Here are my personal key takeaways from the conference (note they are my own reflections on what I’ve learned, not the verbatim of the presenters).
Corporate Innovation Takeaways
What is the difference between explore and exploit?
Startups are a temporary organisation looking for a scalable business model - they focus on exploring. Corporates are designed to capitalise on an existing business model - they focus on exploiting. To be successful you need to be good at exploring and exploiting. The two require very different mindsets, approaches and techniques. The explore mindset is risk-taking, experimentation, and early market validation. Techniques are Lean Startup, Lean UX, Radical Innovation, Design Thinking, Design Sprints, etc. The exploit mindset is risk-minimisation, scalability, repeatable processes and market share. Techniques are Lean Management, Six Sigma, Supply Chain Optimisation, Customer Relationship Management, etc. to maximise sales revenue and profitability while reducing business costs.
Why is it harder to innovate in corporates?
In corporates you might have to deal with politics and your idea could become stuck in a power battle. If one important person in the leadership team or board disagrees - your idea is killed. As an entrepreneur you can shop around until you find an investor who says yes. And 1/20 investors will say yes.
What can you do to help corporate innovators?
Create an innovation pathway so the corporate innovator does not have to go up (in the hierarchy) and ask for permission to continue. This is often the valley of death. Many functions in corporates will just do their job - in doing so they block innovation efforts. Most functions e.g. HR, Finance, Procurement, etc. are designed for efficiency and they exist to minimise risk.
Business Model Innovation Takeaways
Why is Business Model Innovation important?
Product and Service Innovations are relatively easy to copy by competitors. Business Model innovations are more complex and their inner workings are often invisible to outsiders. However, Business Models expire, you just don’t know when. There are great tools to Business Model Innovation like the Business Model Canvas by Strategyzer or the Business Model Pattern Cards by the St. Gallen University.
What is the concept of switching costs?
An often underestimated question in Business Model Innovation is Switching Costs. How easy or difficult is it for your customers to switch? Some products are built on this strategy. When launching the IPod, Apple applied a switching cost strategy. Customers who had uploaded all their music onto iTunes have themselves created high switching costs. It’s likely that they will stick with their provider.
In 2014 I worked with a national telco who introduced roll-over data to the competitive telecommunications market. Gigabytes that would roll over to the next month meant that customers quickly collected vast amounts of data. Using up all the data became nearly impossible (most people did not change their mobile browsing behaviour) but it served as a very sticky value proposition as customers didn’t want to ‘lose their data’.
What corporates have successfully reinvented their business model?
After the backlash in film through digital technology Fujifilm invested in cosmetics. They realised that their specialist knowledge in preventing films age helped them with preventing skin ageing.
Hilti moved from selling power tools to leasing them as a service. Hilti’s Fleet Management means that the company is no longer selling drills but holes. This business model aims at establishing a long-term maintenance system with leasing contracts, and to enable long-term, sustainable, and stable customer relationships (Dr. Stefan Nöken, Hilti board member).
Do you want to know what makes Uber’s Business Model successful?
My personal wishlist for ISPIM 2020 in Berlin
More presentations on radical innovation. Approaches based on creative problem solving like Design Thinking are by many seen as the only way to innovate. There are other approaches to innovation that don’t require a problem to start with. E.g. Roberto Verganti on the innovation of meaning and Radical Innovation through Hacking Industry Conventions. An approach I have developed with Fanny Parise, Nicolas Tallon, Laura Rumich and Matthias Lenssen.
Sign up to my newsletter below to receive exclusive content on innovation and strategy (I share one or two posts every month).
Posted by Dr. Sebastian Vetter