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Inger Hanne Vikshåland: Hello, and welcome to this session on industry shifts and inflection points. I’m Inger Hanne Vikshåland with Engage // Innovate and today I’m talking with Rita McGrath and Christian Rangen.
Rita McGrath is a globally-recognized expert on strategy, innovation, and growth with an emphasis on corporate entrepreneurship. Her best-selling book “The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business” was awarded the Strategy Book of the Year in 2013.
Today we’ll be discussing her upcoming book on strategic inflection points, a book that is especially relevant in a Norwegian context and will be one of the topics on her upcoming visit to Stavanger in Norway, May 12th.
By my side I also have Christian Rangen, co-founder and partner at Engage // Innovate. Christian is one of the leading strategy and innovation experts in highly uncertain environments. He has worked all over the world with big global brands and promising startups.
Christian is one of the creators of a series of new strategy tools called Strategy Tools for the Next Generation, which are used by companies all over the world. His latest research revolves around industry shifts and inflection points which we’ll discuss today.
Rita, why don’t you start with sharing what you’re working on at the moment?
Rita McGrath: I’m working on a new book, really looking at this issue of strategic inflection points and the basic idea is that when you dissect a strategic inflection point, you often observe that the roots of it began a long time before it actually happens. So the working title for the book is “Gradually, then Suddenly”, which is how you experience inflection points. But the good news for strategists is that if you’re paying attention early, you can often see them coming and make appropriate interventions ahead of time.
Inger Hanne Vikshåland: Interesting, can you tell us a little bit about the biggest trends you see in the field of strategy and innovation?
Rita McGrath: The biggest trends in strategy and innovation have really become almost integrated. So, you know when I first started in the field, the strategy people were all in one corner of the room looking at industry trends, who is going, what are order of entry, market shares, that kind of thing. And what we’re seeing today is that you can’t really have a conversation about strategy without giving as much time and emphasis to innovation as you do to more traditional strategy topics. So that’s one of the biggest trends that I see.
Christian Rangen: I think I’ll just echo what Rita just said. I think we see this a lot, especially with large organizations that it’s really a merging of minds between the strategy side and the innovation side. Very few organizations have built the tool and the practice for it, but it’s getting there.
Inger Hanne Vikshåland: So Rita, based on your recent work in Cali, what are the key takeaways for other companies looking to accelerate innovation programs?
Rita McGrath: I’ve developed something that I call the Innovation Maturity Scale where you start out at 1, which is almost actively hostile to innovation, and then move your way up to 8, where you really got an innovation proficiency, it’s baked into all your processes, it’s not this weird thing sitting on the side. And I would say my work in California leads me to believe that most organizations are at about a 2 or a 3 on that scale. They’ve got pockets of innovation, there are champions that kind of comes and goes. They take the big trip out to Silicon Valley, have a picture next to the Facebook sign, but they don’t really have it embedded as an actual proficiency in the organization. I see that unfortunately all over. So, one of the big challenges is how do we make innovation something as repeatable and reliable as say, quality, or those kinds of practices in organizations.
Inger Hanne Vikshåland: The average in California is about 2-3 on the Innovation Maturity Scale, what do you think about Norwegian companies, Chris?
Christian Rangen: You know Rita, you’ve done some work with Norwegian companies already, and I think I’ll again, echo you that a lot of people go out and they have their photo taken by the Facebook sign or by the Google sign, but you know, really, organizing for innovation as a repeatable process, those are far and few between. There’s a few, Telenor is a good example. I know Rita you have been writing about Schibsted as a good example. Kongsberg is a good example. But overall, there’s a lot of work to be done here.
Inger Hanne Vikshåland: Based on your research on industry shifts and portfolio thinking, what are your recommendations for Norwegian executives coming out of the oil and gas industry?
Rita McGrath: I think the first step is to recognize that what worked in the past is not going to be what works in the future. You really need to be thinking about getting into new areas. To me there are two vectors you can choose. So you can choose to operate from a capability platform, or you can choose to operate around a particular customer need that you’re serving. So I’ll pick Statoil as an example. Clearly, there’s a choice to be made about do we operate from deep capabilities in undersea operations, safety, you know, incredibly technically complex capabilities, or on the other hand, do we define ourselves in the energy space, and get into things that really have not been traditionally the capabilities that we’ve had. Things like renewable, solar, that kind of thing. I think companies need to make a choice about which route they’re going to follow going forward.
Rita McGrath: A good example of a company that started with the capability idea would be Fujifilm in Japan. They decided to say, “hey, you know we’re terrific at chemicals, we’re terrific at imaging, so let’s find other places where those capabilities come into play. And that got them into things like cosmetics, a service for the pharmaceutical industry, they have a whole variety of different activities they’re pursuing, but they have at their core this central capability idea. I think companies need to make a decision. If you’re going to go away from your core towards something that is new, which is going to be the driver for that?
Christian Rangen: From your previous book, Rita, you of course opened with the case study on Kodak and then the case study on Fuji. This week, of course Snapchat goes public on a valuation of 24 billion dollars – why did it take such a big shift in the industry to move from the old film to the new to create that kind of value? How on earth could something like that happen from within Kodak?
