Innovation Through Renovation

Posted on Feb 14, 2013 | 2 Comments

Here is this month’s piece from Brand Velocity, an Atlanta-based consulting firm that is putting Peter Drucker’s ideas into practice at major corporations.

Peter Drucker placed a high priority on innovation as an essential source—if not the essential source—of organizational sustainability. Yet many of today’s innovators use concepts such as “thinking outside the box” and “beginning with a clean sheet of paper” as proxies for being truly innovative.

Recently, in a discussion with the president of a large financial services company, the subject of innovation came up. “Over the years, I’ve been to a lot of offsite sessions, where we have gone through the very inspirational exercises of starting from a clean sheet,” he told me. “Here’s the problem. We aren’t starting over. We have a legacy of customers and relationships that have been built over the many decades. Every established company needs to innovate. But no established company can start over.”

During this discussion, I thought that I might be listening to Drucker—without the charming Viennese accent.

Our company has had the privilege of working with major companies on large reinvention projects for many years. In our experience, Drucker’s wisdom has come through time and time again: Most successful corporations that we’ve worked with have addressed innovation through renovation, not building from scratch.

Drucker made innovation, as he so often did with complex subjects, deceptively simple. In his own way, he observed that we must answer three questions simultaneously: First, what do we need to stop doing? This is the “trimming the tree” so that it can grow fuller. Second, what are we doing successfully that we can build upon? Drucker was all about building upon your strengths—whether as an individual or as an organization. And third, what should we start doing that we are currently not?

This third question is where most innovation consultants start—and stop. This question is the most fun to tackle. Yet it is typically the least practical part of innovating in established companies. It’s important, but only in conjunction with stopping those things that are not working and building upon what already is.

That’s why the most innovative companies I know have continually focused on evolution to achieve revolution over time.

— Jack Bergstrand

2 Comments

  1. Bob Embry
    February 15, 2013

    Quoting from chapter 6 of Management, Revised Edition

    “Change agents.

    To survive and succeed, every organization will have to turn itself into a change agent.

    The most effective way to manage change successfully is to create it.

    But experience has shown that grafting innovation onto a traditional enterprise does not work.

    The enterprise has to become a change agent.

    This requires the organized abandonment of things that have been shown to be unsuccessful, and the organized and continuous improvement of every product, service, and process within the enterprise (which the Japanese call kaizen).

    It requires the exploitation of successes, especially unexpected and unplanned—for ones, and it requires systematic innovation.

    The point of becoming a change agent is that it changes the mindset of the entire organization.

    Instead of seeing change as a threat, its people will come to consider it as an opportunity.”

    ===
    Quoting from Innovation and Entrepreneurship

    “Still, successful entrepreneurs aim high.

    They are not content simply to improve on what already exists, or to modify it.

    They try to create new and different values and new and different satisfactions, to convert a “material” into a “resource,” or to combine existing resources in a new and more productive configuration.

    And it is change that always provides the opportunity for the new and different.

    Systematic innovation therefore consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation. …

    … The claim of so many businesses, “Ten years from now, ninety percent of our revenues will come from products that do not even exist today,” is largely boasting.

    Modifications of existing products, yes; variations, yes; even extensions of existing products into new markets and new end uses—with or without modifications.

    But the truly new venture tends to have a longer lead time.

    Successful businesses, businesses that are today in the right markets with the right products or services, are likely ten years hence to get three-quarters of their revenues from products and services that exist today, or from their linear descendants.

    In fact, if today’s products or services do not generate a continuing and large revenue stream, the enterprise will not be able to make the substantial investment in tomorrow that innovation requires.”

    ===

    Consider the entire life stories of GE, Apple, IBM, Motorola …

    Reply
  2. Daniel Pacheco
    February 17, 2013

    Ten years from now that is 2023 ninety percent of my revenue will come from products and services that did not exist in 2013. Thirty years back 1982 to 1992 hundred percent of my revenue came from finance. I was a finance professional. Then recession hit the aerospace industry and I was laid off sorry made redundant. I reinvented myself and moved into a new field. For the next ten years 1992 to 2002 hundred percent of my revenue came from training and development. Then the dot com bubble hit and all training cost were hit – freelance trainers like me were unemployed and unemployable. I reinvented myself and moved into the field of business consulting and coaching from 2002 to 2012. Now as I stand at the threshold of the new decade for me “a one man army “I can am saying ten years from now ninety percent of my revenue will come from products and services that did not exist in 2012. I am talking from personal experience and not theory. Today less than five percent of my income has come from training and development compared to 90 percent in 1992 to 2002. I have gone back to my archives pulled out that old book of mine “Innovation and Entrepreneurship” by Peter Drucker. Purchased a new book and am rereading the new book and marking down my insights then I will compare these insights with those that were marked down twenty years back and set the direction for the next ten years. The ten year decade declaration is a fact for me.

    Reply

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