“More Proof That Uber Is Killing the Taxi Industry”
“How Netflix Bankrupted and Destroyed Blockbuster?”
“Is Spotify Killing Our Music Industry?”
These are real headlines, one or more flavors of which we have all read online sometime or the other. They make us think of startups and nimble new market entrants as disruptors in established industries, and large corporations as old-fashioned laggards waiting to die.
Yet the reality is anything but. Over the last year, we have seen big business at the forefront of technological innovation. In the midst of the pandemic some of the world’s largest corporations mobilized to leverage ground-breaking technologies to keep vital supply chains running and develop life-saving medical devices.
An IBM research showed that 72% of executives said incumbents drove disruption in their industry, compared to just 23% for outsiders. What does this prove? Size and speed are not independently the criteria for success, but a combination of both is a winning formula.
Successful incumbents are the companies that can establish close collaboration with innovators and entrepreneurs. Where the infrastructure isn’t ready to support fast and furious innovation internally, it can be carried out by an agile partner or strategic ally. As a result, it is often the incumbents that are actively innovating at the edge and leveraging the outcomes to implement lean innovation methodologies across the enterprise.
Are you an incumbent? Here are my five tips for unlocking fresh thinking and fostering an agile, entrepreneurial mindset at an established organization:
1. Always start with the customer
In many ways, businesses have never been closer to customers and their expectations –and that’s largely due to the convenience and insight provided by digital channels. But customer obsession starts with asking and listening.
For instance, when we surveyed our target segment last year we learned that only 9% of homeowners knew that homes were one of the highest producers of greenhouse gases (GHG). We also learnt that the majority of consumers are willing to pay for their homes to become net zero so they can benefit from the efficiencies of green technology.
At the same time, however, consumers are not willing to change their lifestyles in order to effect these changes. While uncomfortable reading for some, it’s insights like these that help us stay innovative in the home energy management space. Instead of trying to convince customers of something new, listen to their concerns and priorities first. This has been our guiding philosophy at Schneider Electric, where we’re able to innovate smart and sustainable solutions to cut domestic CO2 emissions without impacting people’s everyday lives.
2. Slow down and think
I believe successful innovation is rooted in three main attributes – hyper-awareness, informed decision-making, and fast execution. In the world of the ‘new normal’ we often find ourselves working round the clock. But hyper-awareness begs undivided time and attention. Reading a few headlines, dedicated briefs or newsletters simply won’t cut it anymore.
That’s why it’s important to block uninterrupted time in your diary just to think about specific insights, pain points and trends you are observing in the marketplace. Many of the most important decisions we make in our lives will be the result of ‘right brain’ thinking – based on limited data, fast-twitch response and blind intuition. But in a marketplace where everyone else is desperately trying to respond quickly to events, there’s a real advantage in stepping back and engaging the left brain. It’s important to delegate operational tasks that your team members can handle so you can set time aside to consider the bigger picture.
3. Forge partnerships
Open innovation fueled by collaboration is the future. Many startups have laser focus on specific customer problems, and quite often they have the software and solutions to solve them. For a larger enterprise, partnering with such companies can accelerate your innovation agenda while you can offer the startup your scale and regional or global reach to help them grow.
The creation and distribution of open-source tools, built and distributed on shared, industry-wide platforms can greatly expand the scope for value creation. Think of how you could create such platforms – Schneider Electric Exchange being a great example. In this way, collaboration and strategic alliances are enabling a much-needed step change across many industries and markets. Schneider Electric’s alliance with Geo in the UK, our Singapore EDB partnership to create NaviX, and our collaboration with Assa Abloy, Somfy and Danfoss to form the Connectivity Ecosystem Alliance, all show the power of such partnerships. When we work together for the sake of innovation, it’s a win-win for the corporation, the partner and the customer alike.
4. Organize yourself for meaningful innovation
If you want to avoid the gravitational pull of corporate inertia slowing you down, you need to anchor yourself to business innovation. Start with the core purpose, culture, mission or DNA of the company; create dedicated teams to jumpstart innovation at the edge and establish venture teams that bring equity partnership in addition to commercial collaboration.
At Schneider Electric, we have a dedicated team called ‘Innovation at the Edge’ that manages this process. We push to ensure all business units have a close working relationship with the Innovation at the Edge team. As the world’s Most Sustainable Corporation, we also have a core purpose, a mission that drives our innovation agenda. Bringing lean innovation and an agile mindset to internal practices is key to success.
5. Seek continuous improvement
Digital has disrupted many industries while creating opportunities for true innovators. Yet societal preferences change as well. It’s important not only to be conscious of the now, but also to think about the next three to five years. How will your product or service improve to keep pace with changing customer expectations? Getting insights and product feedback as you go along is key to maintaining this kind of agility. It’s also important to include sustainability considerations in these plans, from circularity to sourcing while maintaining strong business performance. A business’s environmental impact will be key for all companies, big and small, as consumer attention switches more heavily to climate change.
During Industry 2.0 and Industry 3.0, size mattered the most. Yet this has changed in the new world of Industry 4.0. Technology, digital and software have lowered the bar for entry, giving startups and small businesses the ability to scale rapidly and reach millions or billions of customers. But I don’t see this as another tale of David vs. Goliath. Instead, a new narrative is growing where a combination of speed, agility and scale wins the battle every single time. If we take the past 12 months as a reference, they have taught us that nothing is set in stone. Changes and opportunities are waiting for us at every corner, and we should be hyper-aware, take informed decisions, and act fast to make the best of today.
About the Author
Jai Thampi, Senior VP Strategy & Innovation at Schneider Electric’s Home & Distribution division, is an established thought leader in strategy, digital transformation and corporate innovation in B2C and B2B domains.
Featured image: ©Sunny Studio