Rita McGrath: Well it could’ve, you know, I think the tragedy in a way of big companies is that they’re so enmeshed in their existing practices and processes they just don’t even see those opportunities. Kodak, they were wedded to chemical based processing and the whole Snapchat idea came out of fooling around almost, with “hey I wanna share an image, but I don’t wanna be tied to it forever. So I think you’re just starting from a really different place than where Kodak started.
Christian Rangen: When you frame it like that, it sounds like a really stupid idea, you know. Why would you want to share a photo that disappears?
Rita McGrath: (laughs) well, I think that’s also part of the current phrase that people are using a lot is the “jobs-to-be-done” theory. So traditional photography was all about preserving memories for all time, right? That’s how we thought of traditional photography. Whereas with Snapchat it’s much more about sharing an image as part of a conversation. And when the conversation finishes, you don’t necessarily want that image hanging around forever. So it’s more, you know, in the moment, fun, and maybe a little naughty, something we don’t want to have a permanent record for. So it’s really meeting a different need for a different job.
Christian Rangen: Let’s go back to the question at hand. Kind of zooming in on the oil & gas industry. As you know, the oil & gas industry represents by far the biggest value creation in the Norwegian GDP. It’s not only oil & gas, it’s the entire supply chain, the entire value chain behind it, up to technology development, helicopter transportation, research & development, and what we’re seeing now is a big pain running through this entire value chain as they’re trying to readjust to very different world. And hands-on experience is that most management teams, they’ve never had to look outside their own industry, they’ve always been serving a very fixed position, fixed value chain with profits everywhere.
Christian Rangen: What would be your how-to-get-started guide for management teams that’s always been just milking a cash cow and now they need to go find reinvention. How do you start?
Rita McGrath: I think the place to start is getting inspiration from outside your current operations. I really think you need to be looking outside that industry – find analogies, find different ways of sparking your imagination.
Rita McGrath: I guess the analogy I would use is you need to get, as a famous leadership book once said, imagine you’re going to a dance, and if you’re on the dance floor, you have one experience of that dance. Everybody in the industry has really been on that dance floor, we’re interacting, we have predictable profits, we know exactly what’s going to happen. But imagine the ballroom has a balcony, you need to get up on that balcony and get a different perspective on what’s going on. I think there’s a need to really immerse yourself outside your immediate context and get a sense of what’s going on in the world that may or may not have anything to do with what you’re looking at.
Rita McGrath: Pragmatically, how do you do this? There are a number of ways. Christian, as you and I both know, you can immerse yourself in an executive program, come to a seminar – like the one we’re planning, you could go to conferences from industries different from your own. I think the key thing is to make some time to get away from the emails and the day-to-day, to really get a big picture perspective of what could be going on.
Christian Rangen: You make it sound so easy.
Rita McGrath: (laughs) it really isn’t that hard, I mean I think this is one of the optimistic messages that I’d love your readers and listeners to take away. Which is, we have this fear almost of, oh my God we’ve always been the automotive industry, the healthcare industry, in this case, the oil & gas industry, every place else looks so scary and foreign and unfamiliar but you know, when you make the relatively small effort — take a couple of days, go to a non-related industry conference, or have conversations with people who don’t touch what you normally touch, and it’s surprising how quickly the insights begin to emerge.
Rita McGrath: The other company I worked with a lot that is an expert at giving people this kind of different perspective is the Mach49 people which you met with Christian, when you were out in California. They’re very good at creating situations where people can gain, pretty rapidly, some major insights about what they could be doing differently.
Christian Rangen: It’s true. I met them a few weeks ago in California. A very impressive leadership team they have in place. It’s a company we hope to engage more with in the year ahead. Absolutely.
Christian Rangen: I want to bring up the point on the architecture behind the strategic inflection points. What are some typical weak signals that in advance can alert you, and how much gut feeling vs how much analysis do you see is required from management teams to act on these weak signals?
Rita McGrath: Well the weak signals are when something happens that creates a 10x shift in the envelope that contains your industry. If you think about any kind of sector or industry or company, they have certain constraints in their environment that are present when they’re born. Take the newspaper business for example, the main constraints in the newspaper business before the digital age were things like how many contracts do you have, how many trucks do you need, how many newsstands are you positioning, well, then along comes digitalization and all of those constraints at once are changed by a factor of 10 or 20. And so what happens in companies, those changes don’t happen instantly, those changes take a long time to unfold.
Rita McGrath: Let’s take retail.
Rita McGrath: Amazon sold its first book online back in 1995 and a reporter from Fortune that same year, pointed out that the internet could change all these different constraints that publishing, retail, distribution, all these different industries, this is back in 1995. The data were absolutely positively there, but nobody in retail was paying attention. And if you cast your mind back to 1995, that was before wide scale adoption of broadband, that was before we had always-on, instant internet, that was way before the mobile phone revolution.
