Is innovation part of your three year plan?
As long ago as 1962, Everett Rogers published the Diffusion of Innovation concept, coining the phrases ‘Early Adopters’ and the ‘Early Majority’ that are still popular today.
In 2016, McKinsey assessed the average lifecycle of a company in the current market at less than 18 years. Three years on, this is more likely to be 15 years.
In 2018, I suggested that all established market positions are under threat from new and disruptive start-ups, whether or not they’re technology-based – the theory of inevitable failure.
There’s a confluence of ideas here that, seen separately, may not raise any eyebrows. But put them together and every CEO, in every sector, should be reaching for a legal pad and making notes.
Let’s start with Everett. His bell curve is shown below, and it’s easy to see why we love the idea of payback early in the adoption cycle. But if you overlay a fifteen-year cycle, suddenly there’s a problem: the three-year planning and strategic vision favoured by so many CEOs only makes it as far as the earliest point of break-even.
You may think it’s very convenient to overlay a rigid timeline onto a chart like this but bear with me. If the market you’ve launched into experiences unforeseen activity, even the three-year view is cut short. This scenario will never allow you to reach profitability, the product won’t mature, and customers will jump to the next thing.
It’s far easier and less messy (not to mention cheaper) to start up a new product from scratch than to work an idea into an established business structure. But let’s look at my theory of ‘inevitable failure’, otherwise known as ‘the need for innovation’.
It has been said that the only difference between humans and other animals is our ability to deny reality. As brands come and go, experienced watchers will recognise a clear and unavoidable fact: everything dies. Ignore this at your peril.
Sectors resisting change
If you’re working in a market today, that market will shut you down eventually. For example, every internal combustion engine component manufacturer is three to five years away from a major realignment of their market. Why? Because electric vehicles are mandated by governments and EVs don’t use carburettors, fuel tanks, engine blocks, fuel gauges…
Plastic packaging is another case in point. If you are invested in multi-material, complex laminations that use more than one compound type and you’re not working towards a new VP, move on. The people who work for you deserve better.
If you’re a brand that persists in using more than a single packaging material to present your products, the same applies.
Innovation is an experience
This collision between theories suggests there are lots of great new products that may have become innovations; but won’t. Time is not on their side. The rate with which emerging technology is hitting your market sector and the rapidity with which companies start up, thrive and die, means even the best and most successful ideas aren’t guaranteed a long and happy life.
So, what’s the answer? Simple. Look further ahead and plan for a different market.
As a company or brand owner, it’s your responsibility to create a view of your future that is unique to you. Confirmation bias is a thing of the past; you cannot rely on doing what everyone else does to succeed. Creativity, speed of communication and technology are moving more quickly than products can be developed and distributed. The consumer experience is now to leap-frog a product generation because so much happens between purchase occasions. This means that brand loyalty is at an all-time low – the cost of switching brand allegiance is zero; the cost to you is survival.
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