Innovation

Oct 1, 2015

A good crisis can make for great opportunities

Originally published on September 4, 2015 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/a-good-crisis-can-make-for-great-opportunities/article26204036/

A few weeks ago, I went to Brazil to speak to a large group of manufacturers on the perpetually-topical subject of innovation in a time of crisis. The forum, held by FIERGS (Federation of Industries of Rio Grande do Sul), addressed the well-known struggles of the Brazilian economy. Unfortunately, those same issues are now being faced by the Canadian economy.

With the recent announcement that Canada is in a “technical” recession, these two resource-driven economies are slowing to a crawl. The good news? For me, there’s never been a better time for businesses to embrace innovation. And the best way to succeed in this perpetually challenging area is to look at innovation through the lens of crisis – or turnaround – management.

Innovation has always thrived in hard times. Desperation forces people to question the status quo. In good times, people may be less inclined to rock the boat, but when investors and customers are bolting for the doors, you have no choice. That’s probably why some of the world’s great companies were founded during recession – businesses such as General Electric, IBM, Disney, Microsoft and Adobe.

One of the world’s most successful innovators, Apple, wasn’t founded during a recession. But the same principle applies. When Steve Jobs returned to take the reins in 1997, Apple was facing crisis: too many products, too little focus, not enough revenue. What saved the day? Steve Jobs shaved Apple’s product lines by 70 per cent. Even the best companies can become bloated and undisciplined during the good years and forget the core competencies that made them great.

To stay true to your strategic core, you could do worse than look to the process of strategic turnarounds. Once a company has accepted that it has lost its way, a successful turnaround requires an extraordinary commitment to self-analysis, questioning, reflection and day-to-day change. The same turnaround tools can be adapted to meet the enormous market pressures all businesses face today.

The main reason many companies fail is lack of focus. They start off doing one thing well, and then get attracted to – or distracted by – other opportunities. Some may be successful, others not. But all of them distract the business owners and leaders from what they set out to do. And all too often these shiny new opportunities are well removed from the business’s original roots. That means there is little synergy with established operations, and way too much to learn – about new products, suppliers, distribution channels, markets and customers. It’s falling into this pit of guesswork and improvisation that leads most companies to call in the turnaround experts.

It takes courage to admit that your company needs to reverse course. But successful turnarounds require everyone involved to face the brutal truth.

The best turnarounds usually begin with a strategic review that asks: What are our strengths? What do we do best? Where are we losing money? What operations are most profitable? Where can we grow? Successful change also requires that you reconsider some of the specific actions that got you into trouble. Stop doing the same old things; one definition of insanity is doing the same things and expecting different results.

Here are some of the key elements of a successful turnaround:

  • You need the right people on the journey. A winning turnaround starts with shedding employees who aren’t contributing sufficient value, or lack passion for their job. Once you get rid of the complainers and the complacent, your company has a better chance to bounce back.
  • You need a “change champion” to manage the turnaround – someone who owes nothing to the old, failed ways of doing things, and is prepared to listen carefully, consider many new ideas, and take direct action. His or her objective must be to stop the bleeding and get the company moving in the right direction. This is usually a hard job for the original owner/manager to do. Regardless of who takes charge, they require a formal process. As outlined in my book, The 90% Rule, that means knowing where your organization came from, knowing what it’s best at, and finding more ways to create value for more customers.
  • Focus is key. Trimming marginal operations is imperative – as Steve Jobs knew when he cancelled 70 per cent of Apple’s product lines in order to focus on only the best and biggest opportunities. In crisis, protect the core. Pull the plug on non-core activities.
  • Review prices and margins. Many companies are afraid to raise prices or set minimum margins for fear of losing customers, but it’s the best way to figure out who your best customers really are, and to clear out the unprofitable ones. Every penny of these exercises goes directly to the bottom line. No surprise, then, that the companies I have seen do this all wish they had done it sooner.
  • Refocus on the customer: What do your customers want and need? What are their biggest pain points, and how can you relieve them? Get out and talk to the customers. (It’s a shame so many companies wait till they’re in trouble to do this.) Once you have identified new ideas, opportunities and solutions, let the customers know the new directions your company is taking – and how they contributed to its success.
  • Keep employees well informed of the company’s plans and decisions. In the absence of facts, fear breeds confusion and negativity. Keep everyone informed, involved, and marching forward.
  • Paint a clear picture of what you’re trying to do and the process you are following. Share this vision with all your all stakeholders (customers, employees, suppliers, investors, bankers, etc.). You want everyone to know that there is a better future ahead, and that their sacrifice, hard work and faith will not be in vain. Make sure to offer a specific reward at the end, whether it’s increased job security, bonuses, profit-sharing, and/or a blowout party to end all parties.

