When it comes to the commodity market, customers aren’t typically looking for new innovative products. They want the tried-and-true product, which is essentially the same from seller to seller, at the lowest price. “Cheaper” is better than “new and improved.” How, then, are you supposed to get ahead and innovate as a company?
I’ve seen this struggle firsthand in our industry. In fact, currently, we’re the only company in the wood treating industry dedicating staff to innovation. This is not to say that there hasn’t been skepticism from some of these parties.
Consider the opening statement in a fairly recent article entitled, How to Convince Your Company’s CEO to Invest in Innovation when it says, “CEOs who truly invest in innovation aren’t just rare; they’re often self-sacrificing. How did investors reward General Electric’s former CEO, Jeff Immelt, for placing a $4 billion bet on the industrial Internet of Things, remaking GE into a model for lean, entrepreneurial management? By firing him, of course. Immelt surely knew that his shareholders wanted to see innovation; they just didn’t want to invest in it.”
It goes on to cite a concept that far too many executives settle for, “innovation theater,” or this idea of merely appearing to treat “innovation” seriously but with no significant investments or decisions to develop it. The article adds, “At many companies, then, the innovation “department” is but a shell with a figurehead. And most CEOs, boards, and investors are content for it to stay that way.”
This is a hurdle for any company looking to enact change—some parties will inevitably see the effort as an unnecessary risk with an unlikely return on investment. This is the understandably cautious, conservative impulse of the mid-sized, family-owned company. This is especially true in the case of truly disruptive innovations; the impetus toward changing the business or moving into a whole new market can easily be met with an attitude that says, “We don’t do that here.”
The key is to show the skeptics that the ability of the company to remain profitable while also growing and remaining dynamic in the market—controlling its future rather than having the future control it—is going to rest on how it utilizes the innovation process.
Innovation is more than just an obligatory hypothetical notion – it requires a real, dedicated process. This however, is difficult particularly for smaller and mid-sized companies, were corralling the resources to build a lasting innovation effort is not always an easy task, and stumbling blocks will undoubtedly pop up along the way. Nevertheless, the potential upside for such a company, especially one operating in a commodity market or a consolidating industry, is that a structured innovation effort can truly become the impetus for transforming how the business operates, fueling sustainable business and disrupting commodity markets—and bringing value not only to customers, but to the general public as well.
Learn more about how to integrate real innovation into your business strategy by contacting me.