4 Strategies to Cope with a Rapidly Changing Industry
In an age when well-established industries are just one innovation away from total disruption, Dr. Ankush Chopra says it’s necessary for companies to act fast.
In his latest book “The Dark Side of Innovation,” Dr. Chopra, who holds a Ph.D. in strategy from Duke University, says business leaders can learn important lessons about innovation from companies like Google, Kodak and Microsoft.
“What I see is that companies get disrupted because of one of two things: For whatever reason, they’re not able to innovate when asked to, or they don’t innovate fast enough,” says Dr. Chopra.
He says businesses face three main threats from innovation.
“One is information barriers. They don’t have the needed information to innovate,” says Dr. Chopra. This happens when another company reaches a new developmental milestone first, and others in the industry find themselves playing catch-up.
“The second barrier’s normative. ‘Hey, we have a way of doing things,’” says Dr. Chopra. By hiding behind tradition and routine, Dr. Chopra says business leaders place themselves at a significant disadvantage.
Lastly, and most importantly, Dr. Chopra says many companies experience a “cognitive barrier” when it comes to innovation.
“There are cognitive factors that just make it very hard for us to see the need for innovation,” says Dr. Chopra. A good example of this, Dr. Chopra says, is Swatch, which changed the watch industry by creating demand for affordable fashion watches.
“60% of people in Switzerland lost their jobs in matter of ten years – they dominated in the world of watches,” says Dr. Chopra.
4 Ways to Ensure Innovation Doesn’t Kill Your Business
No. 1: Don’t be a deer in headlights.
When the first digital camera came out, Dr. Chopra says Kodak spent billions of dollars trying to learn the technology.
“However, the choice that these companies’ leaders faced was: Embrace this technology or avoid it. If they embraced it, it will destroy a lot of their own profits,” says Dr. Chopra, given that film had higher profit margins than digital.
“They behaved as deer in headlights, because they had two options, both of which were bad, so they said, let me not do anything,” says Dr. Chopra.
No. 2: Make sure your whole team is on board with moving toward innovation.
In the case of Kodak, Dr. Chopra says the team imploded from within. While the company was investing in digital technology, large factions of employees were resisting innovation.
In order to move forward effectively, Dr. Chopra says it’s imperative to make sure all your employees understand the game plan.
No. 3: Recognize and appreciate new threats.
“Microsoft, for the last thirty years, was sitting on the cash cow that was Microsoft Office,” says Dr. Chopra. “There was no alternative, until Google offered a free product suite called Google Docs.”
Dr. Chopra says Microsoft didn’t seem to register Google as a real threat – so they didn’t act. To ensure your company doesn’t get its market gobbled up by an upstart, Dr. Chopra says it’s important to recognize new threats and plan a course of action.
No. 4: Create an “Option C” plan.
Dr. Chopra suggests that many companies believe they either need to ignore threats, or try to catch up to them. Alternatively, he says more companies should try to create an innovative third option, offering a new path for customers.
Returning once again to cameras, Dr. Chopra says smartphones have basically killed cameras. While he doesn’t know if it will be successful, Dr. Chopra says Sony has come up with a good “option C” by creating lenses for smartphones that help users take professional-grade photos.
“Creating an ‘option C’ is the big challenge for companies,” says Dr. Chopra.