Diamonds can only be created under great pressure. Whether your company needs a major rethink or you are simply looking for new opportunities for growth, crisis thinking can create the new opportunities you and your team are looking for.

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Sep 22, 2015

Experts suggest using innovation in times of crisis

Photo credit: Dudu Leal

This post was translated from Portuguese.  It was originally posted by FIERGS in Brazil following a keynote presented by Ken Tencer at their Innovation Forum, “Innovation in Times of Crisis”.  The original post can be read at: http://www.ielrs.org.br/pt-br/noticia/especialistas-sugerem-usar-inovacao-em-tempos-de-crise

“Nothing like a good crisis to generate great opportunities”. This was one of the takeaways shared by Ken Tencer, entrepreneur and Spyder Works CEO, during the 3rd Forum on Innovation and sponsored by the FIERGS System, through Sesi, Senai and IEL. “Many great businesses have started during recessions,” he told more than 700 people who came to FIERGS Events Center this Wednesday. “It’s important to focus on key clients and invest in innovation in a few areas,” said Tencer, a leader in management and innovation, and co-author of The 90% Rule®, which empowers companies of all sizes to identify, prioritize and implement growth opportunities. “Every day I challenge myself and my team to search for the next 10% of growth. We have to think about innovation every single day”, he commented. During the talk “Cause a Disturbance – a Simple Way to Innovate Continuously”. Tencer, who also co-authored bestseller Cause a Disturbance (2014), recommended delighting customers, “because they will delight your bottom-line”. To do this, the Canadian speaker suggests always listening to your customers, “because that’s where your ideas will often come from”. He said there are six steps to ensure that innovation is lasting and targeted (1) Engage emotions, not numbers, (2) Change the lives of your customers, (3) Connect the dots – between your business and its customers, (4) Identify and rank the opportunities, (5) Develop a plan, and (6) Communicate the plan.

In addition to Tencer, Gijs van Wulfen, an expert on innovation and design thinking, from the Netherlands, also spoke at the event. Van Wulfen is founder of the Forth Method which has been implemented by 35 European companies and is a LinkedIn Influencer, with more than 260,000 followers throughout the world. Van Wulfen shared 10 insights to innovate in times of crisis (1) Teamwork -You can invent alone, but you cannot innovate alone. Innovation must be bought in by all, (2) Choose the right moment, (3) The pace of the process has to be slow, (4) A great idea is a simple solution for a problem or a dream the customer has, (5) If you don’t have new insights, you will not have new ideas (which is essential for the sound operation of a business), (6) Think outside the box, but present it in a box, (7) Have a business plan, (8) Connect with the client from the start of the innovation, because “he is your support”, (9) “Innovation doesn’t stop at the first No, that’s where it starts”; 10) Lead your people, show them the way.

Gijs van Wulfen also presented the Forth Method, with its five islands of thought. According to van Wulfen, first we have to know where we want to get to, and then, look for the knowledge to get us there. “Ideas will come after a while and, with knowledge, we can choose the best ideas, try them, get the feedback, and then outline our business plan”.

Also presenting at the Forum was the company Imobras, which was featured in the Best Practices Toolbox, an initiative by the RS Innovation Center in the State of Rio Grande do Sul. The Center was created to support businesses in generating innovative solutions to their own challenges.

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Category: Icicle, Innovation, Spyder Works

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Sep 10, 2015

Why technology is not a synonym for innovation

Originally published on July 3, 2015 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/four-great-innovation-opportunities-that-arent-technology/article25207445/

Not long ago, I was sitting in on an innovation roundtable. There were about 20 of us, all equally excited about the role of innovation in moving business forward. But after a short while, it became obvious that most of the talk was about technology. Now, let’s be clear. I am a huge proponent of technology – developing, investing in and adopting technology to improve the processes in our companies (and lives).

