How the World’s Largest Firms Drive Innovation in Today’s Ultra-Competitive Environment

Take notice of all the things you use on a daily basis, and ask yourself: How did they come into widespread use? Your computer, your phone, Netflix, Uber … Every product and service that we use on a daily basis started out as … just an idea in someone’s head.

So the question is, how did they bring these ideas to life, and how did they make their way into your life?

We all understand that innovation is what drives change in our lives; no matter where you live in the world, after all, we’re all affected by it. Yet few people understand the nuts-and-bolts of how innovation really works, how to do it.

The Ever-Evolving Nature of Business

Technologies, market structures, and customer preferences are rapidly changing as new trends and technologies emerge. Leaders know that every business must respond by adapting to fast-paced market changes. And how do they do that? By innovating.

No business can remain stagnant in today’s rapidly evolving world and expect to survive for very long. So it makes sense to define Innovation as a “force of disruption”—intentional disruption. After all, the goal of any business innovator is to disrupt the incumbent and take away their market share.

To do this, the innovator must focus on something the incumbent is doing, but do it better.

Many startups focus their efforts on disrupting the incumbents through business innovation—taking an old way of doing business and making it irrelevant by introducing better value propositions and better experiences for customers.

How Netflix Disrupted the Billion Dollar Video Rental Industry

A great example of successful intentional disruption is Netflix, and how they capitalized on the existing demand for at-home movie entertainment.

Founders Marc Randolph and Reed Hastings saw what Blockbuster was doing, customers visiting their stores to rent movies to enjoy at home, and came to the realization that visiting the store wasn’t actually necessary anymore. They eliminated it by mailing DVDs directly.

Of course, we’re all know what happened: Blockbuster refused to see that people would stop coming to their stores, and slowly went downhill until its ultimate bankruptcy.

Netflix, on the other hand, continues to innovate, consistently eliminating unnecessary steps so customers can effortlessly enjoy great at-home entertainment.

In the end, Netflix had disrupted the incumbent’s business model completely, forever changing the way people watch movies.

In hindsight, the shift to streaming services seems obvious to us now, but in the moment, how were the founders of Netflix able to identify the opportunity?

This is one of the key facets of innovating and something all great “disrupters” understand.

Companies like Uber, AirBnB, and Apple all follow a similar process to capture increased market share. They observe what was working in the here-and-now, and identify the gaps in the market that need to be filled, often by understand the role that new technologies might play.

Ideas Are Only Part of the Innovation Process

Is there any doubt in your mind about the critical need for innovation? Can you see how companies have been able to identify new opportunities to disrupt industries? I’ve no doubt that you’ve been the customer of an established business and found yourself thinking, “If they did it differently instead of their way, their company would be so much better.”

It’s common to observe this – we all have our preferences, and most of us easily generate creative ideas on how we would improve the Status Quo.

But of course coming up with a disruptive idea is only the beginning of the story. You need a way to actualize the idea, to bring it to life.

So you’ve probably already realized that the process of innovation is difficult to manage; it can be risky, expensive, and unpredictable. It typically takes a lot of effort to make an impact with your ideas, and if things don’t go to plan, you risk losing profit and damaging your reputation.

Holding on to Market Share Is Not Sustainable

Some leaders look at the innovations that come from companies like Apple or Amazon and think, We don’t have people or resources like theirs—we can’t do that kind of magic.

So instead of trying to drive innovation, they fight hard to hold onto what they already have.

But that’s obviously not a strategy for long-term success.

Take the taxi industry, for example. When Uber first made its debut and started gaining traction, taxi drivers tried to fight Uber in the courts, but they were unsuccessful. The result? Their profits were stripped away almost overnight.

In today’s competitive world, there will always be those that lead change and make an impact, and those who resist change, clinging to what they already have. It’s the former who succeed in the long run.

So when you see companies like Apple, Uber, and P&G consistently evolving to achieve ongoing success, it isn’t due to magic or good fortune; it’s because they understand the critical importance of innovation, and they follow a disciplined innovation process.

These processes can be used in any business, and whoever follows them diligently will be able to obtain long-term growth and success.

This knowledge and its benefits are available to any company of any size, anywhere in the world. All it takes is the right insights, and the willingness to adopt these lessons and try something new.

The 5 Components of Successful Innovation

There are five critical components of any effective innovation process, five elements that enable any business to identify opportunities and turn them into profits.

However, if any one of them is missing, then achieving success at innovation becomes a lot more difficult. Every organization that’s serious about successfully implementing innovation, making huge impact, and bringing disruption to the market must understand and apply these 5 stages:

1. Identify the link between strategy and innovation.

Your business must have a way of identifying innovation opportunities and of making this process a priority. Innovation is the means of implementing your organization’s strategy, so you’ve got to define the strategy correctly, and then identify the innovations that will make it real. Having a systematic framework for identifying these opportunities is crucial to long-term success.

2. Design innovation portfolios to optimize financial performance.

Once the opportunity areas have been identified, you must have a clear understanding of your firm’s capacity to capitalize on them. You have to weigh the risks for each against the potential rewards to determine whether it’s worth moving forward. If an opportunity presents itself that will take up financial resources and not generate a substantial profit, you’ve got to discover that right away. Ideas must be prioritized and optimized in order to make the greatest possible impact.

3. Implement the innovation process and achieve optimal results.

You must have a rigorous process in place for bringing ideas to life, acting quickly to make them real, because chances are your competition is working hard as well. Success at innovation comes when you follow the proven frameworks and processes, and do it fast.

4. Develop a culture of innovation in your organization.

To support and foster long-term innovation, company leaders must promote, encourage, and nurture innovation throughout the culture. This requires that you recognize the three critical roles that are necessary for any innovative firm, the right leadership, the critical process management, and coming up with great ideas: Innovation Leaders, Innovation Managers, and Creative Geniuses.

5. Utilize tools and techniques necessary to support the effective innovation process.

The appropriate tools must also be in place to enable and support innovation to be fast and efficient. Without the right tools, getting products and ideas to market often takes far too long, and opportunities will be long gone.

Driving Innovation at Your Company

These five elements are critical for driving innovation at any organization, and once you understand them, they’re easy to set up.

Over the past 20+ years, I’ve focused on developing and applying some of the most advanced innovation strategies to help my clients overcome critical business challenges. I believe that everyone has the ability to create meaningful innovations.

I’m keen to help spread these ideas and strategies to as many people as possible, which is why I’m offering you a chance to build your Innovation Library absolutely FREE.