Rita McGrath: So even though this information was out there, it wasn’t actually practically relevant at that time. I mean, in America, the way we got on the internet in those days was you dialed up to AOL, and this dial tone right, and that time you actually even paid for the time you spent on the internet. So even though the early warnings were there, it wasn’t really practical, it wasn’t a meaningful shift in the business.
Rita McGrath: However, had you been paying attention, you could’ve seen that as an early warning that something big might be coming your way. And I think that’s what I’m encouraging executives to sort of broaden their imagination about what could happen. If there’s a potential for a 10x shift, something that is a constraint on your industry, that’s where you really want to be paying attention, early on.
Rita McGrath: And in the early days, there aren’t any data, so it is a bit of intuition, it is a bit of imagination. It’s looking at what could shift, rather than saying, ok this is at my doorstep, we have to react to it now
Christian Rangen: If we bring this to our upcoming event in Norway, what do you think are the biggest takeaways for busy executives that will be taking time out of their fairly challenging workday at the moment to spend a day with us?
Rita McGrath: One of the takeaways is how do you think about early warnings, another is how do you set yourself up for innovation. And as you know, Christian, I am a big believer that you have to be investing your resources in three kinds of initiatives.
Rita McGrath: One is to keep your core business as healthy as you can, which is challenging if it’s in decline or flat. The second is to think about what you’re going to launch that is going to be part of your next core business. The third is how do you invest in strategic options which are early investments that give you the right, but not the obligation to make a significant investment going forward. And I also think we’ll be offering a sneak peek of some of the tools we’ll be using so we’re in the process of developing an innovation operating system which embeds in software and ways of working this innovation proficiency that I alluded to earlier.
Rita McGrath: How do you do work that is legitimate but also is friendly to the innovation practice.
Rita McGrath: There will be some very cutting edge ideas in the workshop.
Christian Rangen: I think we’re all looking forward to it. It’s interesting that you mentioned the Three Horizons. I think we share a passion for tool-ifying rather than complicating the field of strategy. We follow your work and we’re very much looking forward to seeing what new strategy tools that’s going to come out of it.
Rita McGrath: I think it’s going to be a very exciting day.
Inger Hanne Vikshåland: Great! Should we finish off with the final question? We have talked about the big picture, and globally, we are seeing more and more governments looking to accelerate national transformation, like Norway for instance. So what are your thoughts on this, Rita?
Rita McGrath: Well, government has some positive things that it can do and it also has some challenges. You know, the typical government program of sort of picking winners and losers and funding new kinds of innovation is often not that practical. They have a different set of motives, they have a different judgment criteria so I would advise governments to not get directly involved in supporting businesses and ventures.
Rita McGrath: Where I do see governments being incredibly helpful is where the market really fails. So providing support for initiatives that perhaps are too long-term or too challenging or difficult for individual investors to want to take a risk. That’s one way where governments can be really helpful.
Rita McGrath: Another way is to invest in capability creation. So rather than saying, we think x industry the place to go, we’re going to put all our resources there. Instead say, we can be part of building an innovation capability in our country. We could invest in training entrepreneurs, we could invest in training people how to build an ecosystem, we could invest in specific skill development, I think those are all very fruitful where governments can get involved in creating more innovative companies.
Rita McGrath: I think what people don’t understand is, given our current administration in the US which i think is a really important topic, is that if government was business, it would be business right? Government has different things – so just as a specific example, you know, businesses seek out points of differentiation, so if you are a business what you wanna do is appeal very very strongly to a given and select set of customers. Government is all about creating broadly, the biggest set of benefits for the largest number of constituents even if nobody is particularly 100% pleased with the outcome. You know, it’s a completely different set of criteria that you’re working with when you’re the government, so we really need to understand what government can and can’t do.
Rita McGrath: I’m a huge believer though in capability building.
Christian Rangen: It’s um, you know, not to touch on your current administration, I think there are a lot governments around the world that are looking for ways to, you know, much like Singapore probably, really really put a strong effort behind growing new growth industries. I think this discussion in the US between should we take care of the coal industry or should we accelerate our efforts in the solar industry is a perfect point on that conflict. Because there’s one that you’re familiar with, and then there’s one where data’s seeping in that solar is actually employing more people today than coal yet the discussion very much revolves around past profits and past traditions.
Rita McGrath: I’ll jump in there. I think that’s a battle Norway is going to have to be grappling with. There’ll be an awful lot of nostalgia for the way things used to be. In any big disruption, in any big technological change, there is going to be people that benefit and people that suffer.
Rita McGrath: And I think we don’t talk enough about how do we responsibly attend to the losses experienced by those suffering. And me personally, I think one of the difficulties with the way our economy is set up right now is that we don’t require for-profit organizations to do very much about the social costs of the dislocation that they create and as a consequence, if you’re running the company, and it does something that is economically sensible but socially costly, right now, society at large bears the cost, the US companies don’t bear the cost. A friend of mine has a great phrase, he calls it “social pollution”, which is the way we structured our system in many ways. We don’t require companies to take responsibility for some of the things they do that really do create social complications.
