There have been many times throughout history when technology and consumer behavior changed very slowly.
However, in recent years rapid change has been spurred by several factors:
- New technologies
- Massive increase in remote workers
- New consumer behavior
Since entire industries and consumer markets are being transformed by these changes, the only way companies can survive – let alone thrive – is by investing in innovation. Unfortunately, the rapid pace of transformation makes innovating quite challenging for companies. For example, the biggest challenge is being able to identify and act on trends quick enough to develop new products or services that won’t be obsolete by the time they hit the market. Despite the challenges, businesses must make innovation a priority. Here are a few tips on how business leaders can successfully position their organization to operate on the cusp of change.
Ignore Old Metrics Used to Measure Success
Periods of rapid change often make traditional metrics of business success obsolete. That’s because past success doesn’t guarantee future success – especially when it comes to sales revenue and profitability. Furthermore, historical measurements might mask a firm’s potential long-term vulnerabilities. Therefore, given the fact that so many changing externalities are at play, business leaders shouldn’t take past (or even current) returns as future success. Instead, they should anticipate fierce competition and start investing in innovation now to help them be competitive in the future, as well as create new income streams for the firm.
Prepare for Multiple Future Scenarios
The management consultant Peter Drucker once said, “The only thing we know about the future is the future is unknown.” That’s especially the case now given the amount of rapid change going on in the world. Therefore, business leaders must learn to prepare for as many future scenarios as possible. However, that goes beyond just financial analysis and adapting business models.
For example, small businesses should seek out ways to expand their client base, as well as develop new products or services. By creating new markets and revenue streams, small businesses can position themselves to embrace whatever changes arise in the future. Bigger brands can likely go further by creating entire new business lines within their enterprise. Each business line could be geared toward one potential future or another – with the goal of developing new products or services for that future. Then, if one future scenario begins to appear more likely, the firm can quickly invest addition resources to capture the market early on – before its competitors. Likewise, the company can quickly unwind business lines and shift its focus to those that show greater opportunities.
There might be certain instances when a company must completely change its core business if it no longer serves their target market. Remember, if your core business no longer fits the world around you, then you won’t be in business much longer.
Experimentation and Validation
Since the future is largely unknown, how can business leaders identify and take advantage of new opportunities brought about by rapid change as they emerge? The answer to that important question is found in the twin pillars of innovation known as experimentation and validation. As mentioned, businesses must experiment with as many new projects and business lines as they can to prepare for possible future scenarios. While focusing on one or two ideas can be risky, experimenting with several ideas can help business leaders find the best opportunities while minimizing potential risks. When it comes to experimentation, it’s often best to start out small, and then build on those ideas that show the most promise. Just make sure the ideas you experiment with are distinct enough to avoid potentially missing out on a lucrative opportunity.
In addition to experimentation, you will continually need to validate each idea to determine whether its value is increasing or decreasing. Don’t just validate a project once and assume that it will be successful. Doing so could cause you to miss out on investing in more promising innovation. The goal is to find the brightest ideas that will light a path for your company to follow into the future.
In short, many of the most successful companies of yesteryear that ignored investing in innovation are either struggling to survive or have already gone out of business. Since the only constant in business is change, your company must embrace it, as well as find ways to profit from it. Don’t make the mistake of relying on past performance to try to predict future performance. Instead, you must try to prepare for as many future scenarios as possible – and be able to quickly shift your resources when a potential scenario begins to appear more likely. Remember to experiment with several new ideas, as well as continually validate ideas to find the best ones.