At the moment we are working with a number of clients that are struggling with innovation. The programmes they introduced don’t work, the idea box stays barren and the cynics have taken over the asylum.
The Business Model Innovation Factory (BMIF) is currently the book we use to explain and show why innovation does not work. Why this book and what can you learn from it?
First of all it takes a fundamental approach to innovation, using the business model at its core. The story of how value is created, delivered and captured. The problem your client is trying to solve, the network of capabilities in your company and how you capture that value.
You will be Netflixed
The premise of the book is that every business model can and will be “Netflixed”. Blockbuster, HMV, Sony, Kodak have all seen their business model been destroyed. All business models are vulnerable. Your business model will be destroyed too.
Tweaking is not enough
Tweaking is not enough. Incremental change is not enough. Innovation in the context of your current business model is not enough. You have to go radical. Straight from “The innovators dilemma”. You need to “Netflix” (as a verb) your own business model.
Why does innovation not work for most companies?
BMIF gives a few reasons why innovation does not work. Starting with the word “innovation” itself. The word is polluted and means to many things to too may people.
- It is the death by 1000 initiatives.
- It is because the CEO is not really behind it.
- It is because the IT legacy systems.
- It is because cannibalisation is not allowed (which is what being “Netflixed is all about).
- It is about shooting the mavericks and renegades.
- It is because the ROI on innovation is assesses based on the current business model.
- It is because design thinking is not part of the approach.
- It is because experimenting in the real world is not allowed.
Refurbishing your house
The analogy used is the one of builders refurbishing your house. People who have done that and decided to stay in the house with the builders, know it is near impossible. You are camping in the kitchen, the heat does not work, the internet is down, and it is full disruption. The same goes for innovation.
Making innovation work in your organisation
To make innovation work it needs the full and unequivocal support from the CEO and the senior management team. It needs to be kept independent from line managers. It needs to be a separate business unit (the Amazon Kindle as a shining example on how that can work), reporting directly into the CEO. The unit will need to ignore the current business model, ignore the legacy systems and hang out and collaborate on the edges of the silo’s, disciplines and sectors.
Staffed by designers, external people as well as internal staff. With passion and with a narrative that is compelling. Willing to experiment and learn in the real world. Operating as a lean start up.
Be like Tarzan
In between this very solid advice the book has a pop at the education system, business planning and the need to look at the your own individual business model. The same way business life cycles are speeding up, so are career life cycles. During your career, you will need to reinvent yourself regularly. Jumping as a Tarzan from learning curve to learning curve.
All loin cloth jokes welcome.