Innovation: the Path to Progress

by Randy Harrod – C12 Group Area Chair, Central Florida (North)
( I had a great time before Christmas meeting with Roger Norberg who works among business leaders in Metro Detroit through the organization C12 Group: a national group of  Christian business Owners and CEOs. –  This is an article from a C12 blog – Richard Dalton)

Economic and technological cycles are an unavoidable part of business life for all of us. Yet some companies become victims of ever-changing market conditions, while others survive and emerge from this same turbulence in a strengthened position. What makes the difference?

Since 1917, just three companies have been among America’s largest 100 firms every year: General Electric, Procter & Gamble, and DuPont. What sets these vastly different companies apart from thousands of less resilient companies? Each of them carefully cultivates innovation as a way to stay sharp, fresh and relevant.

Innovation simply means “to renew.” GE, P&G, and DuPont use well-established innovation management processes to keep their development pipelines full, analyzing scores of relevant growth and improvement options each year. This helps them to simultaneously pursue profitable growth, longevity, and leadership in the markets they serve. Your immediate reaction might be, “Sure, huge corporations spend millions on R&D and world class talent. My situation is way different.” In fact, the basic principles and approaches that enable these global firms to perform so well are also available to smaller businesses. As leaders, there are three ways we might react to cyclical pressures:

  • Bury our heads in the sand, do nothing, and hope it goes away.
  • Aggressively cut costs in a way that limits our long-term growth possibilities.
  • Address both top and bottom line pressures by adapting our strategy, business model, and operating costs to new market conditions and the opportunities they provide.

When you think about the third, and smartest, way to lead in changing times, you quickly realize that this approach always applies for forward-looking businesses, no matter how brisk the economic or technological winds. Change is always with us. John Lennon got it right when he sung, “Life is what happens to you while you’re busy making other plans.” Even though man’s plans are fallible, as those called to be leaders and stewards, we must move forward in enhancing how we serve our customers if we’re to survive over the long-term. Peter Drucker, the 20th century’s most influential management thinker, famously said, “Any organization which continues to do what brought it success in the past will ultimately fail.” Drucker based much of his teaching on the idea that the single most important measure of a company is its ability to anticipate and invest in tomorrow’s opportunities. He promoted leading through innovation and said, “The best way to predict the future is to create it,” meaning that if the market or industry is going to adopt new ways, it’s best to lead and set the new direction, not follow.

In effect, every company is in a race for ‘strategic renewal’ within its industry. We need to invent new and improved sources of revenue and profit before the old ones disappear. This idea is certainly more compelling in a tough economy, but the best companies seek innovation – to achieve superior growth through a forward-looking strategy and business model – even in a booming economy. They do this by maintaining healthy tension between familiar core products and processes and a continuous stream of next generation offerings and methods. Those who respond to good times by postponing innovation and clinging to the comfortable, “If it ain’t broke, don’t fix it,” mindset usually end up in trouble when the economy dips.

Drucker consulted with GE for 60 years. He’s credited with helping them develop great discipline and clarity in their efforts to see ‘change’ as an ever present opportunity for innovation to be pursued with a sense of urgency. Addressing the tension between staying with ‘proven’ offerings or obsoleting them in favor of next generation approaches, Jack Welch, GE’s long-time Chairman and CEO, said: “You can’t grow long-term if you can’t eat short-term. Anybody can manage short. Anybody can manage long. Balancing those two things is what management is.” As a result, companies like GE annually pursue such goals as growing significantly faster than the markets they serve, maintaining margins even when sales dip, and remaining or becoming the leader in each niche they serve. This requires lots of innovation, creative tension, and a constant ‘war room’ mentality.

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