Monday, July 3, 2017

The Small Way to Be Innovative That Has a Big Impact

If you want to send shivers down the spines of many company leaders, all you have to do is say one name: Kodak.
The Eastman Kodak Co. has become the poster child for big, successful companies that failed in a spectacular way after missing opportunities that were critical for its evolution and survival. In Kodak’s case, it was digital photography, which it invented.
While Kodak emerged from Chapter 11 bankruptcy in 2013, its failures – and the resulting thousands of lost jobs – have become the cautionary tale for company leaders who fear their businesses may suffer the same fate if they don’t embrace radical innovation.
But what is missing from this “disrupt or be disrupted” discussion is that Kodak’s tale if often repeated – but it is not the norm, says David Robertson, professor of practice at the Wharton School at the University of Pennsylvania.
Instead, it’s stories like Gatorade’s that are more common, he says.
Specifically, Gatorade’s sales were stalled in 2007 after inventing the sports drink category in the 1960s. While it was pursuing some more radical, disruptive inventions (a chemical that would help the body process oxygen better that later turned out to be impractical for many reasons), it also began looking at innovation of its core product or “complementary” innovations.
Using market data, Gatorade knew that serious athletes were sticking with the brand despite cheaper competitors and so began developing products such as nutritious gels, bars, smoothies and shakes that were designed for before and after exercise.
This sort of innovating isn’t seen as ground breaking, but it is often underutilized by company leaders who feel they must begin with radical innovation before trying other options, Robertson says.
Robertson says research shows that revolutionary innovations have a 60% to 75% failure rate, while incremental improvements have a 25% to 40% rate of failure. But what Gatorade did is what he refers to as “The Third Way” in his book, “The Power of Little Ideas: A Low-Risk, High-Reward Approach to Innovation.” The approach worked for Gatorade because the products were diverse, they were targeted toward specific customers and they posed little strategic risk, he says.
While this third alternative is not a replacement for incremental improvements or disruptive innovations, it does provide another option that businesses need to understand and consider when faced with (read more here


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