Forget incremental change. If you want big returns–and less risk–build something entirely new.
Here is an uncomfortable truth: In time, everything in your life, as you know it, will perish. This is true of your relationships, your jobs, and, perhaps especially so, your business. It’s not nihilism; it’s just reality. But rather than taking this state of affairs as a defeat, I propose instead that it is actually a wonderful phenomenon.
In mathematics, it’s referred to as the S-curve. Essentially, the S-curve describes the predictable pattern of anything that develops over time: You’re born, you grow–first gradually and then more quickly–you slow down as you mature, and then you fade out. This trajectory is true for people, organizations, cities, countries, and civilizations. Every single one of us is somewhere within the bounds of our own unique S-curve.
To see the whole world from this perspective means accepting from the outset that you and your company will come to your respective ends someday. Naturally, we have a vested interest in delaying the arrival of that day for as long as possible. The secret, however, does not lie in a mystical oasis in the desert or a shot of epinephrine to the jugular. I optimistically assert that there is a way for companies to forestall the inevitable decline–not by prolonging your current S-curve, but rather, when the time comes, by jumping to another one.
Why jump? Why not keep extending your current S-curve indefinitely?
To do so might have been possible a decade or two ago, but no longer. The creed of our millennium will be carved into the remnants of obsolete technology like Neolithic cave paintings: Innovate or die. Our digital landscape is changing so rapidly that your assumptions about yesterday’s market will likely be outdated by the time you trade in your cellphone. Lessons from business school that would have saved your company 10 years back will ruin it today. The rules have changed.
Think of your current S-curve as something worth prolonging for as long as it’s beneficial and then no more. Your aim will be not to perpetuate your existing business model but to buy time–time to build up the capabilities and resources you need to make the leap to the next S-curve intelligently, such as money, brand, and reputation. A reprieve also allows you to acquire valuable assets like production facilities, natural resources, knowledge, skills, culture, and customers.”Radical innovation can result in massive returns and breakthrough results, and if you do it right, with less risk, too.”Magnus Penker
To prolong the life of your S-curve, you’ll need to employ incremental innovation, which is all about improving current products or services, enhancing their features, or lowering operating costs. The idea is to use creativity to revivify old ideas in a new, more appealing form, so that they can be recycled again and again. Popular incremental methods include lean manufacturing, Six Sigma, Kaizen, Scrum, and design thinking. These are all continuous reengineering initiatives. And the improvements they bring will increase profit margins–incrementally.
Sounds like the safe and steady path, right? Wrong! When you do finally need to jump ship, there will be nothing incremental about it. The safest way to ditch your current S-curve and hitch a ride on an entirely new one is through radical innovation. As I show in my new book, Play Bold, businesses that adopt this way of thinking become, by necessity, more structured and procedurally efficient at capturing, testing, and piloting clusters of ideas–which, incidentally, helps them become better incremental innovators, too.
Radical innovation has a far greater impact on economic activities than incremental innovation. It creates new markets and renders existing products, business models, and services obsolete. Radical innovators bring about this transformation by introducing groundbreaking new products or services. Nothing is recycled here.
While the gains from incremental innovation are usually modest, perhaps 10 percent or so, the risks seem low as well. But recent studies have shown that radical innovation can result in massive returns and breakthrough results–think 10 times the performance–and, if you do it right, with less risk, too.
How so? Incremental innovations improve a single S-curve, which market forces will eventually destroy, taking the company with it. Prioritizing gradual improvement also leaves you vulnerable to sudden, unexpected shifts in the market. The new S-curves generated by radical innovation open a path to business continuity through an endlessly adaptive transformation process. That’s not to say you’ll never fail–you will. But even failure can help you.
Now, we must be careful when talking about failure. The wrong kind of failure can be devastating. Jumping into innovations without being sure that the new direction is right for your business is like rolling the dice on your future. So it’s irresponsible to advise business leaders, as so many have, to “go ahead and fail. You have nothing to fear.”
Successful companies learn how to fail the right way. They contain and channel experiments that fail so they can learn from them without damaging the company’s future. A well-known example of beneficial failure is when 3M chemist Spencer Silver tried to develop a super-strong adhesive. Instead, he accidentally created the opposite: a fixative that was reusable, pressure-sensitive, and bonded only lightly. But because of 3M’s culture of perseverance, his group searched persistently for a new application, and years later, their discovery led to Post-it Notes.
It’s important to remember that when you arrive on your next S-curve, this new sweet spot is not a destination. It is only another living, breathing thing that will grow, level off, and eventually fade away. That is why your long-term strategy must include a plan to continually search for and nurture new S-curves, both in the areas where you excel today and in markets you might not even know about now. The future depends on your ability to adapt to changing tides.
This adventure can be an uncomfortable and daunting one, but it’s also the answer to our somewhat gloomy introduction. Your survival begins when you get out of your cave, where all is known and under control, and start experimenting with innovative ideas and business models. Today is the day to be bold and ask: How will you change the world?
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Original source: Inc.