By: Chuck Frey
It may seem that tweaking existing offerings may be the safer or more provable approach, but the world may be changing too quickly or in very broad ways, ways in which an incremental approach may be insufficient for long term growth.
In the main, business leaders focus their attention on extensions to existing products and services. That is a reasonable and logical approach to managing a business. Once a market position has been established, managers seek to maximize the profit from previous investments. A company’s offerings are a money machine where people keep turning the crank to produce more money. By tweaking things a bit, people can keep that machine churning out money for some period of time.
This world is analytically driven and many people are very comfortable in this environment. The danger inherent to this approach is that the world does not stand still. Technology changes, customer desires change, economics and demographics change. If business leaders ignore these changes the world will leave them behind and the money machine eventually stops running.
The past few years have provided numerous examples. The long term success of any company is based on continually reinventing itself, and that process is not an easy one. Many companies choose the merger and acquisition route because they view it as a safer or faster route than creating something internally. However, many research reports document the high failure rates of mergers, so that might not be the best long term approach.
Which leads us back to incrementalism. It may seem that tweaking existing offerings may be the safer or more provable approach, but the world may be changing too quickly or in very broad ways, ways in which an incremental approach may be insufficient for long term growth.
A future needs to be created for a business in a determined and focused manner. The leaders of a company need to commit themselves and their resources to continually inventing a new future.
Finding new customer needs, new markets and new opportunities should be a continual effort no matter what the economic cycle. The amount of funding available may vary, but the effort should not wane. Ultimately a company needs to create and maintain sustainable competitive advantage. The only way to really achieve it is by continually inventing a new future.