There are two types of innovation – the evolutionary, slow, Darwinian changes and the revolutionary, sudden, abrupt type of innovation. The question is not which of the two companies should do? It is whether the company can do both at the same time and do it well.
The evolutionary style of innovation is necessary to stay ahead of visible competition. It is about making the hundreds and thousands of incremental improvements in every aspect of the organization’s activities – operations, marketing, sales, finance, etc. Each improvement brings a small positive change towards the success of the organization. The cumulative effect over time is to produce a huge change improvement in the organization.
The evolutionary change is relatively easy to implement, because it is easy for people to make minor changes to their way of working instead of having to change fundamentally overnight. Training is also easy. The process is also less risky as changes which do not result in improvements can be easily cancelled at a low cost. The process can be delegated to many persons in the organization.
The sudden, revolutionary innovation is necessary to stay ahead of competition that is unknown and invisible. Stable, successful organizations find it very difficult to change their basic way of working because, after all, the current model is what made them successful in the first place. When faced with rapid change, organizations behave like ostriches with their heads in the sand because they do not have the means to change course.
Leadership plays a huge role in making this happen. The leader must always be questioning what the company is doing at any time. The upstart who snatches the market from the giant corporation usually has no respect for the giant’s services or products and invents something that will replace them. Instead of waiting for someone to make one’s product obsolete, the organization should do that itself.
Tom Peters recommends that 50% of a company’s revenues in the last 24 months should come from new products or services. What this essentially means is that a significant part of the company is always trying to put the rest of the company out of business by inventing new things. This may be difficult to swallow and achieve, but unless the company’s leadership desperately tries to find products and services that can destroy its current line of products, it is guaranteed that somebody else in the world is going to do that.
Revolution is tough. People love stability and can be overwhelmed by rapid change. Leadership must understand this and put the necessary organizational structures, like compensation models, to drive this process. Again, a clear message about the consequence of lack of innovation is vital for ensuring the partnership of employees during the transition process.