Christian Rangen: I think that’s a big topic to dive into. I think across western governments we’ll see a lot of challenges in that field in the next couple of years starting probably with France later this year.
Christian Rangen: Rita, it’s really good chatting with you and I think I speak on behalf of everyone here when we say we’re very excited to welcome you to Norway, again.
Rita McGrath: I’m really looking forward to it!
Christian Rangen: And I’m very excited to be spending time with you on your latest work and see how we can help shed some light to a large group of executives that will absolutely benefit from getting a better understanding of your work.
Inger Hanne Vikshåland: Thank you so much Rita for your insights and your great responses.
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Work on your strategy with Rita McGrath on her upcoming visit to Stavanger. Join us for the full-day senior executive strategy Masterclass on May 12, 2017.
This is an invite-only Masterclass. Fill in the short form below to request your invite:
Engage // Innovate co-founder Christian Rangen recently had the pleasure to sit down for a conversation with Columbia Business School professor and globally-recognized expert on strategy, innovation and growth Rita McGrath, to discuss her latest work on strategic inflection points.
As a long-time member of Engage // Innovate’s informal Advisory Board, Rita’s thinking has long been an influential and inspirational force.
In the short, but very interesting conversation, the two strategy experts delved into innovation as a repeatable process, how companies should react to the early warning signs of impending industry shifts, as well as Rita’s upcoming Executive Strategy Masterclass happening in Stavanger on May 12.
If you would like to join the upcoming Masterclass — request your invitation here or learn more about the Masterclass here.
You can listen to the talk in the podcast below or read the full transcript here.
Five key takeaways:
1. How companies can think about getting into new areas
Rita’s latest research deals with industry shifts and portfolio thinking, a subject highly relevant to the declining oil and gas industry in Norway. As Norwegian executives struggle to move beyond the oil and gas industry, the first step is to recognize that what worked in the past might not be what works in the future.
Companies need to be thinking about getting into new areas.
“To me, there are two vectors you can choose. You can choose to operate from a capability platform, or you can choose to operate around a particular customer need that you’re serving.” said Rita.
Statoil, for example, could choose to operate from deep capabilities in undersea operations and other complex technical capabilities they’ve built over the last decades, or make the bolder move of defining themselves in the energy space and explore options they’ve never traditionally had the capabilities in.
Rita pointed out that Fujifilm was a good example of a company that started expanding their portfolio by operating from the capability platform.
“They decided to say, ‘hey, you know we’re terrific at chemicals, we’re terrific at imaging, so let’s find places where those capabilities come into play.'”
Today, Fujifilm’s efforts in diversification has brought them into cosmetics, medical imaging, and even services for the pharmaceutical industry. The company is pursuing a variety of different activities all linked at its core to their central capabilities.
2. Look outside your industry to get started with reinvention
When asked for a beginner’s guide for management teams that need to find reinvention, Rita advised companies not to stay within their own little bubble.
“I think there’s a need to really immerse yourself outside of your immediate context and get a sense of what’s going on in the world that may or may not have anything to do with what you’re looking at”.
How does one do this? There are a number of ways.
“You can immerse yourself in an executive program, come to a seminar — like the one we’re planning, you could go to conferences from industries different from your own.”
Rita believes that the key is to get away from the daily grind, your emails and the day-to-day, so you can really get a big picture perspective of what could be going on.
“When you make the relatively small effort — take a couple of days, go to a non-related industry conference or have conversations with people who don’t touch what you normally touch, it’s surprising how quickly the insights begin to emerge,” she mused.
3. Pay attention to the early warning signs of industry shifts
When Rita looked into the architecture behind strategic inflection points, the typical weak signals that could’ve alerted businesses in advance often go unnoticed.
“The weak signals are when something happens that creates a 10x shift in the envelope that contains your industry. If you think about any kind of sector or industry or company, they have certain constraints in their environment that are present when they’re born.” said Rita.
We’ll take the newspaper industry as an example.
Back in the day, the main constraints in the newspaper industry were things like how many contracts they had, how many trucks they needed, how many newsstands they had, etc.
Digitalization came along and transformed all these existing constraints by a factor of 10 or 20.
The changes don’t happen instantly, and they take a long time to unfold, but only the companies that prepare for them in that time can come out of the 10x shift triumphant.
Rita then pointed out Amazon as an example.
Amazon sold its first book online back in 1995. That same year, a reporter from Fortune pointed out that the internet could potentially change all the different constraints across several industries like publishing, retail and distribution.
The data were there. But nobody in retail was paying attention.
Rita believes that businesses should look out for possible industry shifts and plan ahead instead of reacting when it’s upon their doorstep.
“When you see something way off in the distance when you’re driving, you can adjust your trajectory with a relatively small shift of the steering wheel, but if you wait until it’s right upon you, you’re nearly at it. You’ll have to make that steering wheel jerk significantly to avoid the obstacle. And that’s the way to think about early warning signs.”
4. Stepping up on the Innovation Maturity Scale
Rita has developed a tool called the Innovation Maturity Scale to help companies see where they are in terms of innovation proficiency.
