Should We Innovate or Stick to Our Knitting?
I have seen many business owners grapple with whether to strengthen their core operations or pursue growth through innovation. The ideal answer I believe is to embrace both strategies.
Innovation doesn’t always mean drastic changes; it can occur in three ways: improving efficiency, enhancing the current business model, and exploring new ideas. Managing the tension between these types of innovation is crucial.
1. Maintain a Strong Core
Remain committed to the existing core business that is generating revenue and has established customers. Teams focused on delivering value must ensure current performance meets customer expectations. If these customers are dissatisfied, trust is eroded, undermining the company’s ability to innovate. Everyone should understand their role in upholding the organisation’s culture and performance, as this foundation is vital for future resilience and growth.
2. Clarify Types of Innovation
The term "innovation" can be ambiguous and interpreted differently across an organisation. It’s essential to differentiate among:
Efficiency Innovation: Continuous improvements that enhance the current business model.
Sustaining Innovation: Extensions of the existing model, such as entering new markets or targeting different customer segments.
Transformative Innovation: Searching for breakthrough business models.
Customers should benefit from all efficiency innovations, as streamlined processes allow for creativity and improvement. However, all business models will eventually become obsolete, highlighting the importance of transformative innovation. This requires a longer-term, experimental mindset, which may challenge some employees and stakeholders.
3. Manage Risk Creatively
Innovating, particularly in the sustaining and transformative areas, requires effective risk management.
One strategy is to develop a separate brand for experimentation to minimise confusion and protect the core brand. Alternatively, testing ideas in a specific market segment can limit potential fallout, allowing for learning without widespread impact.
By employing these varied approaches, organisations can cultivate a culture of innovation that balances the need for stability with the pursuit of new opportunities. Ultimately, recognising that innovation isn’t “one-size-fits-all” is key, as different types demand different strategies, skills, and mindsets.
Balancing core strengths with innovative exploration can pave the way for sustainable growth and adaptability in an ever-changing market.
Innovate or stick to your knitting? What has your experience been and what did it tell you?