What annoyed me was that the group seemed to consider “technology” a synonym for innovation. But you don’t need technology to innovate. True innovation is about doing something new: developing better processes or bringing improved products and services to market. Innovation can be the newest technology, or just a new idea – such as when supermarkets learned to multiply their profit on a piece of fruit by pre-slicing it for today’s on-the-run consumer.

Conversely, much of technology today is far from innovative – from Amazon’s stone-cold Fire phone to the dorky Google Glass, that unnerved everyone around the (few) people who dared to wear that device.

Regardless, the point of my article is not to hammer technology or its role in business and society, but to promote every possible form of innovation, as a homegrown, low-risk way to create value for organizations and their customers.

The conversation at our roundtable continued, with one participant suggesting that we should find ways to support innovative technology companies. Fair enough, but this was followed by an observation that “We certainly aren’t looking to fund hair salons.” To which I asked, “Why not?” Why not fund hair salons if their business model is unique and brings new value to customers, such as Blo Blow Dry Bar, the fast-growing retail chain from Vancouver? Their groundbreaking motto: “No cuts, no color: just wash, blo, go.” Or how about getting behind the “athleisure” trend? The activewear trend was largely driven by Canadian superstar Lululemon, and now includes new competitors such as Montreal-based Lole.

I think what’s missing from most discussions about innovation is the fact that every aspect of human endeavour, not just business, requires continuous tweaking. Consider the National Hockey League, which is always tinkering with the rules, equipment standards and playoff formats to make the game faster, safer and more exciting – and just last month decided to make overtime a three–on-three competition for more freewheeling fun. In a world where everything is always changing, businesses especially must scrutinize all aspects of their operations to see where innovation can make them faster, stronger, more profitable, or more exciting.

Given this imperative, let’s look at a few non-technology trends that I believe will drive innovative business opportunities in the coming years.

1) What’s Old is New. Unfortunately, what’s old is us. The Boomers are aging and with this comes a shift in priorities. The underlying desire is to live active, healthy lives with self-respect and dignity for as long as possible. This leads to increasing demands for home health care products and in-home services: anything and everything that can provide us comfort, safety and day-to-day support, and delay the moment when the boomers must sell their drumkits and move into institutions. Yes, technology has a big role to play in this trend, from new drugs and anti-aging creams to wearable fitness monitors and alert buttons. But other opportunities abound, from custom in-home services to specialty foods, clothing and travel and entertainment services geared to active seniors.

2) Waste Not, Want Not. Mom and Dad told you to save your money and take better care of your things. Now, with increasing population density and shrinking discretionary incomes, making better use of what we have is more important than ever. As our living spaces get smaller, we’ve seen the rise of new stores, products and designers focused on maximizing storage space. And then there’s the “sharing” economy, in which upstart companies such as Airbnb, Uber and RentfrockRepeat help us to get more use out of the homes, cars and clothes that already exist. (Some people think these are technology companies, but I don’t see it. They’re not developing technology, they simply adopt it to create the powerful communications systems that allow owners and users of goods and services to find and trust each other.)

3) Treat Yourself. Consumers are harried. We are tired, and we face more financial pressures than ever. Sorry for that glamorous analysis of modern life but it’s true: it’s the reason for the rise of the eight-year car loan and why Ottawa had to ban 40-year mortgages. But the flipside of fiscal stress is rising demand for small indulgences. There are edible temptations such as the cakepop, the cronut, or one of Canada’s favourites, the Purdy’s hedgehog. There are relaxing indulgences courtesy of the day-spa movement. And you can even indulge yourself at the movies, with cinemas that let you pre-reserve larger seats and enjoy real meals while you watch.

4) Self-innovation. I don’t know many people who are completely content with themselves. Most of us have one or two things we’d like to improve, enlarge, reduce or re-invent. Either directly or through online course providers, we can now take thousands of university courses from esteemed institutions. Or we can find websites that teach us how to change the oil in our car, enhance our yoga skills or learn a new language. Being innovative with our own lives is an excellent complement to being innovative in our businesses.

Bottom Line: there are a lot of great companies with new, innovative ideas that go beyond the development of technology. Yes, they incorporate technology in their business model, but so should we all. Most importantly, these companies understand and anticipate market trends, and find new and engaging ways to solve challenging consumer problems.

So, for those of us who will never be technology developers, let’s take solace in all the other ways to grow our businesses as we enjoy a cakepop in our rented formal outfit and zip around town with our two-hour car allowance while learning how to ask for fine wines in Spanish.

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