The scale goes from 1, where companies are hostile towards innovation, up to 8, where the leadership is committed to innovation at all levels.
Compared to the innovation maturity Rita sees during her work in California, she believes that most organizations are at a 2 or a 3 on the Innovation Maturity Scale — meaning that they have the desire to improve and innovate, but have no full-on support.
“They’ve got pockets of innovation, there are champions that kind of comes and goes. They take the big trip out to Silicon Valley, have a picture taken next to the Facebook sign, but they don’t really have it embedded as an actual proficiency in the organization,”Rita revealed.
Norwegian companies are not that different, Christian mused.
They are great at initiating innovation, but when it comes to really organizing for innovation as a repeatable process, most Norwegian companies fall short, save for a few.
“Telenor is a good example, I know Rita you have been writing about Schibsted as a good example. Kongsberg is a good example. But overall, there’s a lot of work to be done here,” Christian explained.
5. Businesses should invest resources across Three Horizons
Mature companies often face declining growth as innovation slows down. Companies that want to keep growing must not only focus on their existing business models, but also potential growth areas in the future.
“I’m a big believer that you have to be investing your resources in three kinds of initiatives. One is to keep your core business as healthy as you can, which is challenging if it’s in decline or flat. The second is to think about what you’re going to launch that is going to be part of your next core business. The third is how do you invest in strategic options, or early investments that give you the right, but not the obligation to make a significant investment going forward,” Rita said.
There are strategy tools that can help frame this, including Strategy Intro, The Three Horizons Framework, and the Three Levels of Business Models.
Both Rita McGrath and Christian Rangen will be unveiling new strategy tools at the upcoming Rita McGrath Strategy Masterclass in Stavanger. Request your invite by filling in the form below.
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Work on your strategy with Rita McGrath on her upcoming visit to Stavanger. Join us for the full-day senior executive strategy Masterclass on May 12, 2017.
This is an invite-only Masterclass. Fill in the short form below to request your invite:
The Gist of It for Busy Execs:
- The Strategic Innovation Canvas is a simple, easy-to-use tool to collaborate on, communicate and develop future-oriented strategy.
- The Strategic Innovation Canvas is built upon the theories of Clayton Christensen (three types of innovation) and Rita McGrath (discovery-driven growth and short-term competitive advantages).
- Companies that use the canvas like Statoil, Reckitt Benckiser, and Biotage find that it allows them to shape a very different future for their organization.
Christian Rangen — co-founder of Strategy Tools
It’s now been 5 years since the early development of the Strategic Innovation Canvas. The strategy tool has since been put to use in hundreds of companies.
We decided to take a look back at history and sat down with the original strategy tool designer Christian Rangen with a few questions.
1. What can the Strategic Innovation Canvas do for my company?
The single biggest impact the Strategic Innovation Canvas has is helping management teams and strategists to create a more future-oriented strategy.
Most companies are incredibly focused on operations and the status quo. As the pace of innovation and disruption is picking up worldwide, we believe companies need better tools for their future.
This has been the driving idea behind Strategy Tools since our early research days back in 2011. We simply must build better strategy tools and the Strategic Innovation Canvas is but one small contribution to this global challenge.
The Strategic Innovation Canvas gives you a strategic framework for developing an options-driven innovation portfolio. This builds heavily on one of our advisory board members Rita McGrath’s long-time work on discovery-driven growth and short-term competitive advantages.
Companies that use the tool like Statoil, Reckitt Benckiser, and Biotage, realize that they’re able to shape a very different future for their company simply by using a different strategy tool.
The Strategic Innovation Canvas – a great tool to engage everyone in shaping strategy | Reckitt Benckiser workshop, Italy
2. Where did the canvas originate from?
Early during our research, we found a repetitive pattern of thinking in threes.
Again and again we saw this becoming very apparent in the field of strategy.
One example is the old McKinsey research — The Three Horizons of Growth, where companies need to think about the short term, medium term and the long term at the same time.
Equally Clayton Christensen talks about three in terms of sustaining innovation, improving innovation, and market-creating innovations. But we realized that we didn’t really have any good future-oriented tools that brought this level of “three” into practical use.
Working with a number of companies including our good friends at Statoil, we started sketching out and prototyping the first designs of the Strategic Innovation Canvas. Using highly innovative companies like Amazon as case studies, we were able to communicate and articulate what this meant in practice.
Our goal in the early days was really to build a simple, easy-to-use visual tool that came out of fairly advanced research and understanding of how to shape strategy for the future. And i hope we have achieved that fairly well.
With the Strategic Innovation Canvas, it’s easy to collaborate on shaping the strategy of your company | RB using the SIC in a workshop
3. How was the early development work?
The early development work built on a lot of design workshops with the executives from many industries.
The tool was largely built through workshops and testing with executives responsible for designing and shaping strategy across many different industries.
This has not been a primarily academic research, but really a genuine co-creation with executives around the world.
Following the very early design phase, we quickly took our work on the road and presented the early designs at various innovation conferences, including Copenhagen, Cannes, and Vienna. Again the feedback that we got from the larger innovation community helped confirm our earlier experiences and helped shape this tool further.
