July 24, 2017

Most large companies are prepared to invest in “incremental innovation” but very few are willing to grant decision authority to management teams at a level necessary for disruptive innovation. I don’t think this is necessarily a bad thing or a criticism of large companies often lack of ability to stimulate disruptive innovation.  However I do believe that management teams who are genuinely interested in unlocking greater potential in their employees and research and development efforts do need to have a serious look at the constraints they apply to non-budgeted capital expenditures.  We often admire the innovation successes of other companies in retrospect however rarely do we compare the context details of those companies before they achieved success to our own contexts.

Let’s take for example the impressive market dominance Apple achieved before they became a powerful and dominant player in the mobile telecoms market.  My kids are too young to remember the different types of MP3 players that existed on the market before Apple launched the iPod.  Very few people I know use iPods anymore even though many have multiple models in their drawers and tech “graveyard” closets!  It’s all consolidated now in our mobile phones.  What even fewer people know about is a key moment that happened in Japan when Steve Jobs approved a $10 million dollar expenditure that secured a key piece to their disruptive innovation at that time… the iPod 1.

This 2013 article from Time relays the story about a key moment when I believe Apple secured its dominance in the MP3 market.  I recall reading this story in the official Steve Jobs biography and at that time I thought — “what other company would have the ability to approve such a large expenditure at a moment’s notice?”  I often highlight this story when discussing innovation desires of companies with attendees of CE training courses.  The reality is most companies cannot move nearly this fast and hence need to accept that their disruptive innovation potential and first mover abilities will be constrained by their policies and decision processes that are often rigidly in place.

I was prompted to write about this when reading this McKinsey’s article titled “Culture for a digital age”.  The article talks about how fear of taking risks is one of the barriers to company success in the digital age.  This insight was derived from a survey of global executives who were reflecting limitations they see in their organizational cultures.  I could not help but think about how these same global execs were being empowered or constrained in taking bold decisions on a moments notice?  Could any of them authorize a $10 million dollar supply chain investment over a dinner with one of their direct reports?



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