Start With What You Have:
Your fastest track to profitable growth
The Idea in a Nutshell
Resilient businesses such as IBM, Wipro, Haier, Western Union and Intel have managed to successfully evolve and reinvent themselves, often multiple times. Others, such as Kodak, Woolworths, Digital Equipment Corporation and ICI failed to do so and fell by the wayside.
Faced with the need to innovate, managers often look for silver bullets from the outside, but the longest-lived companies have learned to refresh themselves from within.
The successful companies discussed in the article excel both at identifying their under-appreciated resources, and in applying them. The article provides examples of seven approaches leaders can use, and ends with a diagnostic for provoking discussion about an organization’s ability to start with what it has to refresh its engine of profitable growth. (see page 9).
The Idea in Practice
1. Start with what you have. Many people think innovation involves dramatic ‘moonshots’. But ‘moonshot’ projects are often shots in the dark. If you are an established company, take inspiration from Silicon Valley by all means, but then, like Daimler, ask: “What customer problem can we solve in a new way, using what we already have?”
2. Break down barriers between customers and employees. Your customers know more about what they will buy than you do. Companies as different as McCain and Lego have benefited from bringing customer insights into the very centre of their businesses.
3. Find and meet surrounding needs. Understand what your customers are doing before, during and after they use your products and services. Like Cardinal Health, you can very often meet these surrounding needs in a way which has favourable economics both for the customer and for you.
4. Force yourself to be frugal. Experts build products and design services based on their own view of what is required. Companies like GE are working to avoid such over-engineering. They ask: “Where are we working hard to deliver things that the customer isn’t noticing, or simply doesn’t care about? Could we do better on the ‘less is more’ principle?”
5. Prioritize observable behaviour over words. Customers are often unable to articulate their needs or predict their buying behaviour in imagined scenarios – a fact which limits the value of traditional market research. When Disney launched their stores, they created realistic situations and watched how people actually responded. This provided much better information than interview responses.
6. Test your assumptions in the real world before you waste money. Mike Tyson famously said that everyone has a plan until they get punched in the mouth. In this fast-moving world, beware of assumption-laden traditional business planning. Like Zappos and others using lean startup approaches, identify the key assumptions which could sink a business idea and test them in the real world as early and cheaply as possible.
7. Unify your power barons—or else. Many CEOs have failed because they wouldn’t confront recalcitrant power barons. As Kodak and Digital Equipment Corporation show, it never goes well for the leader if their direct reports aren’t supporting strategy. Give people a reasonable opportunity to get on board. But beware of kicking the can down the road!
In the race to stay relevant to their customers, businesses often look for silver bullets from the outside. They rush to pursue expensive and risky new acquisitions, system implementations and hires, while overlooking unexploited potential they already have. In contrast, many of the longest-lived companies have refreshed themselves from within, starting what they had to more safely and dependably refresh the engine of profitable growth.