The Strategic Innovation Canvas works seamlessly with other visual strategy tools | Tenaga Nasional workshop, Malaysia
4. What’s been your biggest learning?
One of the effects of working with the tool is that management teams, strategy teams quickly realize that most of their energy and intellect goes into core business and operational issues.
Simply working with the tool forces you and enables you to design a different strategy for the future.
Again and again we see management teams surprise themselves when they realized how operationally focused they have become, and they simply do not have a proper strategy and innovation portfolio in place.
My biggest learning has been that simply by visualizing on this and starting work on it, companies quickly adapt and start developing better strategic thinking for themselves.
With the right facilitation, 300 people can work on shaping company strategy at the same time. | Biotage workshop, Spain.
5. How do you see companies using the tool? What is the best practice when using the Strategic Innovation Canvas?
Best practice is really when the tool becomes internalized by leaders and strategists at all levels.
This might take time, this might require some training sessions, but once leadership starts using the tool for their own progress, once the strategy team starts using the tool in internal sessions, once mid-level managers pull it out to start to discussing a more ambitious strategy, that’s when the tool really comes to effect.
The Strategic Innovation Canvas is not meant for a one-time, one-session use, but really it is a deep strategic tool that should be embedded into the organizational DNA.
One of the teams from Biotage working on the Strategic Innovation Canvas
6. What do you see next for the Strategic Innovation Canvas?
Moving forward, we see three things.
One, we see an increasing number of companies putting it to use.
Two, we see more and more strategy and innovation teams internalizing it and using it in their everyday work.
Three, we’re looking at ways to bring this into a software solution.
We are working on our book and our writing in general, to publish more content, insights, and case studies on how our strategy tools are being put to use. This has been work in progress since 2012, and we’re still trying to find time to make more of that happen.
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Sri Lanka is a nation in transformation. Emerging from a 30-year civil war from 2009, the country has been playing catch-up on business development and innovation. It’s been 7 years, and Sri Lanka is running to make up for lost time and reach its full potential.
The result? An impressive 6.4% economic growth in recent years.
With its goal to move from a lower middle income country to a high income country in the next two decades, Sri Lanka’s government has implemented multiple reforms and set in place many business-friendly policies to improve the business environment. The economy is on the rebound, slowly but steadily.
Strategic Innovation for Sri Lankan Firms
The government is now looking to build a knowledge-based economy to lay the groundwork for the future of the country.
Their biggest challenge at the moment, according to PwC’s Academy manager Nuwan Dishan, is to ignite the entrepreneurial spirit in both big businesses and small.
“Companies aren’t really sure how to implement an innovation department and go beyond R&D. How do you come up with new business models, new strategies, new products and services to revolutionize the industry?” he said in a recent interview with us.
Companies in Sri Lanka, like many others across the globe, struggle with managing innovation and transformation.
“We have many good ideas from individuals, entrepreneurs and startups. In fact, some of our local companies have made it to the global level. As an economy we need more of these companies dominating local, regional and ultimately global markets with strong brands.” Dishan revealed.
The biggest challenge most Sri Lankan entrepreneurs face is nurturing the good ideas into reality, into a commercially viable product or service through new business models that disrupt the market.
“In order to do that I think insights are critical not only at a local level but also at global level. Rome was not built in one day, similarly this would take time. Collaborations such as Engage // Innovate and PwC’s Academy will help companies get new insights to think in different angles.” he explained.
Last year, PwC’s Academy reached out to Engage//Innovate to run a Strategy Tools for Business Model Innovation workshop for some of the top business leaders in Sri Lanka.
Engage//Innovate founder Christian Rangen flew over from cold and gloomy Norway into the pulsating heat of Sri Lanka, and facilitated two intense days of learning in Colombo.
Participants deep dived into the current innovation best practices and strategies. They looked at updated, real world case studies and got hands-on with the strategy tools that’ll help frame their innovation strategy.
Christian Rangen’s Strategy Tools for Business Model Innovation Workshop in Sri Lanka with PwC
In just two days, they have laid the foundation for strategy and transformation within their companies.
Many of the participants found the strategy workshop so enlightening and inspiring that Engage//Innovate has once again been invited to run a new workshop, happening from Mar 8-9, 2017.
“This programme has been quite fantastic. We thank PwC’s Academy because Christian has made us think in new dimensions in terms of innovating our strategy for the progress of our company. Our thinking has been changed after attending this programme.”
— Thilanka De Zoysa, Managing Director, Convenience Foods Lanka PLC.
Creating the future for Sri Lanka | Engage // Innovate Workshop with PwC’s Academy in 2016
Improving the Sri Lankan Economy through Innovation
With Sri Lanka’s goal to join the ranks of the high income countries — you need significant innovation.
Development of technology is an important measure for innovation, and as of 2015, Sri Lanka’s tech exports stood at just 1%.
In the Global Innovation Index, Sri Lanka ranked 91 out of 128 countries. It isn’t bad for a country that had battled 30 years of civil unrest, but it reflects the amount of work Sri Lanka has to do in order to secure their place in the future.
