Red Bull Stratos: the impossible made possible

Red Bull Stratos.

Red Bull Stratos is a scientific mission to 120,000 ft. Jumping from a stratospheric balloon one man will attempt to break the speed of sound in freefall.

If one team can dream up and execute this mission. What can your team achieve?

Red Bull Stratos: the impossible made possible

Making disruptive innovation work for you

The big challenge in “The Innovator’s Dillema” and the body of research called “Disruptive innovation” is: Can Large, Established Companies truly innovate?

Innovation researcher Bettina von Stammn asks in her book “Is disruptive innovation within a large company possible?” (von Stamm, 2008). And the reality for a lot of firms has been no, we have not been able to reinvent ourselves. We have been getting disrupted and pushed to the sides. Do you remember Myspace, Compaq, Kodak, Borders Bookstores, video rentals, encyclopedias and laptops…… These are all examples of companies or product lines getting highly disrupted.

The classic literature concludes that disruptive innovation in established firms is extremely difficult. But a new body of research is emerging. This one is different. This one shows how large firms are learning to deal with and use the innovator’s dillemma to their own advantage. One such article is
The Empire Strikes Back: How Xerox and other big corporations are harnessing the force of disruptive innovation”. Clayton M. Christensen and Scott D. Anthony, both of Innosight, has written an excellent article on how to master radical innovation in established companies.

Using the case of Xerox (remember, Xerox, with the copiers?), the authors state “ It is a classic story of the “innovator’s dilemma.” Xerox struggled to defend against threats at the low end of its business, failed to create growth in new markets, and found itself on the brink of irrelevance, if not extinction”.

But today, the company is reinveting itself. Moving it’s focus from being “a printer company” to “helping clients simplify business processes” has allowed Xerox to find new avenues for growth. One such avenue is document management services, including buying 74.000 new employees and pusing R&D into not new copiers, but into services.

The authors line up three suggestions for companies seeking more disruptive innovation.

1. Pushing beyond Core Competencies
2. Embracing business-model innovation
3. Managing the old and the new differently

Now, interestingly, most material taught in business schools is “stay with your core competencies”, not push beyond it. Equally, few business schools have traditionally been training managers in radical business model innovation.

Thankfully, work from Innosight and the Business Model Generation team, lead by Alexander Osterwalder is developing the tools and making business model innovation become a reality for companies worldwide. Emerging research on firms like Apple is showing how innovation can become a core competency in itself. Now we just have to step up the number of strategic innovation programs in business schools worldwide. That’s easy.

Update:
Since first writing this post, I’ve been teaching strategic innovation both at our Business School and a number of executive consulting programs. I am greatly pleased to see how quickly people ‘get’ strategic innovation, once they have a framework to explain it.
Moving from ‘understanding’ to ‘doing’ is harder, but with training and coaching, every single employee can become a true innovator.
Because, we firmly belive; “Innovation should be everyone’s job”.

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What Banks Should Understand

This week we’ve been reading up on innovation in banking and financial services. It is an industry ripe for innovation.

One of our favourites is “Your Next Credit Card is Your Last“. Imagine going back to, say, 1985, and say ‘cheques cease to exist’. Most probably the average consumer would look at you funny and shake their heads. But that’s excactly what’s happning to credit cards and debit cards. We do not need them any more. The phone is taking over. We’ve been blogging about this for a while. But Fast Company’s recent article is bringing this closer to reality. And it probably won’t be banks doing it……

Following the theory of disruptive innovation, it will be the current industry òutsiders`who are small, quick and nimble, who will reinvent banking as we know it. Did you know that Google is the big driver of mobile phone banking payments in the US? And now rolling out across Canada too….

or that Square has one of the highest growth rates in financial services anywhere?Are you familiar with the web-driven, social banking concept of Bank Simple yet? Or perhaps you have yet to read about Stripe: payment for developers yet either?

While these examples are all from North America; looking across the globe, to Norway and Pakistan (!) a similar pattern emerges. The Norway-based telecommunication (now going on software) company is now the biggest bank in Pakistan. Yes. Under the name of Easypaisa, Telenor has grown its customer base to ten million, while other banks have eight million customers – combined. All in less than 18 months. With 100 million mobile users – and growing – Telenor looks set to become of the biggest banks in Asia. All thanks to banking meeting technology and innovation. Yet, as Telenor is quoted saying, “We talked to 36 banks in Pakistan, but none wanted to join us”.

This, of course, is the typical pattern of companies getting disrupted. They fail to embrace new opportunities, new technologies and new business models. At their own risk.

Facts that should absolutely scare banks throughout the western world are these:
Cost of opening a traditional bank account in Pakistan: $85
Cost of opening a Easypaisa bank account: 60 cents

Time to open a traditional bank account: one week
Time to open a Easypaisa bank account: a few minutes

“We got 500.000 new customers in the first month”, says Telenor. That’s not a bank in the world who can claim such figures.  This is what we call “Think Different”.

So while non-banks are pushing the boundaries for innovation in, well, banking, traditional banks are watching from the sidelines, slowed down by their own size, mental models and organizational structures.

Starting tomorrow, today’s banks should embrace change, embrace innovation and embrace technology. And the should see their role changing in the customer relationship. Banking services should be more of just that; services. As businesses globalize, so will banking services. “Small businesses will expect their financial services provider to be their local portal to
the global marketplace, delivering the products, services and information required for successful international transactions” (Intuit). Intuit’s excellent Financial Services 2020 report paints a compelling picture of technology, customer service and personalization blending seemlessly.

“Technology will drive innovation and create new efficiencies and ways to interact with customers and business models”(Intuit). One such example is using Twitter for a digital townhall meeting.

 (all photos from Banking2020.com)

(The complete transcript can be found using #IFSsurvey on Twitter)

P.s.
If you are having trouble understanding this blog, that’s the big challenge for bankers. Even banking regulators are struggling with the emergence of social banking. Yet,these are all things banks should understand.

What Banks Should Understand

Strategy Tools For the Next Generation

Strategic innovation, fresh ideas, creativity, new business models; we know these are becoming increasingly important for companies. Yet, we also the speed of change is slow in most firms. Way too slow. The more experience the company has, the slower is the rate of change and adaptation.

As consultants and lecturers in strategy, leadership, marketing and innovation at BI Norwegian Business School, we witness every single day, the lack of effect from the standard tools we teach. The tools we teach today, are not good enough for tomorrow. They do not get us the creativity and strategic innovation we need.

This is something we are working to change.

Today we work on “Strategy Tools For the Next Generation”.
‘Dream bigger’, we say. Why, most managers reply.
‘Think different’, Steve Jobs said. How?, most managers reply.

Young leaders, however. The ones under 35. They still haven’t developed the fatal flaw of fixed mental models – yet. Be believe it is today’s young leaders, the ones under 30, the ones under 35, who will create the future. These are the ones we need to develop. These are the ones we need to develop tools and processes for. These are the ones we need to develop into change agents. Into intelligent revolutionaries. These are the ones we should teac h how to lead from behind. How to change the mental models of their teams. These are the ones who should learn to master the innovation pyramid, the change escalator and our full kit of Strategy Tools For the Next Generation.

We are already hard at work.

Launching in 2012:   www.strategytoolsforthenextgeneration.com

Strategy Tools for the Next Generation is our solution for today’s emerging leaders. We believe tomorrow’s leaders need different tools than most we have today.

Most organizational theorists agree on higher speeds, more change, need for more creativity, more adaptibility, more engagement and, of course, more innovation.

These are some of the tools we are developing.

Strategy Tools For the Next Generation