Effectiveness is doing the right things, efficiency is doing things right.
Sorry, I know that doesn’t help much, but bear with me on this.
For example, consumer goods projects should always validate ideas and concepts with the type of consumer who they expect to buy the resulting product.
It’s important to have the right balance over timeframes, geography, business groups etc.
It also drives the company to do whatever it can to improve the output while optimizing the allocation of the input.
So, when the strategy isn’t clear to either the leadership team or the rest of the business, it’s much more difficult to understand how a new idea can fit into the future direction of the organization.
WE SAY WE WANT NEW BUSINESS BUT WE DON’T REALLY KNOW
But in reality, all the time and effort is spent on growing the existing business, so ideas for new opportunities away from the
Unless the company embraces an ambidextrous organizational approach, the imprisonment will continue.
This comes from a genuine wish to seek ideas, but also a desire to engage people in the future of the business.
There’s a world of difference between a brief description of an idea – “we should launch a product that (insert function), enabling customers to (insert benefit)” – and a concept that has been validated commercially and technically.
Innovation that won’t help with the next quarter’s numbers – or even make them worse – often takes a back seat.
This can be fatal to new ideas, particularly when pursuing them means something has to change in the business.
If we say “yes” to every new small idea that comes along; to every short-term product improvement; to every cost saving from changing ingredients or components; then suddenly all the R&D resource is committed.
Open Innovation can bring ideas, technologies and new routes to market from outside the company.
The ideas exist and are accessible, but remain unexploited, because the company doesn’t possess the self-confidence and structures to bring in external ideas.
If you have a clear strategy, including an ambidextrous approach to new business; your employees are fully engaged and contribute regularly; you have a great way to describe and validate new ideas with enough time to do it properly; you’re decisive; your portfolio is balanced; you welcome ideas no matter what the source; and you still don’t have enough good ideas; then ideas really
One of my favourite business aphorisms, although I can’t remember the source, is “sales is about selling more of what you have; marketing is about having more of what you can sell.”
– “because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions; marketing and innovation.
Marketing is the distinguishing, unique function of the business.
This does not mean that Marketing should dictate ideas; rather, they should lead the process, involving other parts of the company and diverse external sources as appropriate.
The insights come from knowledge of consumers, users and customers (terminology differs by industry and company……), and provide opportunities to meet recognized needs, as well as to identify potentially unrealized ones.
A Marketing team too close to today’s business may not be sufficiently aligned to the needs of a longer term, potentially disruptive, business group.
A lot of skill and intuition is needed to have a concept description or a Minimum Viable Product (or Prototype) that gives the closest experience to the final target as possible.
They need the technological capability to deliver the product, and need to work closely with Supply to be able to make it cost-effectively.
This can be the toughest part, when everyone in the project team wants the most benefits for the lowest cost, selling at the highest price in unbelievably high volume.
While certain elements are led by different parts of the company, it’s not in isolation.
That’s why over the years the description of features with everyday products like TVs has been very frustrating, let alone the consumer-hostile nature of the on-screen menus.
It describes companies who can innovate in the current business at the same time as creating new business options for the future.
- Different groups organized separately in the same company; or
- Internal groups focused on existing business, with strategic alliances or start up investment looking to the future; or
The projects looking to support today’s business are often termed exploiting, the further out ones referred to as exploring.
All of the models should clearly distinguish between projects that are aiming to support the current business and those looking to change the company.
A similar chasm exists in the ambidextrous organization when novel initiatives move from the experimental groups to the everyday business.
The efficiency engine which is the core of the company is focused on short term objectives.
After all, failure to meet quarterly or half yearly earnings targets rarely goes down well with investors, who then feel nervous about the ability of the company to meet long term growth goals.
Managers of the core business often see radical new business projects as risky, uncertain and potentially distracting.
This view isn’t helped by companies failing to incentivize those managers to take the new stuff on board.
Finally, and practically, quite often the core business does not possess the capabilities and competencies to take the new exploring work on board; whether that be people, supply lines, customer access or other aspects of the novel business.
I was once working with a company who had established a new ventures group to go out and explore radical new options for the company, a “strategy-stretching” exercise.
Almost all of the things they came up with were rejected by the core business divisions because they were – wait for it – off strategy.
The new ventures group did not have the permission let alone ability to go to market independently, as this was seen as duplication.
They specifically give the brief to their new ventures group to deliver Emerging Business Areas (EBAs), “new growth platforms not (yet) within the scope of our current businesses”.
