Innovation. It’s the holy grail of business. It’s the engine behind capitalism and prosperity. It’s one of the primary things that helped distinguish this country and make it a world leader. Every company, tiny or huge, spends energy on how it can do better, do more, innovate. Whatever that is. I grew up a software engineer. For me, that always meant developing something amazing. Something no one else had. Later, as I became an entrepreneur, I had different thoughts. If you are a founder, a leader, or anyone who can impact the strategy of your company, I’d like to share a perspective on innovation and how you can challenge yourself with some different starting points. I believe that some amount of your job is to think unsafe thoughts. Most of your energy can revolve around keeping your ship afloat. A portion, though, should be things that can change everything.
“A ship is safe in harbor, but that’s not what ships are for.“
William Shedd (1820 – 1894), Presbyterian theologian
Years ago, I attended an annual executive offsite for a large Fortune 500 multinational company. The purpose was to get those leaders out of their offices, their day-to-day problems, etc., to think differently. This is a normal business practice. And a good one. The topic for the day was “innovation”. More specifically, how can we build a culture of outside-the-box thinking among the technical teams? How do we incentivize, reward, and challenge our engineering teams to come up with new ideas? How do we give those people some freedom from their daily tasking to innovate, invent, and dream? How do we set up budgets? How much should those budgets be? Who runs those budgets? How do we communicate with these people, and the company goals, and get them aligned with those so they can spontaneously CREATE? We know they are brilliant. How do we give them the freedom to tap into that cleverness for the benefit of the company?
This was all fine. Nothing really wrong with these lines of thought. It’s hard for companies to do new things. At least the questions are being asked. The realization I came to though was that this is how people think about innovation. It’s too simple. Innovation is about invention. It’s about new products we can sell. Breakthroughs in the technical world where we are first and aren’t we clever? Now buy our new stuff. I guess there’s a thread of truth to that but not really.
Here we are, in a huge conference facility, with the collective leaders of a diverse company. Nearly a hundred of them. Some of these people have been leaders for many years. Some have financial acumens. Some come from the technology ranks. Some are leading large portfolios of customers. Many have been very successful in business development. Some used to be on the customer side themselves. This is the group that knows the company. This is the group that should be challenging themselves to innovate. Instead of tapping into all this brain power directly, we ask them to be the messenger and the custodian only. It’s too easy to pass the buck and say we just need our technical people to invent more cool stuff. That’s what our brain tells us innovating is.
“Listen to anyone with an original idea, no matter how absurd it may sound at first. If you put fences around people, you get sheep. Give people the room they need.“
William McKnight (1887 – 1978), Businessman & philanthropist
Yes, there have been great breakthroughs in technology throughout history. But look around the world. Many of our most admired and profitable companies have innovative business models. Think Uber, Netflix, Amazon, Airbnb, Facebook. The list goes on and on. Yes. These are technology companies. Is it really the technology that makes them special? No. Not at all. It’s the delivery model that was disruptive. The tech was just a tool to put that innovation in place. In this company, THIS group of people are the ones to challenge themselves to think outside the box. What do we have that customers want? How can we package them differently? How can we monetize our assets by using creative thinking? We, as business leaders, shouldn’t be taking the lazy route and wishing our tech people could invent the next cool AI tool. That won’t make the company money. What MIGHT make the company money, for example, could be exploiting someone else’s tech innovation through licensing and building a service with it on top of data and subject matter we know intimately. Finding a mechanism to get those results out in a way that customers would pay money to subscribe to those answers. That’s just a fake example but who would come up with that concept? The people in this room.
Now for your business. Take a breath. Get away from the chaos of running your company for a moment. You can do this alone or with others. Others could be trusted leaders in your company or could be independent people you feel confident and safe with. Someone who doesn’t bring the internal baggage of your past with them. This can be a very interesting exercise for a board of advisors or individual advisors. Sometimes you get some totally ridiculous ideas. Some of these outlandish thoughts will be burned in a large bonfire but some may be seeds that actually germinate into something realistic with some smoothing from your team. Worst case, it is practice at getting out of your comfort zone.
The key is to step up and look around. If you’ve been successful, you have one or more ruts you’ve been running in. This sounds bad but it is terrific. If you have ruts, it means you’ve continually been able to compete and win repeatedly. Thus, the rut. Being in a rut constrains our thinking though. Our wagon really likes that rut for its wheels. Going off the path is totally contrary to good sense. So we struggle to think differently. We tend to think linearly. That’s ok. Not innovative, but still good. You may be able to scale your current plan. Also, good. True innovation, though, could take your company to whole new places.
“You can’t wait for inspiration, you have to go after it with a club.“
“If at first the idea is not absurd, then there is no hope for it.“
Albert Einstein (1879 – 1955), Mathematician
Take this breath to peer up over the rut into different fields. Think about what types of things you have that others have wanted and were willing to pay for. Don’t think scaling. That’s your day job. Think revolution. Think business models. Don’t be afraid to think of crazy ideas. It gets the juices flowing. Many businesses I know are service business models. For those, they rely on T&M contracts and the only way to scale or change the curve would be to hire like crazy. Start asking yourself questions about what it is that makes you different, and interesting.
Do you have groups of subject matter experts that your customer base loves? If you could clone those people would there be a great market for them? The linear method is obviously more hiring. Ok, that’s fine. Do it. But now think differently. Can we identify what the end product the customer wants from that group? Is there a way to package those byproducts in a way we could sell those instead of their hours? A way that would allow that group to create finished products that could be commoditized? Maybe not. It’s an exercise. We service companies get so trapped by the T&M business model it can be impossible to grow geometrically.
Does your team create environments that you could stamp out? Do they work with data that could be exploited, refined, and turned into new products? Do we own that data? If not, can we revenue share with who does?
Do we have technologies that our customers like but are stuck in old licensing business models? Can we package the tech and the services as subscriptions that we could list on a catalog? Yesterday’s world revolved around time and materials labor and licensing technology. How can we escape that and try some different things?
Do we have extra space? Extra equipment? Unused capacity that could be monetized? Do we have special people who could be an asset beyond selling them by the hour? How can we package that differently?
Has our customer set recently started exploring novel buying practices? How would those early tests be instantiated in our company? Can we show we are at the front end of the innovative procuring they have already started to adopt?
So many different questions we can ask ourselves. Every company has its possibilities. It takes practice and will to get good at asking the right questions.
“The Stone Age didn’t end because they ran out of stones.“
Unknown
Maybe don’t focus on building the next new widget so much. I think new tech is cool and can be useful. Useful as a tool though. Not as an end. Instead of trying to build the next ChatGPT, figure out how you can bring that existing cool tech into your wheelhouse. Maybe package it up with your know-how, your data expertise, and your subject matter excellence and create an interesting blend that’s unique to you. One that finds an interesting business model, that’s not T&M or licensing, to allow your customer to send you money. Look at how some of the new commercial companies are providing value to their customers. It’s not through a T&M or license business model. Can you steal some of their ideas? Be the Netflix or Uber for Space or cyber?I have no idea. These are simply nudges to think WAY beyond your current way of doing business. Think business model, not just technology. Our company, ISS, was a technology company. It succeeded because of that technology. It THRIVED and had explosive results due to creative business models, though. My intuition is that nearly all of the most game-changing companies from the past couple of decades are due to business model innovation SUPPORTED by good technology. Not the other way around. Give yourself and your team permission to think of crazy impossible ideas. Most will be horrible and untenable. They will exercise those new thinking muscles.
“The way to get good ideas is to get lots of ideas and throw the bad ones away.“
Linus Pauling (1901 – 1994), Chemist, author, and educator