Reading a classic Harvard Business Review article during the week, I found myself again wondering at the mechanics of these changes. The paper, Value Innovation: The Strategic Logic of High Growth, tells of mold-breaking approaches by Bert Claeys in Belgium, CNN in the USA and Accor in France that saw them achieve phenomenal growth.
In a shrinking cinema market in the 1980s, Bert Claeys offered a radically different cinema experience in Brussels. Instead of cutting costs, the company opened Kinepolis in the suburbs. It offered more comfort, better sound and free parking in a 25-screen megaplex. Attention to detail, picture and sound quality, and ease of access made it an instant hit. It won 50% of the market in its first year and expanded the market itself by around 40%.
In 1985, Accor launched Formule 1, a new concept of budget hotels in France and offered services that really mattered to budget travelers. Out went restaurants, receptionists at off-peak hours and unnecessary furniture in the rooms. In came comfortable beds in quiet rooms. Costs plummeted and the concept took off.
A household name now, CNN started in America far from the traditional media center of New York, not did it compete to hire big names. As the authors state:
Ironically, value innovators do not set out to build advantages over the competition, but they end up achieving the greatest competitive advantages.
But these examples are all too rare. While most companies say they want to be innovative, they have a hard time breaking out of the same old rut. And I have seen this happen before. The company will bring in an outside consultant to give an outsider’s view. He or she may then suggest untapping the organization’s potential by involving employees.
Then management, which has shown no particular interest in anyone’s idea or potential previously, tells a bemused workforce that they are looking for big ideas to introduce new products or save money or whatever. One or two suggestions may be made, and after a little hoopla about them, life returns to normal.
In his blog, innovation consultant Jeffrey Phillips (@ovoinnovation), tells of how he helps companies overcome this inertia. He has a number of approaches and one of them is creating “a conduit for ideas.” While businesses started off as entrepreneurial organizations, the desire to automate and achieve reliability often tamps innovation. Even when employees have ideas, they get lost or discarded.
That’s because the firm is organized in stovepipes and silos, and any idea that doesn’t align to those silos is automatically rejected. Even ideas within silos are suspect, because they’ll upset the natural order of things that we have humming along so nicely.
But businesses need to do more than operate efficiently, Phillips says. In a great image of the creative process, he says:
It needs to create new things as well, and anyone who has been present at the birth of a baby or a product can tell you that it is messy, loud and frequently not on time.
Photo of Kinepolis cinema courtesy of Polidori_69 on Flickr.