of current business, and create the future for the business. The trouble with this is that few organizations do this well – they are either good at continuous improvement or good at innovation, but not good at both in a strategic, tactical and deliberate way.

We can look to Motorola as a basis for this conversation. Remember, Motorola was the cradle of doing things better in business in the 1980s, when it pioneered the widespread implementation of Six Sigma to improve the quality of its electronics products. Having installed this capability, what next? The era of competitive advantage by continuously perfecting products and processes is over; today it is expected that top organizations can do this “in their sleep.”

So the new frontier of performance is figuring out how to make breakthrough innovations on both ends of the scale: low-end disruptions, as well as high-end advancements at higher prices. And especially figuring out how this can be done on a continuous and more predictable basis. Call it “circumspect, creative cannibalization” if you want to use fancy words. Otherwise call it the new necessity for business success.

LG, Samsung and Nokia are bypassing Motorola, breathing new market share air. Apple is set to unveil its new touch-screen, music- and video-playing handset, the iPhone. While Motorola is strategically and tactically focused on improving the functionality and features of its RAZR (RAZR2) – iterative improvements – competitors are leapfrogging the RAZR device, or at least matching its style and substance with products of their own.

The result for Motorola has been Q1 (2007) losses and a cell phone market share drop from 22 percent to 17 percent. Commensurate with this has been an upgrade of Nokia by such investment banks as Goldman Sachs, and a downgrade of Motorola stock by at least 10 investment banks, according to Business Week.

What is the bottom line here? Motorola seems to be playing by the rules it knows best: doing things better, or taking what it has and optimizing it. But sustainable business success also entails doing things differently on a consistent basis. While a company may hit a product design and innovation home run, if it doesn’t have a way to then hit another home run, it will be outrun.

Why is this so difficult, to keep hitting the innovation ball out of the park time after time? For starters, an organization or company has to  selectively abandon the past, and that can be difficult – especially when that selective abandonment might entail cannibalizing a blockbuster product that went from high-priced market leader ($500 in the case of the RAZR) to free giveaway (after incentives) in the space of 36 months!

The biggest problem for Motorola, according to an April 27, 2007 Wall Street Journal Article, is that the company was working “furiously to get a successor phone to market by the second half of 2006, according to people familiar with the matter.” But Motorola failed to do so – it had the right idea but couldn’t execute fast enough.

Futurists have been predicting this increased pace-of-change phenomenon for a long time, and each year, more and newer products, business models and processes are created by more players in the global economy. Just doing what you’ve always done better, in other words, is quickly becoming an antiquated notion and a recipe for business failure. See Six Sigma: So Yesterday?

Yes, doing things better and engaging in constant improvement is absolutely necessary for success. But that’s not all. So critical, too, is doing things differently, and having the right culture, systems, methods, tools and people for innovating today – and as soon as that is done beginning the process of outdoing yourself as quickly as possible.   

Comments

[Mark Alan Effinger]

Dr. Samuel, this is a great, great topic.

YOu can look at innovation-as-product-release as a series of overlapping gaussian curves. By plotting the decay rate of a given product (in total sales revenue), you can anticipate when you need to drive the next innovation.

Yes, there are many more competing delta points to address, but this is a visual cue that may help clarify the issue.

We're working on a Flash modeling application to help companies manage their releases based on these curves (along with a significant amount of additional market, adoption, price and development data).

We'll keep you posted.

Thanks for sharing your insights. Very helpful.

Warm regards,
Mark Alan Effinger
http://www.ThoughtOffice.com