Earlier this month I had the great pleasure of attending and speaking at Innovative Management Partner’s annual Strategy Days symposium in beautiful Innsbruck, Austria. The title and theme was “Innovationlogic of the Future”.
The event sought to answer three key questions:
- What kind of innovation approaches does tomorrow's society need?
- Why are Shared Value and sustainability the answers?
- But why do many such innovations result in a "dilemma"?
You’d be surprised what’s suddenly part of your ecosystem
Imagine that you’ve decided to build a CO2-neutral car – a car that doesn’t create any net new emissions. Imagine that you are authentic about it, meaning that you’re not satisfied by the car not emitting new CO2, you also want the production of the car to be CO2-neutral. You discover that in theory, there is enough alternative energy in the country that you produce in to power the production of the car. But in practice there is not yet a solution to capture and store the wind and solar energy excesses on any given windy or sunny day, so you can’t actually access this alternative energy. In the old, pre-shared value paradigm of doing business, you could easily say that as a car company, it is not your duty to solve this problem. But in the new paradigm, a paradigm where you develop new products and services in part by redefining productivity in your value chain and working with partners in your cluster, the logical answer is to roll up your sleeves, call your best innovators to action, and develop a technology to solve this problem. Does this sound utopic? Maybe. But Audi is doing this as we speak with its new e-gas project.
“Ownership” is so passé
If all goes well, our children will scratch their heads at the notion of “ownership”. The notion that we buy products for our own individual consumption and then dispose of them eventually – even if we try to recycle – will hopefully seem outlandish. The society of tomorrow must move to the concept of “usership” or even “stewardship”. These means that customers purchase temporary access to products that have been designed for dismantling and reuse from the beginning. After a certain period of time, the producer or a third party proactively takes the product off the customer’s hands, replaces it with a newer version, and feeds the components of the original product back into its production processes. It sounds so simple and obvious. But it doesn’t always happen. Moreover, the concept of individual ownership, which implies endless amounts of idle time, must also be tossed out. We need a “Zipcar” model for much more than cars!
Dare to cannibalise
Thanks to Clayton Christensen, and Kurt Matzler and Stephan Friedrich von den Eichen from IMP, the seminal book “The Innovator’s Dilemma” has finally been released in German, both in terms of language but also in terms of examples and the German context. As you may recall from reading it nearly 15 years ago, successful companies often fail to recognize and ride new innovation waves because they are doing everything right. Hence the dilemma. It was true in 1997, it is still true today. Shared Value innovations in particular can cause companies headaches because if they result in better and potentially cheaper products and services, established products and services can quickly become cannibalized. However, avoiding this dilemma in the short-term by putting breakthrough innovations that can erode margins into a drawer is never the right answer in the long-term. For someone else will just make the same discovery anyway. It is better to cannibalize yourself than to wait for someone else to do so. So as companies are reconceiving products and markets, redefining productivity in their value chain and even enabling local cluster development, they should embrace potential cannibalization, not shirk it.