Innovate or Die
“If you always do what you always did, you will always get what you always got.”— Jackie “Moms” Mabley
By: Greg Geisler, CEO, VericalXchange
I’ve never been a big believer in the tried-and-true. What I’ve found in my 40-year career is that what people call tried-and-true usually means easy-and-comfortable. And that almost never means “most successful.” The most successful companies are in a constant state of innovation. But how do they manage it? They know the secret of strategic partnership.
The Less-Pain Innovation Secret
Whether you’re a top competitor in your industry now or you want to become one, you already know that you need to adapt and grow. What most companies struggle with is how. With all of the work required to take care of all the business and challenges you have today, how can you find the extra time and money to innovate?
As Chip and Dan Heath recommended in their New York Times bestselling “Switch: How to Change Things When Change is Hard,” you need to make a shift. Don’t keep doing what you’ve always done. Instead, stop solving problems and look for bright spots—examples of people/companies that have achieved what you’re trying to achieve. Study how they made the leap you’re struggling to make, and learn from their success.
P&G: A Study in Innovating Innovation
In 2000, Procter & Gamble (P&G), manufacturer of household and personal products like Tide, Gillette and Olay, recognized that it had a problem. For virtually the entire life of the company, P&G had run on an innovation-from-inside model. But a funny thing happened in the 21st century: innovation sped up.
“An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense ‘intuitive linear’ view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate).” – Ray Kurzweil
In today’s market, the exponential pace of technological developments not only enables faster innovation, but also increases the public’s expectations for innovation. Companies that want to maintain their edge have to keep up, but, as P&G noted, that’s simply not possible when innovating the old-fashioned way. You can’t go it alone.
Larry Huston, P&G vice president for innovation and knowledge and Nabil Sakkab, senior vice president for corporate research and development, wrote about that moment for the Harvard Business Review:
“Squeezed by nimble competitors, flattening sales, lackluster new launches, and a quarterly earnings miss, we lost more than half our market cap when our stock slid from $118 to $52 a share. Talk about a wake-up call.”
P&G recognized what they needed: partners. If they stuck with their old way of going-it-alone, they were going to lose market share to more competitive innovators. So, they created a solution: Connect + Develop.
Connect + Develop is essentially an innovation crowdsourcing site that draws big ideas and their creators to P&G’s doorstep. But it’s not simply about sourcing good ideas. It’s about partnership. As their home page explains …
“It’s a fact: collaboration accelerates innovation. In an increasingly connected world, the biggest business wins come from working together. When we partner externally, inspiration and innovation—and mutual value creation—are at our fingertips.”
Ideas generated through Connect+Develop have become some of P&G’s bestselling products, including Olay Regenerist and the Swiffer Duster.
But they didn’t stop there. P&G also realized that there was another untapped source of innovation that they had to embrace: their suppliers.
“Our top 15 suppliers have an estimated combined R&D staff of 50,000,” wrote Huston and Sakkab. “As we built connect and develop, it didn’t take us long to realize that they represented a huge potential source of innovation. So we created a secure IT platform that would allow us to share technology briefs with our suppliers. …
We also hold top-to-top meetings with suppliers so our senior leaders can interact with theirs. These meetings, along with our shared-staff arrangements, improve relationships, increase the flow of ideas, and strengthen each company’s understanding of the other’s capabilities—all of which helps us innovate.”
You Don’t Have to Be P&G. But you can be.
You have to innovate, and you have to do it continuously. In fact, if your company wants to stay on top—or get there—you need to create a plan that ensures innovation is always happening. But you don’t have to be a $16 billion company to do it. You simply have to start building partnerships.
This is where the idea for VerticalXchange was born. We connect senior level executives at companies like P&G with the suppliers who can be incredible sources of innovative ideas. We bring them together for one-on-one meetings, but only after we have completed thorough research to ensure that every meeting is a potential match.
An eXchange doesn’t happen every day, and we don’t host them in every industry. But that doesn’t mean you can’t start building your own innovation-driving strategic partnerships right away.
- Find the right partners. It sounds obvious, but you’d be surprised how challenging it can be to find the right strategic partners—almost as challenging as finding the right romantic partner. You have to figure out what you need, and you have to vet your potential partners to be sure that it’s worth the investment of your time and money to move forward.
- Spend time with those partners. Face-to-face meetings among decision-makers are essential. They should be regular meetings, and they should be on neutral territory. Everyone needs to be thinking creatively at these sit-downs, and getting out of your usual four walls is a good way to kick-start your brain.
- Plan for strategy. Strategic conversations don’t just happen. You have to plan for them. Before any meeting with a potential or existing strategic partner, do a call and set an agenda. What questions will you answer in your meeting? What ideas must be explored before you all part ways?
- Set follow-up goals. One of the big challenges of actually innovating is making it happen. People love to talk about big ideas; people are less thrilled about figuring out how to implement them. To make this easier, and ensure that something real comes out of your partnership, set a plan with action items and deadlines before you leave the room.
These steps aren’t earth-shattering, but they are time-consuming if you’re doing them all on your own, and they can be expensive. Take it from P&G: they’re worth every penny. Five years after the company’s stock took its year-2000 plummet, and they launched their innovation initiative, they doubled their share price and decreased their R&D investment as a percentage of sales from 4.8 percent to 3.4 percent. R&D productivity is up 60 percent, and they have launched hundreds of products that were created, at least in part, from the input of their strategic partners.
Interested in attending an eXchange or creating a custom innovation-driving initiative? We’d love to hear from you.