Non-Innovation – Innovation – Re-Innovation

UT Innovation

Non-Innovation l Innovation l Re-Innovation

Reframing the Mental & Business Model

“It’s not necessary to change … if survival is not mandatory!”

Innovation, a single 10 letter word with billions of dollars of implication.

 

Managers today have, basically, three strategic Innovation options:

  1. Non-Innovation
  2. Re-Innovation
  3. Innovation

Non-Innovation is one option. Simply put: ‘It’s not necessary to change … if survival is not mandatory!” If survival is mandatory, what must companies do today to generate billions of dollars in revenue, retain or create thousands of jobs, reward investors and sustain the environment? They have to think about it. They have to think outside the box, they have to think in new boxes and they have to Innovate or Re-Innovate. They must reframe both their metal & business models.

The Necessity of Understanding Innovation

“Business has only two functions—marketing and innovation. “  Peter Drucker

There is a dictionary definition for the word Innovation … but it does not really seem to fit what is going on today. Today’s innovators and change agents are redefining the word to also mean,  reframing issues and thus reframing the mental model or mental model that leads to innovation. Reframing a problem allows people to see old reality through a new lens—and that in its own right is an important innovation. Many call this process, ‘thinking outside the box’. Advances in technology or shifts in consumer expectations mean that now, we must also often switch our thinking to thinking in new boxes. Innovation therefore results in a change in reality.

Innovation Changes Reality

Some examples of disruptive and reality changing business Innovations:

  • Uber is the world’s largest taxi company, yet owns no automobiles.
  • Facebook is the world’s most popular media company, yet creates no media.
  • Alibaba is the world’s largest retail company, yet has no inventory.
  • Airbnb is the world’s largest accommodation provider, yet owns no real-estate.

 

 

The Track of Innovation Change

Technology, linked to a variety of platforms (PC’s, Desktops, Tablets and Smartphones), has spurred Innovation, sometimes disruptive, at an ever, almost exponentially, accelerating pace. Consumers today have near-perfect information and near-infinite product, services and price choices. And … consumers today cannot seem to live without things they did not know existed yesterday.

Think about the track. In 1995, less than 1% of the world’s population had an Internet connection. Today, that number is around 46% or 3.4 billion people. On April 21st, 2016, Nielsen released its 4th–quarter 2015 Comparable Metrics report, Smartphones now have 82% U.S. HH penetration with cross-platform functionality … meaning they can access synchronized information virtually anywhere, 24/7 regardless of device.

Therefore, technology and non-technology are intertwined, Consumer expectations meld to produce a change in existing reality through an unprecedented demand for Innovation or Re-Innovation!

Example: Non-Innovation Marissa Mayer Yahoo

“Management is doing things right; leadership is doing the right things.”

“If you want something new, you have to stop doing something old”

Peter Drucker

 

Today, under Marissa Mayer’s leadership of the last 4 years there is no evidence of successful Innovation or Re-Innovation. Yahoo is now categorized as a relic of the past—a declining internet giant with no apparent competitive advantages, no recent innovations and an obscured future trajectory. Yahoo was founded in 1995. A billion users visit Yahoo sites every month. At one point, Yahoo had a market capitalization of $128 billion. Today, that valuation is somewhere, according to many, south of $0. NYU finance professor, Aswath Damodaran says, “A tech company that is 20 years old is like a regular company that is 60 years old.” Note: In the Silicon Valley world there are winners or ‘smoking craters’. There are very few middle of the road successes. Venture capitalists and the markets generally fund companies until they blow up, one way or the other. The financial market does not want companies that are moderately successful. Yahoo is up for sale!

 

Example: Steve Jobs and Mental Model Innovation

Steve Jobs achieved spectacular Innovations by reframing a mental model which led to reframing product, business and solutions models. He re-imagined—he linked new technologies—he combined things that had never been combined before. For example, in 2007 Apple introduced the iPhone. The iPhone, for the first time, was a single device that converged an iPod, phone, camera and touch screen. Jobs reframed the mental model of what a phone could be. Jobs thus was able reframe a business model as cell phone carriers were now forced to buy the phone from Apple and resell it to consumers over some period of time on a contract basis. Jobs went on to create the APP Store which subsequently has sold billions of dollars of iPhones and Apps. The iPhone and the APP store were Innovations, consumer solutions and software applications that were useful to consumers. To reiterate, ‘Consumers today cannot live without things they did not know existed yesterday.’

Example: Re-Innovation McDonald’s New Mental Model Changes the Menu

Following is a headline from a Fortune Magazine article, January 23, 2015:

“McDonald’s reported a 21% decline in quarterly profit on Friday as sales slid across all regions, ending a challenging year on a poor note.”

Following is a headline from a USA Today article, January 25th, 2016:

“The fast-food giant’s all-day breakfast strategy, rolled out nationally in October, also appears to be winning over customers. The company credits all-day breakfast with helping send sales at U.S. restaurants open at least a year up 5.7% in the quarter ended Dec 31. That marks the second quarter in a row of same-store sales growth in the U.S., after seven quarters of declines.”

 

Historically, the restaurant industry has always thought (Mental Model) about food in ‘day parts’—Breakfast, Lunch and Dinner or certain foods for certain times of the day. Someone at McDonalds apparently asked the questions, “What if today’s customers want breakfast type foods when they want it? What if breakfast products were not really just about the time of day?

McDonald’s, for the moment, is an example of a company that recently mastered something we will call Re-Innovation. Their challenge was not based upon a disruption by new technologies; rather the challenge was a change in consumer expectations. Consumers moved on from the way McDonald’s and other fast food restaurants defined their business. McDonald’s management reframed their thinking. They moved from trying to sell what they made to finding out what their customers wanted to buy, when they wanted to buy it—and found ways make it happen.

The challenge for the McDonald’s management team was not to Innovate and create a new business. McDonald’s management was required to re-innovate their existing business model—to change their frame—to look at their customers in new ways.

Innovation or Re-Innovation is simply about ‘Thinking Outside the Box’ or ‘Thinking in New Boxes’ and turning that thinking into reality.

In other words, Innovation or Re-Innovation is about reframing your mental models to connect your products and services by adding customer value and by serving your customers better than anyone else can serve them. Reframing Mental Models leads to the linkage of product, business and solution models that serve as the foundation for radically successful Innovation or Re-Innovation.

 

Can Innovation be taught? Try this … https://sph.uth.edu/research/centers/ingen/

 

R/L

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: