MANAGING in the

NEW WORLD

Innovation

A recent study by MIT Sloan has outlined the reasons on why firms are often so bad at business innovation. For a start, most executives remain primed only for short-term growth, oblivious of innovations taking place at faster maturity cycles than ever before. Many are really poor at gauging business intelligence, in spite of being powered with the latest tools. A sense of urgency seems to be missing from the work styles of several organizations. Some worry that their profit margins are too thin, so risky innovation will eat up those mere margins too. Many suffer from the belief that to innovate one needs to be wild and crazy. On the contrary the true innovative companies are those that have set up a process towards it. Some even back out because they simply do not consider their team or its members as creative enough. Instead, they must learn how to harness the inherent creativity within.

Source:https://executive.mit.edu/blog/six-reasons-firms-cant-innovate#.W03bhdIzZPa

Uploaded Date:18 July 2018

Companies are nowadays failing faster than ever before. Taking a cue from famous Roman philosopher Seneca, institutions are indeed flourishing slowly but failing fast. Kodak for instance filed for bankruptcy six years after it hit sales peak in 2005. Much like biological ecosystems, businesses too are complex adaptive systems. Like species benefiting from each other, companies too are inter-dependent on the overall ecosystem. Similarly, ecosystems too face challenges such as depleting food stocks. Disruptors, new technologies and negative feedback loops facilitate similar function. Companies often fall back on strategic and innovative growth due to their focus on short-term financial gains or an adherence towards historic metrices rather than future-looking ones. To learn some lessons from biology, businesses must anticipate resource exhaustion. Small and big measures must be mixed to ensure max results. One must embrace evolution as that is the best approach towards business innovation. Computer science too teaches a few lessons such as constant search but with a broad start being beneficial and embracing randomness. A well-thought-out strategy needs to be followed towards talent recruitment to ensure that the right capabilities are acquired. A sense of dynamism needs to be in place, and a balanced set of measuring metrics be sued.

Source:https://www.bcg.com/publications/2018/leaping-before-platform-burns-increasing-necessity-preemptive-innovation.aspx?linkId=51236467

Uploaded Date:04 July 2018

Business innovation is not a one-time eureka moment, but a continuous process involving several steps. This is particularly true in the innovation hubs such as Silicon Valley. PwC recently held its Seventh Innovation Challenge in Tokyo, where such steps were addressed. Tapping the power of pride is one such measure, as such emotional energy drives people to go beyond tangible perks such as benefits or compensation. Failure must be an option, because in a safe environment no one experiments, leading to a static innovation ecosystem. Company culture and talent management must not beabout foosball tables or free food.Instead, it must be one of empowerment and work-life balance. Any innovation strategy followed must put the customer in the middle. Then one will understand what solutions customers really need. A flexible work culture is a must as innovation does not necessarily arise during the fixed hours.

Source:https://www.strategy-business.com/blog/How-Innovation-Happens?gko=6104d&sf190241774=1

Uploaded Date:27 June 2018

There exist a lot of misconceptions about the sharing economy. It is considered a millennial pastime, who will soon tire out. And apparently, it is only relevant in taxi and hospitality segments. However, that is not true as proven by several real impactful examples. Silicon Valley in California is where this sharing economy had its roots in, but in rural India, it has found acceptance through Mahindra & Mahindra’s mechanical farm equipment. The company created a platform called Trringo by which farmers could rent such farm equipment which was otherwise expensive. The sharing economy helps in expanding markets to areas which otherwise could not have afforded a service. It also stimulates people to pay more as the payoff for paying an incremental figure will provide substantial benefits. The users enjoy the variety and improved quality along with the price factor. Those not using are often held back by trust or convenience issues. Business intelligence received from a survey reveals that 57 percent of US, 67% of Indians and 40% of Germans will switch to the sharing economy if convenient offers are received. Sharing is not just relevant for startups but companies at all stages of their growth. Uber and Airbnb have so far been the biggest success stories of this trend.

Source:https://www.bcg.com/publications/2017/strategy-accelerating-growth-consumer-products-hopping-aboard-sharing-economy.aspx?linkId=51426822

Uploaded Date:19 June 2018

Out of about 2,500 companies studied by BCG, only a small fraction can manage growth and profitability during both the good and hard times. These companies termed the 2% club are leaders at business innovation but are also ruthlessly efficient at the same time. Their experimentation does not imply any loss of business. Three key examples stand out for these 2% companies. Spanish fashion retailer Zara for example taps into evolving fashion trends at jet speed and designs accordingly. Amazon maintains its position in this club through a startup mentality where it is constantly able to innovate by studying use patterns. Toyota keeps itself in this club through its lean production principles. The 2 percenters excel due to their explorative stance rather than any exploitation aimed. The latter have a short-term and internal focus, with production and efficiency the hallmarks. For the former, it is agility, empowerment and a growth-oriented long-term, external focus. They share some traits beginning with a clear balance between exploitation and exploration. The have an “outside-in” focus. The embrace the disruptions around. They possess a model for renewal each time things fail.

Source:https://www.bcg.com/en-us/publications/2018/2-percent-company.aspx?linkId=48400612

Uploaded Date:13 June 2018

The Private Equity (PE) model is going through significant changes right now. A case in point was the creation of Emerald Media by PE firm KKR which is now an equity-based platform. This kind of a platform horizontally merges a few sector-specific investments, known as “add-on” deals. Emerald consisted of the combined synergies of CA Media, Yupp TV and Amagi Media. CA which was the focal investment enabled distribution through its wide reach, Yupp had an excellent technology platform, while Amagi is known for its top-notch content. This sort of “buy and build” model is rare but catching on. This business innovationis in stark contrast to the traditional leveraged buyout which aims at almost instant gains. Matching operational synergies is now being taken seriously by PE heads, as opposed who believe in the financial role in buyouts. Fund managers now realize that these platforms may be differentiators if managed well. Building a platform works when a PE already has investments in field it wants to create one on. More options are generated when the investments are in widely differing fields. It is also a sign of “exploration propensity”, always a sign of opportunities to be tapped. No wonder, the big four were the first to mainstream into such platforms.

Source:https://knowledge.insead.edu/economics-finance/business-model-innovation-comes-to-private-equity-9211

Uploaded Date:05 June 2018

Noted NYU Stern professor Melissa Schilling has penned down a new book titled Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators who Changed the World. In this book, she charts the quirky traits of individuals that led to business innovations coming off the shelf. A lot of recent management literature around this topic has focused on the social setting and collaboration. But here Schilling takes a stance by studying eight eccentric, but game-changing innovators. She terms them as “serial breakthrough innovators” and includes- Nikola Tesla, Benjamin Franklin, Thomas Edison, Marie Curie, Steve Jobs, Elon Musk, Albert Einstein and Dean Kamen. She prepares case studies on all these individuals to bring out their unique traits. Schilling has an eye for detail. Innovators unfortunately also suffer from a trait known as hubris or self-efficacy. This otherwise ailment gets converted into positive as it provides these innovators with the self-confidence and gravitas to push forward their products or ideas. They do not blindly follow others’ diktats. Schilling also delves into how Silicon Valley based companies can harness the innovative power of such quirky individuals.

Source:https://www.strategy-business.com/article/The-Quirky-Secrets-of-the-Worlds-Greatest-Innovators?gko=ef650

Uploaded Date:30 May 2018

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