Innovation and Growth

Innovation and Growth are linked in so many differing ways. For an idea to grow, there must be certain systems or practices in place that feed the process of continuing innovation. What specific things can we learn about innovation and growth from some of the most successful growth companies?

Intense global competition and a sluggish economy have made the realization of growth more challenging than ever. Yet some organizations such as Apple, Amazon, and Starbucks seem to defy the laws of economic gravity.

The most successful growth companies adopt at least 4 best practices:

  • Find the next S-curve
  • Lean on customers
  • Think like a designer
  • Lead the way
1. Find the next S-curve

Nothing grows forever. The best products, markets, and business models go through a predictable cycle of growth and maturity, often depicted as an S-curve.

Diminishing returns set in as the most attractive customers are reached, price competition emerges, the current product loses its luster, customer support challenges emerge, new operating skills are required, and so on.

Unfortunately, growth company leaders are often blinded-sided by this predictable speed bump. Once the reality of the S-curve becomes apparent, it may be too late to design the next growth strategy.

The time to innovate—the innovation window—is when the first growth curve hits an inflection point. How do you know when you’re hitting the inflection point? You never know. So the best companies are forever paranoid and make innovation a continuous process.

Steve Jobs understood this when he returned to Apple. In 2002, he challenged his company to break out of the mature computer industry where Apple had never garnered much more than 10 percent market share. He told Time Magazine in 2002, “I would rather compete with Sony than … Microsoft.”

Eight years later, after introducing the iPod, iPhone, iPad, and a game-changing retail channel, Jobs claimed victory and Apple Computer became Apple Inc. While introducing the iPod, Jobs said, “Apple is the largest mobile devices company in the world. Larger than the mobile devices businesses of Sony, Samsung, and Nokia.”

2. Lean on customers

Successful growth companies have a deep understanding of their customers’ problems. Many are embracing tools such as the customer empathy map to uncover new opportunities to create value. This customer insight is the foundation for their lean approach to product innovation: rapid prototyping, design partnerships with lead users, and pivoting to improve their product and business model.

I’m constantly amazed at how few companies invest the time to get out of the office and interact with customers (outside of sales situations). During the turnaround of IBM, Lou Gerstner launched Operation Bear Hug to get the company back in touch with its customers. IBM’s top 50 executives had to visit five customers per week and deliver a write-up to Gerstner.

3. Think like a designer

Managers are trained to make choices, but they don’t always have good options. Innovation involves creating new options. This is where designers excel. Apple’s exceptional user experiences were largely the creation of Jonathan Ive, a professional designer and Jobs’ righthand man.

Design thinking requires a different set of tools. Growth company strategists have abandoned Porter’s Five Forces Analysis because it assumes that markets have well-defined boundaries and competitors must fight for market share. Instead they search for uncontested market space and make competition irrelevant using Blue Ocean Strategy and the Business Model Canvas.

4. Lead the way

Unless the CEO makes innovation a priority, it won’t happen. Innovation requires a level of risk-taking and failure that’s impossible without executive air cover. The best growth companies create a culture of innovation:

  • Howard Schultz decided Starbucks had lost its way. He flew in every store manager from around the world to help redesign its café experience.
  • Google encourages employees to spend a day per week on new ideas.
  • P&G tracks the percentage of revenues from new products and services.
  • Gray Advertising gives a Heroic Failure Award to the riskiest ideas … that fail!

More important are innovative leaders as role models. Amazon founder Jeff Bezos has told both employees and shareholders that he cares less about profitability and more about planting seeds that are likely to pay off in five to seven years. He’s so driven by vision that he’s investing over $40 million of his own money in a product designed to last for 10,000 years.

To launch his successful Think Different campaign, Steve Jobs commissioned The Crazy Ones, a video that featured Einstein, Edison, Gandhi, Muhammad Ali, Hitchcock, Richard Branson, and other “trouble-makers” who changed the world. Every employee understood the CEO’s views on risk-taking and innovation. – from David Power’s Harvard Article

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