Any form of change associated with the business world is often intimidating because it's the fear of unknown. However, the more pressure transforming markets and external factors put on incumbents, the more companies realize that without a change, their chances of survival aren’t good.
Embracing boldness in decision-making and accepting new strategies is never easy considering all the risks. Standing still and not experimenting with your innovation strategy, though, is even worse. Acting cautiously is good, if done correctly, as putting all your efforts and resources into consolidation strategies can make companies paranoid. They can start seeing threats that are not there or not serious, or, if they get carried away with overprotection, they may also miss warning signs.
Caution should represent attention to small changes. Is there a shift in consumer preferences or decline in performance? Do market players offer products that outperform yours? There are many indicators that can signal a need for immediate action, where burying your head in the sand is never a solution. The more influence and stability incumbents gain in the market, the more tempting it becomes to centre attention around retention of proven methods and ignore all the buzz around innovation. So, why would you change your strategy if it's what made the company successful?
Because success can be your worst enemy.
Take Kodak, once a successful innovator and the inventor of digital photography, they lost 87% of their value in the space of a decade and declared bankruptcy in 2012. How? The company missed the opportunity to create a new digital market despite starting with the best possible foundation. Instead, Kodak ignored customer expectations and overlooked the potential new market and decided to continue pushing their established film business, unwilling to consider a transformation to digital. Once the first digital players emerged, they slowly cut Kodak's market share until the brand and its products became obsolete.
Regardless of how great a product is and how many years it's been in the market driving revenue, it's ill advised to presume that no one can offer something better and that customers are too loyal to leave because a brand may have a 'household name'.
What if innovation ruins your value?
It may or may not. Experiencing problems with product development or getting stuck with creativity is perfectly normal, as long as there are visible attempts to innovate. Boldness in decision-making occurs from experimentation and experience from failure. When incumbents are creative with their R&D, incubators, or labs they increase their perceptibility to new ideas and therefore increase their chances of successfully adopting new innovations.
The unwillingness to explore different approaches, collaborate with others, and having a portfolio incapable of evolution is putting companies in precarious situations. Whether it's submitting a product issue to one of the open innovation platforms, creating strategic partnerships with other innovators, acquiring startups, or rebooting the whole structure of the business - if innovative initiatives are embedded across every management and corporate level, executives can then stop fearing becoming outdated.