We have said it before, and it will always hold true: you have to innovate or die. The time a company spends on the S&P 500 is 60% shorter today than it was just 14 years ago. Companies that spend too much energy on trying to maintain an existing competitive advantage instead of taking risks on innovation will ultimately be disrupted. There will be many more Kodaks and Blockbusters in the coming years—businesses that once seemed invincibly competitive, only to fall and fall hard because they failed to move forward.
Innovate or Die: The Stark Message for Big Business
From BBC Business News:
“Just look at the likes of Woolworths, Polaroid, Alta Vista, Kodak, Blockbuster, Borders… the list goes on. All steamrollered by strings of ones and noughts and changing consumer behaviour. But why are so many big companies so bad at it?
Typically, big companies are much more conservative than start-ups and won’t do anything that is untested or could risk future profits,” says George Deeb, managing partner at business consultancy Red Rocket Ventures. “Innovation efforts really require a very different, more entrepreneurial risk-taking mindset.”
Jackie Fenn, a specialist in innovation at research consultancy Gartner, told the BBC: “Size can add to the challenges. A strong brand can have a fear that failure may damage its reputation. “But you cannot afford to stay still – business is a moving escalator. The world is moving around you – customer expectations are changing, competitors are always catching up and threatening to take away your business.”
So how can big companies avoid becoming innovation laggards? Venerable engineering company General Electric (GE), a global powerhouse with revenues of about $150bn (£91bn) and a market capitalisation of nearly $265bn, has built innovation into every part of its business, says Todd Alhart, director of media relations for GE Global Research, the group’s R&D subsidiary.
With centres around the world employing thousands of researchers and engineers serving all of GE’s divisions, you might think the company had innovation covered.
But Mr Alhart says: “We have a tremendous amount of investment in engineering, but the world is moving a lot faster. So we know we’ve got to be faster. The digital world is increasingly becoming part of the physical world.”
So GE has been experimenting with “open innovation,” inviting external engineers to take part in design competitions.
“We’re trying to reach out in a more open and collaborative way,” says Mr Alhart. For example, in 2013 GE challenged the GrabCad engineering community to come up with a way of 3D printing a lighter, stronger bracket for its jet engines.
“We had about 700 entries and gave out prizes for the best ideas,” he says. “A young student from Indonesia reduced the weight by 84%. It’s a great lesson in how you can get great ideas fast.”