Wow … my very first Medium post. Exciting (for me).
Binge-watching the latest season of “ House of Cards ”, you don’t immediately think of Blockbuster Videos. In early 2013, Netflix introduced to the viewing public the entertaining (and hopefully preposterous) soap opera about Claire and Frank Underwood’s path to the White House. Around the same time, a different type of soap opera was playing out at Blockbuster Video stores — broadcasting instead “everything must go” signs, forlorn shelves and a general sense of despair. The same trend that brought down Blockbuster has led to the production of over 400 original television programs during 2016 — a tenfold increase in television production since 2000.
Two decades into the digital transformation of industries and technology-led innovations are disrupting literally every business — whether you’re a recruiter (think Linked-In), retailer (Amazon) or rocket scientist (SpaceX). During this period, every business leader has become intimately familiar with Schumpeter’s theory of innovation — that innovation is the critical element of economic development — and tens of thousands of blogs and books have been published on the topic.
And, yet, organizations everywhere continue to struggle with innovation.
Business leaders need to apply the same level of discipline and rigor to innovation as they do to sales and production functions. Often, however, innovation is viewed too narrowly with a limited focus on product launches or it’s viewed too conceptually where very little is actually developed. This and subsequent articles will outline a practical framework that can help organizations think more broadly about innovation and deliver meaningful results from innovation activities.
It will discuss the Who, the What and the How of innovation and is based on two decades of hands-on experience with developing and managing award-winning services. It also draws on many of the well-developed themes published by academics, consultants and practitioners in the field. Crucially, it’s based on a very simple principle: innovation is as much a science as an art . It’s as much chemistry as it is alchemy. The beauty of this principle is that — similar to a science — innovation can be broken down into component pieces and taught widely throughout any organization.
Many people in this tech driven era tend to think of innovation as being the use of new digital technology to re-work existing processes and develop new ones. Albeit probably the most important, digital innovation is only one of the many facets of broader business innovation. This and subsequent articles will consider the broader meaning.
The performance benefits of effective innovation are real and measurable.
Management journals publish lists of the most innovative companies each year: Amazon; Google; Netflix; Tesla; Uber. These are the companies grabbing the headlines and — along with a few hundred other companies — experiencing the financial benefits of solid innovation practices. While the top 15% of publicly traded companies more than doubled their share price over the past five years; the most innovative  more than tripled their share price during the same time. Now, that is break-through performance.
Read the annual reports of some of the companies in the break-through group and you quickly realize why they perform so well: they understand how to align their business model and solutions to evolving market’s needs. Read through Amazon’s report and their understanding of their markets feeds clearly into how they describe their business and strategy. Read through Apple’s report and, year after year, they discuss new products and services that they launch or retire. Read through JP Morgan’s report and they share their internal approach to service and business model innovation.
Innovation needs to be among every company’s competencies
We are two decades into the ‘digital transformation’ of industries: the ongoing shift from manual-led service delivery to machine-led service delivery has led to a preponderance of data and a requirement for advanced analytics to understand it all; it has shifted distribution channels from individual outlets (e.g. a retail shop or a television channel) to broad-based, multiple front-end (e.g. mobile) and back-end (e.g. cloud) channels; and, is now moving service delivery toward greater automation and autonomy through technologies such as machine learning and artificial intelligence.
In tandem with the evolution of digital technologies, customer expectations have changed considerably over the last two decades and — more than ever — their expectations need to be at the forefront of every business leader’s decision. While many are doing their absolute best to keep up with the pace of change the results are mixed.
Consider the number of retailers — Austin Reed, BHS, Coach, The Gap — that have not been able to keep up with customer preferences. Consider the billions of dollars large financial institutions everywhere are investing right now to automate and simplify their internal processes. Finally, consider the dozens of technology “start-up accelerators” in Berlin, New York, London and elsewhere focused on new technologies for banking, health care, insurance, retail and many other industries.
All this suggests to me that twenty years on and many businesses still have some way to go on this journey. Moreover, while “the use of … words ‘innovation’ [and ‘collaboration’] … has become ubiquitous in U.S. business,” over the last 15 years  , only a few hundred organizations out of tens of thousands have effective innovation efforts.
In my next article, I’ll go into more detail on the Who, the What and the How that any organization can use to bolster innovation efforts. It will present the need for an eco-system of like-minded individuals (the “Who”) that will think holistically about your business model (the “What”) and base any decision on a solid understanding of evolving market needs (the “How”).
 Average percentage change in dividend-adjusted share price between June 2011 and June 2016 for 3,000 publically traded companies in Europe and the US with positive share price growth and market capitalization greater than $1B, out of a total universe of 20,000 companies.
 Average percentage change in dividend-adjusted share price between June 2011 and June 2016 for 300 best performing publically traded companies in Europe and the US with market capitalization greater than $1B.
 “You Call That Innovation?”, by Leslie Kwoh in the Wall Street Journal, May 2012