room44 innovates

Is company culture the problem that innovators struggle with, or is it trying to make innovation as interesting as profit?

Or maybe it’s you. If you’re getting in your own way because you are busy, stop. Your culture won’t change until you do.

In the business news last week: Premier Foods CEO Gavin Darby, Iain Ferguson at the Stobart Group, and Sir Charles Dunstone at TalkTalk are all under fire. Aveva is being pressured to reduce remuneration packages for executives.

Meanwhile, Trump’s getting ready to take on the WTO, while locking horns with the EU and China. The effects of US trade tariffs are already being felt. Harley Davidson is considering moving production out of the US to avoid raw material price increases. Where will they go? China, the EU, Mexico? They’re all in the WTO.

Does any of this affect you? How about this…

When the 1990s dotcom bubble burst, many investors in new businesses lost money, and companies who rode the first wave of digital tech vanished. As a business in that market, you might not have been able to do much to protect yourself from its collapse. But perhaps you could have thought twice about overextending your loans, or growing more quickly than was expedient. In other words, you could have taken note of the indicators around you and drawn your own conclusions.

Some of the biggest tech businesses today lived through the tech bubble collapse, and now dominate the world markets: Apple, EA (Electronic Arts), Microsoft, Alibaba

The likely truth about the dotcom problem twenty years ago is that technology wasn’t as embedded in our lives as it is today: it was an added-value extra that we could survive without. Now it’s a different story. Technology is not only embedded, but essential to the way we live and trade.

You may be anticipating the day that AI stomps over the horizon and marches into your IT department: don’t. Everything you do is already augmented by technology and the machines are learning you so effectively that ‘augmentation’ will soon be the driver, rather than the occasional navigator. AI is here and it’s stealthily mixing with what we do.

And so to culture: established companies up and down the land (any land) are looking to buy adjacent opportunities (businesses that sit just outside their core business functions, that will help grow them vertically into a market). They’re behaving in a relatively traditional way. Consequently, their board members suffer when shareholders realise that just doing a deal isn’t the best return on investment any more. When the CEO gets it wrong, there’s a price to pay. This may be part of the problem at Premier Foods, where a competitive takeover was rejected but the share price hasn’t reached the offered value through organic growth.

I’ll try again: culture. Companies like Premier Foods and Stobart have eye-watering overheads. They have to pay thousands of people every month. So, their ability to fund innovation is limited, despite the assumption that they should be able to afford it. If you are a manager with a budget and a growth/cost reduction target to hit, what do you do: pay a team to ‘innovate’ with an uncertain outcome, or look for efficiencies, or an easy-to-deliver range addition?

On the other hand, companies like Uber have a relatively low wage bill and can pivot whenever the market asks them to.

If investment is a significant limiting factor when your company starts to think about preparing for the future, this is where to start – behave like you don’t need it.

Established business is so lucky in the context of innovation. It has revenue, customers, distribution, supply chain, market knowledge, data sources, access to feedback from live consumers, brand presence and, dare I say it, profit. All the things that start-ups don’t have.

So, what’s getting in the way of you innovating?

Maybe it’s you. If you’re getting in your own way because you are busy, stop. Your culture won’t change until you give it a reason to. Organise as many away days as you like: if you let people go back to what they did before the meeting, you’ve wasted your time.

There’s a process that can help you and it’s available for a modest investment of time and money. It will break down your team’s resistance to changing their perspective on what they do. It will offer all of you a new vision of what must happen next.

It will give you the tools to decide what your eventual plan looks like, so you know you’re in the best place to return a profit as your market changes.

Seeing it differently. Future-proofing. It’s what we do.

“To accomplish great things, we must not only act, but also dream; not only plan, but also believe.” Anatole France

Hard data gives us access to facts that are indisputable. Not easy to find, maybe, but a set of insight revealed by digging into the data stack.

The soft skill that humans can contribute to innovation allows us to distil information and then to apply a tool that AI has yet to develop: intuition. Gut instinct is rarely relied upon these days, but think about your biggest decisions.

Where do I live? What will I drive? Who will I marry? Will we have children? These aren’t decisions usually committed to a spreadsheet, although it’s true that some people (I suspect mostly accountants) do. If so, the answer to #2 might vary but it’ll be a blue one.

So the statisticians and, more commonly now, marketers get busy with the algorithms to produce a set of slides that will categorically pronounce that option A is likely to succeed better than option B.

Now comes the tricky bit. There’s a baby boomer sitting in the big chair listening to the detail. She’s been around. She’s seen trends and she’s won and lost decisions, based on hunches, in the past. She’s happy to be persuaded by the P&L projection and yet… her intuition kicks in and she goes with B – or nothing.

That may frustrate the other end of the board table. It may even retard the company’s progress into new and growing markets, but unless you can hit a chord that resonates right along the wire from what she learnt in the past to what she might believe about the future, you are coming up short.

Show her a strategic end point. Finish the argument and actually predict a future scenario for her. Stand by your own hypothesis. If you don’t, your story is just a story. Whether it’s based on data and history or just made up for effect, your best forecast is still essentially a guess.

Data may show us a door, but human intelligence and our special reasoning still hold the key.

Future thinking. Future proofing. It’s what we do.

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