Sometimes it’s good to step back and think about a few basic principles on any subject worth studying. This is why most of us took a variety of 101 courses during our freshman year in college. These 101 courses built the foundation for further study. I still remember the Psychology 101 course I took at Ohio University in 1968 that introduced me to the famous “Moon Illusion” experiment, check out this explanation if you’re interested: http://en.wikipedia.org/wiki/Moon_illusion.
Innovation & Business Growth 101
With this “101” approach applied to Innovation & Growth, here are a few of the basic principles that I think should be part of anyone’s understanding. They all can be applied to any business today, read on and find the ones that fit your business:
- Stop Doing Lists: made famous by Jim Collins, Jack Welch and Peter Drucker, this principle holds that before a business can determine how and where to grow, it is necessary to decide what to abandon in terms of obsolete, outgrown and unproductive businesses, projects, policies, projects, products, markets, customers, etc. Drucker calls this “purposeful abandonment”.
- Customers: If you read my three part series on Peter Drucker on Innovation, you may have learned about his view that only real purpose of any business is to “Create and keep a customer”. To do this the most important question a company can ask is “What does the customer find valuable?”, that addresses their needs, problems, desires and challenges. Delivering value to a customer, whether new or old, is the primary way most companies grow.
- Innovation: Thomas Edison famously said that “most people wouldn’t recognize innovation if it walked in the door, because it comes dressed in overalls and looks like work”. This is the 1% Inspiration and 99% Perspiration theory. Further, Drucker believed that Innovation must be a structured process and that there are seven likely places to find innovation opportunities. Read my past three columns for a deeper explanation.
- Marketing: Unfortunately, most of us think of marketing as what really is old school marketing communications or MarCom, which is largely PR and advertising and focuses on graphic arts, brochures and websites. Strategic marketing, on the other hand, is needed for business growth and innovation, Drucker says this means to “know and understand the customer so well that the product or service fits him and sells itself”. In my experience there are too few companies that use marketing in this manner. Further, if the purpose of Marketing is to know the customer, then the purpose of Innovation is “the creation of new value to customers in the form of self-selling products & services”.
- Forget, Borrow & Learn: Popularized by Vijay Govindarajan in the terrific book Ten Rules of Strategic Innovators, this approach focuses on starting new businesses within existing companies, which in many cases are starved for oxygen internally by the parent company and never succeed.
- Forget means to forget some of what has made the existing company successful because this expertise may not apply to the new business.
- Borrow means to borrow by hook or crook some the assets available within the existing company, because this is the new business’s competitive advantage over independent companies its competes with.
- Learn means that the first objective of the new business is to learn as much about the market, customers and competitors as possible in its early years. Immediate profitability and growth is a slippery slope for any new business, it is much more productive to learn as much as possible as first step.
Look for for more principles of Business Innovation and Growth 101 in the future.