Everyone is talking about innovation and creativity these days. How can entrepreneurs capture new ideas while continuing to grow your business? Many entrepreneurs are very successful because they focus on what they do best and leave everything else to others on their team. An organization struggles if the owner does not look outside the organization to develop future growth opportunities. Before you say it, I know what you’re thinking, “We’ve grown our business to a very good size and we’ve never found an idea outside of our organization.” Good for you, you have done something very few entrepreneurs have done.
Actually, I can’t think of one successful entrepreneur I know who runs a business over a billion dollars in revenue who did it developing only their own ideas. Even Steve Jobs was proud of the fact he got many of his best product innovation ideas from large companies who could not see how to apply their breakthrough technologies. It may have been possible in the past because of the slower rate of change, but today organizations need to evolve faster than ever before and, in many cases, the earlier the better.
I even try to get startup businesses to think about where opportunities exist outside their four walls, the earlier the better. To do this, they must be willing to explore the many options available to them to grow faster. I use a process that includes a series of questions around their strengths, opportunities, and capabilities. I work with them to identify these so they can decide what kind of organization they want to build. This also includes developing their succession strategy.
There are three key ways an organization can develop new ideas. I start with the three ways to develop new ideas today and then go into further detail in the next several weeks. The first way many entrepreneurs develop new ideas is to build them themselves. Building gives them an edge if their organization has significant financial resources and a unique position in their markets.
These organizations have a strong culture that focuses on developing new ideas and then creating markets for them. Many times, they have created a unique product or service for their markets and they have strong partnerships with their clients so they can get real time feedback on their new ideas. It is critical today to include the voice of your customer in your new product development cycle. Not only because the customer tells you what they want, but how much they are willing to invest in certain capabilities.
I worked with a technology company who had a reputation for being a strong innovator in their markets, but they struggled to get real time feedback from their customers. Because of this they invested in several technologies that customers would not buy because they did not see the value in those new technologies. As importantly, this company created many breakthrough ideas but was unable to capitalize on the wide range of products their research and development created. In many cases, they picked the wrong products in which to invest their capital. They looked in their review mirror more than through their windshield when choosing where to invest in new ideas.
I suggested that they should consider putting together teams that included their customers during the development cycle so they could get real time feedback, as well as critical performance metrics to allow them to be more successful in selling their best early adopter clients their breakthrough products. This process allowed them to prosper in their key markets, but they still struggled when trying to expand into new markets.
A major competitor of theirs employed a different strategy in developing their markets. They used a borrow process, which meant they were always searching for new technologies to sell into their current clients and markets. They were very strong at developing partnerships and licensing new technologies as they became available. In many cases, they would go in and provide additional capital to good startup businesses to help them continue to develop their advanced technologies. They also became very good at buying many of their early investment companies before their markets or new idea took off.
This organization was very creative in how they structured their licensing agreements to allow for the most flexibility during a new product’s potential launch. They were very good at identifying how to apply new technologies to their clients’ businesses. They would be in front of their clients on a more regular basis. This allowed them to see how industries were changing before the changes happened. Because they were not an engineering company, they had less overhead and more flexibility in playing in new emerging markets more successfully.
Now we discussed the build and borrow way of developing new products and markets. Next week, we discuss a strategy of buying new ideas and technologies for your organizations. I have found the buying strategy can take the best of both of these other two strategies and still provide for significant growth and profits. Next week, I’ll share with you why it might be a good strategy for your growing business.
See you next week.