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  • Writer's picturePaulo Mateus

Swift & radical innovation or Incremental slow improvement?

Most business leaders are wired to incrementally improve their business – slow and steady steps are meant to be the best way, right? Maybe not.

Time seems to change faster, but this brings also a fast-paced competition - and for companies, the game has become fiercer and fiercer. To better get a glimpse of how fierce and how fast things are changing, look at the Fortune 500 list of companies:

Back in 1935 Fortune 500 companies had a lifespan of 90 years; now is less than 15.

Remember some well-established giants such as Kodak, Pan American, Toys R Us, Tower Records or Blockbuster? Changing speed in most industries is so fast that is hard to cope – new technology, new disruptive business models, new ways to interact with your customers are challenging your ability to adapt and thrive.

But how can you adapt?

Nowadays companies are being challenged not only by local competitors but by players from the other side of the world. You can contract services or buy goods literally from any company with the right digital presence – will little concern from where they are based at. Yesterday, the best company in a country had a comfortable position and probably had a significant moat to new competitors. Now the same company is challenged for competitors from across the globe, from large established companies and for small teams of entrepreneurs building the next disruptive solution from a basement somewhere.

The cost associated to start a business, as well as the cost of failure, is getting lower and lower, so we are moving to an extreme competitive environment, where companies die and born at an accelerated pace.

But how to adapt then? Many companies embraced long ago popular incremental methods such as Kaizen, six sigma, lean manufacturing to continuously develop reengineering initiatives. It is usual to find fully dedicated teams in a company for continuous improvement. This is certainly not wrong, but is it enough?

Are you familiar with the Red Ocean | Blue ocean strategy? In Red ocean you fight with competitors for pieces of an existing cake; in Blue Ocean, you create new demand and try to find an uncontested market space.

Companies probably must really be prepared to run in two lanes at the same time:

1) Incremental innovation and improvement is good to stretch the inevitable live curve of your product / service: born -> grow -> mature -> die. Remember, however, that swimming in a red ocean is hard and cruel, and to win a piece of the cake you must take it from someone else. Oh, and yes, others will be fighting to get YOUR piece of the cake as well.

2) Radical innovation, building a mindset – AND a skillset – of the perpetual search for a radical transformation in your processes and/or your business model.

Everyone seems to be passionate about innovation, but passion without a plan, goals, strategy and effective implementation is just a dream.

Prepare yourself and your business; think how you can take “innovation” from nice-to-have-but-with-no-consequence PowerPoint slides to an effective transformation plan – and then go implement it.

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