Here is a fact that the best leaders understand but everyone else wrestles with: Innovation needs to be countercyclical. The best time to create the next big thing is when things are going well, not when you are struggling.
When the economy is booming and their company is crushing it in the marketplace, most leaders tend to reap the benefits. As the saying goes, they make hay while the sun is shining.
But then the rain comes. The economy slows. Or your once reliable products or services become stale. Or there are unexpected new competitors. Or people are buying direct. Or…. You know the list.
As a result, the phone stops ringing and your sales department starts to clamor for things to sell.
Only then does leadership spring into action, assembling the brightest, most creative people to chart a new course, fueled by inspired thinking and new offerings.
But by this point, it is too late. Here’s why.
Unfortunately, your company is perfectly engineered to create the outcomes it is creating. In other words, it knows how to do the same thing it did yesterday, juuuuuust a little better today. It also knows how to kill anything that doesn’t resemble what you did yesterday.
So under the pressure of slowing sales or waning market relevance, your perfectly engineered machine will tighten its grip on the past. The well-meaning team will focus relentlessly on your core business—their past success formula—thus accelerating your demise because what worked in the past will no longer work in the future. Making a better buggy whip, a faster film camera, a quieter typewriter or even cleaner coal won’t keep the stagecoach operators, film processors, typesetters or miners employed.
You need a different plan. And it starts with reinventing your business when your CFO is smiling.
Here are six proven ways to create the next significant source of new growth for your company.
- Import new thinking. If you have read this column for a while, you know my favorite saying is “You can’t read the label when you are sitting inside the jar.” Simply put, the longer you are working on a challenge, industry, project, relationship…the more your expertise keeps you from seeing new possibilities. Nothing changes this reality faster than bringing in new leadership from outside your company and, even better, your industry.
- Use a portfolio strategy.There is more than one way to innovate. The sooner you arm your team with the frameworks and language to discuss, measure and invest in different types of innovation, the better. Nothing (and I do mean nothing) defeats an organization faster than leadership and staff placing the wrong kinds of bets early in your innovation journey. Using a portfolio strategy allows everyone to be on the same page as you learn and invest together.
- Strive to hit singles first, triples later.Once you have a portfolio strategy in place, your teams can then begin to learn the fundamentals of innovation. You can help them create small wins while they learn. These wins will immediately impact customer satisfaction and profits that will, in turn, keep your CFO happy and budgets intact. Many leaders make the mistake of allowing their teams to swing for the fences early in the game. Innovation is as much about “small ball” as anything else. Walk before you run.
- Outsource your crazy.Speaking of swinging for the fences, after years of seeing leaders reach for revolutionary innovation while their teams desperately try to appease current clients, leadership and budgets, I have landed on a simple truth: Evolution happens inside your walls and revolution happens outside. Want to start a revolution? Invest in companies that will someday disrupt you. Meanwhile, let your people get better and better at evolutionary wins.
- Get closer to the customer.We have moved from a B2B to B2C to “B2Me” economy. We now live in a world where professional consumers—armed with the power of infinite information—can and will draw a straight line between what they think they want and the company that can give it to them most efficiently and delightfully. So, the company that knows best its customer’s, customer’s customer wins. Every. Single. Time. Period.
- Own the mess.“So you say you want a revolution. Well, you know, we all want to change the world….” When it comes to innovation, what separates excellent leadership teams from the impotent ones comes down to one word: ownership. The leaders who are willing to own the mess—the good, the bad and the ugly—will be the ones whose teams endure.
I started this article with the point that innovation is countercyclical. The best time to seek new sources of growth is while your company is crushing it because there will be less fear in the organization to fuel the inertia that naturally comes with change. But assuming that you are not crushing it, let’s talk about the second best time to start looking for new sources of growth:
(The strategies above are the place to start there as well.)