Why Your Company Needs Purpose For Effective Innovation

Without purpose innovation can become aimless and destructive


In today’s profit-driven environment, innovation is a buzzword that many companies throw around like confetti. Often, however, it has as much staying power as small pieces of tissue paper being thrown in a hurricane. Apparently a wifi connected juicer is an ‘innovation’, a $200 hairbrush that gives a ‘holistic hair assessment’ is ‘innovation’, even restaurants are claiming that adding a different sauce to a burger is somehow ‘innovative’.

This isn’t to say that innovation doesn’t occur in the modern business environment, rather that with the constant need to be seen as innovative for the sake of appearances and profit, genuine innovation is seldom found and even more seldom successful. We have seen many innovative companies spring into existence though, with big players like Uber, Deliveroo, and Tesla all revolutionizing the way that people carry out everyday activities.

What each of these companies has at its core is a belief in what they are trying to achieve, a driving mission that allows them to focus new ideas and products. Tesla, for instance, isn’t a company driven by making cars and batteries, it is a company driven by saving the environment and this has filtered through into their most successful products. They started with high priced, high performance electric cars knowing that they wanted to create affordable electric cars at some point down the line because the more people using electric cars, the fewer people there would be using traditional fossil fuel powered cars. This then saw them move into domestic power storage with their Powerwall, which allows electricity to be stored having been created through solar energy. Even though cars and utilities have little in common, the shared purpose links these two elements neatly together and makes them logical next steps.

Uber similarly has a core purpose, moving people from one place to another as quickly, conveniently, and cheaply as possible. It’s what allowed it to become the behemoth that it is today. It has also appeared to be pushing ahead with its use of self driving cars currently being tested in Pittsburgh, again working towards the core value it holds. However, the issues that the company has had in recent months have been when they move outside of this purpose and concentrate not on the core proposition, but onto competing or trying to maximize profits. For instance, the most recent scandal, where the company created their ‘Hell’ program to track drivers from Lyft (their biggest rival). It has no relevance to their core model of moving people quickly and conveniently, instead it just makes them look terrible and could potentially lose them millions in resultant lawsuits.

This may sound a little simplistic, but when looking back at some of the most important companies in history who have had long term success, their biggest innovations have come from sticking to their core goal. Amazon, for instance, has never stopped trying to improve the way that people receive purchased products, working on drones, 30 minute deliveries, and even physical buttons for regularly ordered items. Concentrating on making these core elements better has also, ironically, seen them move into other fields like web services, which came about having created these services to improve their core services and recognizing that they could supply this as a separate product that was superior to others on the market.

Core propositions also need to have a genuine customer or external purpose, not profit maximization. For instance, the current bogeyman industry of the world - banking - largely ignored their primary purposes and instead focused on their internal wants, to increase their pay and please their shareholders. This has led to an industry with very little real innovation, leaving a huge market into which FinTech has spread and may in time be crushed by the new considerably more innovative market. Innovation within banking now largely revolves around the adoption of technology that has been created elsewhere, which creates only slight iterative change like the ability to access banking apps on smartphones through the use of finger print scanning. The actual purpose of many banks has now become confused, do they exist to make money for investors, help people with their financial security, or simply as a place to keep money?

Innovation and new idea creation are at their most effective when there is a purpose beyond simply making a profit. The companies who have innovated with a goal in mind are the ones who have had the biggest impact on the world and often end up as the most profitable in the long run. For instance, Apple has always had a core philosophy to create the most robust, beautiful, and useable electronic products, with every major innovation falling within this remit. Items aren’t added on as gimmicks to help sales, instead they have only added or taken away things if they are likely to add genuine value (although the latest iPhone may have bucked this trend in the eyes of many). Many innovative companies, like the clothing manufacturer Patagonia, actually go against conventional business wisdom to achieve their purpose (Patagonia’s for instance is sustainability, saving the environment, and minimizing the impact we have on the planet). By trying to sell fewer items through a 100 year returns policy, repair services for their clothing, and even ad campaigns telling people not to buy their clothing, the company is telling people not to buy more from them, but trust the quality of what they buy. This approach of quality over profit has seen their profit and sales increase every year, with 2016 representing $800m in sales, double that of 2010, going against conventional consumer ideas.

This idea isn’t something easy to stick to and often means that company leaders feel that they are losing out on potential opportunities when fads come along that could create short term gains, but blur the lines for long term aims. It takes a strong leader to be able to keep companies on message, but if they can get it right, they are likely to create the most genuinely innovative organizations. 

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