Engage//Innovate and PWC’s Academy play just a tiny role in the grand scale of things, but the abounding interest in the innovation programs is a reflection of the country’s voracity in striving towards change.
Connecting New Growth Opportunities between Norway and Sri Lanka
Sri Lanka is a potentially huge growth market for Norway in terms of renewable energy, wind, and fish-farming. There can be a lot to gain for businesses of both countries to work together, both in knowledge and resources.
“Norway is one of the world leaders in terms of energy and innovation. It is one of the innovation hubs in Europe. Norway has a lot to share with Sri Lanka,” said Dishan.
Engage//Innovate’s work in Sri Lanka is just beginning. We are looking forward to deeper, more impactful collaboration in the near future.
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If you’re in Sri Lanka and want to cement your place in the future, register for the March 2017 workshop by clicking the button below.
We travel worldwide to run workshops and consult with companies. Interested in getting a conversation started?
Our resident innovation guru Christian Rangen is always going on about how important it is to ask the right questions.
His favorite thing to do whenever we sit down for a meeting, is to ask provocative questions.
While they weren’t the easiest questions to answer, they helped re-frame the way we thought and pushed us to see things from a different perspective.
Questions are incredibly powerful.
Think about it, asking questions led to the world’s greatest discoveries and inventions:
“Why did the apple fall from the tree?”
– Isaac Newton“What would the world look like if I rode on a beam of light?”
– Albert Einstein
Opportunities to innovate are around us every minute of the day. The first important question is — are we even looking out for them?
Here are 30 questions to uncover the innovation opportunities you might not have seen before:
Capitalizing on Problems
- What other problems do our customers face that aren’t getting solved right now?
- Can we solve these problems for them?
- What problems do we currently have that we could turn into an opportunity?
- Why are our current unhappy customers unhappy?
Outperforming the Competition
- Where is the market leader weakest?
- What can we do to be better than that?
- If there were a new competitor in our industry, what would they do to be different?
- Who are our unlikely competitors in the future?
Perfecting the Processes
- Which parts of our process flow would we like to eliminate?
- Why are we doing this process in the first place?
- What if we did this backwards?
- Can we remove the constraints when managing our workforce?
- If we had a magic wand, what would we change about our product / service / process?
- What can we do an hour a day to make our business better in 5 years?
Prepping for Unexpected Surprises
- What would happen if someone started giving our service / product for free?
- How can we start giving our product for free and still make money?
- What new legislation could put our business in danger?
- What new technology could make our product obsolete?
- What kind of business model could kill our business?
Thinking Beyond Today
- What other markets could we sell our products / services in?
- How should we go about selling our products / services in other markets?
- How can we tweak our current product / service to appeal to a new market?
- How can we make $xxx,xxx (insert ambitious sum) an hour?
- Could we turn our services into products / products into services?
- Could we start selling our internal resources as a service or product?
- How can we seize the white space of unexplored markets and customers?
- How can we innovate our management and increase the effect of our leaders?
- Can we change our cost structure?
- How can we double our revenue streams without adding cost?
- Are we looking far enough ahead to redesign the competitive field?
- Are there new ways to use the technology and capabilities that we currently have?
- What would Elon Musk, Mark Zuckerberg, Jeff Bezos or a visionary leader we look up to do?
We could come up with 100 more questions, but we’d like to hear yours! Leave them in the comments section below.
The best thing to do in business is to learn from the mistakes of others. Here are three major lessons learned from some of the biggest business blunders to ever occur:
Mistake #1: Ignoring their own innovations
We all know Xerox, they’re world famous for their document solutions and services. Your company is probably using several of their machines. What you might not know is that they could’ve owned the entire computer industry if they had the foresight to.
Back in the day, in 1970 to be exact, Xerox set up the Palo Alto Research Center (PARC) to invent the technology of the future. They pumped it with funding and made sure the genius scientists working there had everything they needed to make magic.
And magic they made.
PARC invented what is widely argued to be the world’s first Personal Computer in 1973.
The Xerox Alto was awesome — it had an operating system, the world’s first Graphical User Interface (GUI — which enabled the then primitive computer screens to display information beyond just numbers and letters), and even a mouse to point towards stuff on the screen. To top it all off, this computer was linked to other PCs by a system they created called the ethernet.
No other machine had this magical combo at the time.
Remember, this was before Apple, Microsoft and the likes even came up with anything close to what Xerox had invented.
And what did Xerox do with this amazing breakthrough technology?
Nothing (much).
The higher ups didn’t quite get the revolutionary technology they had in their hands. They were more focused on their photocopiers that were the existing cash cow of the company.
According to former PARC researcher Larry Tessler,
“the company management at the East Coast of the USA did not (care a straw for) the PARC’s research results unless they were directly involved with photocopiers.”
Someone else was there to capitalize from this technology though.
Steve Jobs was invited to take a tour of the PARC facility in 1979. And during this tour they were introduced to the Xerox Alto and all its (at the time) jaw-dropping tech.
