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How can you encourage your employees to think of drastic innovations? Paul Sloane shares one simple technique that enables small teams to envision entirely new business models.

We can broadly simplify innovations into two kinds – incremental and radical. Incremental innovations are improvements to current products, methods, processes, services, partnerships and so on. Customer complaints and suggestions are a good source of ideas for incremental improvements. So are the people who work in the organization. If you ask customers how your product could be better or if you ask employees how their job could made easier they will come up with plenty of proposals.

“businesses are good at getting better but poor at getting different.”

Most organizations are good at incremental innovation – they make things better. However, very few organizations are good at radical innovations. As Gary Hamel puts it, businesses are good at getting better but poor at getting different. Indeed Clayton Christenson in his book, The Innovator’s Dilemma, argues that it is very difficult for successful organizations to develop disruptive innovations that would threaten the basis of their success. Often they are put out of business when some smaller company develops a radically new technology. Which employee working in a booming telecom company in the 1990s would have suggested that free voice-over-internet telephony would be something they should develop? It took a start-up, Skype, to make a success of this radical idea.

Encouraging radical innovation

How can you encourage your people to countenance drastic innovations? One way is to run creativity sessions where the objective is to conceive them. Ask the question, “Who killed our business?” Get small teams to imagine entirely new business models that could deliver the benefits that your customers want. Each team has to present a scenario of a force so powerful that it could completely replace you. Starting with a blank piece of paper and none of the encumbrances that limit your organization they design a super competitor. They are encouraged to go to extremes and to think completely outside the current model. The exercise is stimulating and can be very revealing.

When I run this exercise with teams, we start by talking about examples of businesses that were wiped out. People come up with examples – ice supply companies that were eliminated by the refrigerator, carriage companies replaced by automobiles, music companies threatened by internet downloads, bookstores killed by Amazon and so on. As well as the impact of new technologies we look at other forces such as fashion, demographics, routes to market and competition. We might consider what has happened to Arthur Anderson, Enron, Polaroid, Pan Am and MacDonalds. Then the teams have to think up a variety of forces that could put them out of business. They have to conceive entirely new ways of delivering the end-user benefits that they currently supply. When they have a good selection of possibilities they select the most potent force and work up a description of how it would work in practice.

Case histories

When I conducted this exercise with a systems integration and consultancy company, one team proposed a scenario where all their proprietary methods became public domain. They went further by describing the idea of an internet business based in India delivering most of their consultancy value.

A team from a major education establishment conceived how a collaborative venture involving Microsoft, Harvard Business School and a satellite TV company could replace them with a slicker multimedia operation.

Once the teams have chosen a business model that could kill them, they have some further questions to ponder. If this is possible, what should we doing about it? What is the ideal vehicle to develop and deliver this new business model? If this is coming should we start it ourselves, buy a business, adapt our methods or take some other action?

Conclusion

Most organizations have natural defense mechanisms against disruptive or threatening ideas. People immediately find reasons why they should not be considered. It is difficult to change the culture to one where such ideas are not only heard but are actively encouraged and developed. The ’Who killed our business?’ exercise is a good way to start.

By Paul Sloane

About the author

Paul Sloane is the author of The Leader’s Guide to Lateral Thinking Skills and The Innovative Leader. He writes, talks and runs workshops on lateral thinking, creativity and the leadership of innovation.

Photo: new innovative thinking from Shutterstock.com

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