As Larry Tesler demonstrated how their “mouse” moves the cursor on the screen and clicked on icons, opened and closed “windows”, wrote emails to other people in PARC, Steve Jobs gradually got more and more excited.
In Steve Jobs’ own words:
“Why aren’t you doing anything with this? This is the greatest thing. This is revolutionary!”
He took this inspiration back to Apple and the rest, as you know, was history.
Mistake #2: Not looking beyond their existing business models
Image source: gizmodo.com
In the early 2000s, Blockbuster was the kingpin of the video rental industry in the United States. At its prime in 2004, it had about 60,000 employees and over 2,000 stores in 25 countries.
Just a short 6 years later, Blockbuster filed for bankruptcy.
Why?
Here’s a fun little story about Blockbuster and Netflix you may have heard.
Back in 2000, Reed Hastings, founder of the then tiny, but thriving company called Netflix, met up with Blockbuster CEO John Antioco and his team.
Hastings suggested they join forces and work together. The deal was that Netflix would help run Blockbuster’s online service while Blockbuster helps run Netflix’s offline component (DVD rental through their large network of stores).
Netflix was laughed out of the room.
We don’t know what would’ve happened if they ended up partnering with Netflix. Would Netflix have grown into what they are today — a 61 billion dollar company? Not too sure.
What we do know is that Blockbuster had the funds, the expertise and the resources to launch their own subscription-based streaming service, but they didn’t.
They even got an offer to purchase Netflix for $50 million, but they didn’t.
Instead, they continued focusing on their existing business model — physical stores that rent out videos.
Because they ran such a large network of stores and employed so many people — they needed DVD rental prices that could sustain this. A significant chunk of their profit also came from late fees, something which doesn’t even exist on mail-order video rental services like Netflix.
It was OK when they were the main player, but when given a better alternative and better customer experience?
Netflix knew what the customer wanted — variety and convenience at a low price. They also accurately predicted the customer’s shifting priorities when online streaming became more accessible.
Because they saw that, they pivoted quickly from their mail-order business into an intuitive online platform for movie-watching.
At a time when similar sites were struggling to even display their content in a clean, functional manner, Netflix was sleek, sexy and even had a first-of-its-kind system which accurately recommended movies based on what your personal preferences and movie-consumption history.
Blockbuster’s CEO Antioco realized Netflix (and other services like it) was becoming a threat. And in 2004, he started taking action — he discontinued the late fees and pumped money into a digital platform which he hoped would pave the way to Blockbuster’s bright future.
The board of directors were not happy about the $400 million these moves would cost the company. They did not believe that growing an online business and finding new ways to satisfy customers were the right strategy to take.
In 2007, they fired Antioco and reinstated the late fees. They raised prices on Blockbuster’s digital platform and cut marketing on it despite its fast growth rate. Instead of innovating their business model, they chose to focus on their brick-and-mortar business.
Wrong move.
Today, the Blockbuster brand has mostly vanished from society, with a few straggling stores scattered in certain markets. Netflix, on the other hand, has become a household name.
In his reflections on this, Antioco wrote in the Harvard Business Review that he “firmly believed that if our online strategy had not been essentially abandoned, Blockbuster Online would have 10 million subscribers today, and we’d be rivaling Netflix for the leadership position in the internet downloading business.”
Quite possible, indeed.
Mistake #3: Not changing fast enough
Image source: REUTERS/Kacper Pempel
Just over a decade ago, Nokia defined the mobile phone industry. With a history that began in 1979, it innovated its way into making the most sought-after mobile phones in the market. It was the world’s no. 1 phone company and sold its billionth phone in 2005.
Shortly after, iPhones and Android came into the market. Suddenly, consumers weren’t looking at Nokia anymore for the latest and greatest in mobile tech.
When Android 1.0 was launched in 2008, Nokia’s Q3 profits plummeted by 30%. It went downhill from there.
Nokia realized a bit too late in the game that they needed something that could compete with the smartphones being produced by Apple, Blackberry and Samsung and the likes.
While Nokia continued releasing solid phones with top-notch build quality, the Symbian software that they used in their touch-enabled phones were sub-par compared to Apple and Android phones. Nokia was making great quality phones with amazing cameras, but lagged behind in user experience.
People found other mobile phone operating systems easier to use and so sales continued to dip.
In a last-ditch attempt to win the smartphone battle, Nokia partnered with Microsoft to produce phone that will run on a Windows OS.
The move sold quite a few phones, but it came too slow, and the end product was not good enough to compete with the likes of Apple and Android phones which still delivered a far superior user experience.
Nokia’s market share continued to decline and in 2014, Microsoft acquired Nokia’s mobile business for $7.2 billion.
Just for a bit of perspective, at the height of its times in 2000, Nokia’s market cap was hovering around $245 billion.
However, this is fortunately not the end of the story.
There’s talk of a comeback for Nokia in the first half of 2017, and this time finally, the phones will run on Android. Knowing Nokia’s hardware capabilities, I’m definitely looking forward to see what they come up with.
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What are the biggest mistakes you’ve made in business and what has that cost you? Share your lessons in the comments section below.