Who’s Going To Take The Risk?
When I joined Swisscom in 2011, market-creating innovation was synonymous with high risk and career suicide. And when we had so much more to lose than to gain, we eliminated uncertainty by maximising sustaining and efficiency innovation and minimising market-creating innovation.
Sustaining innovation were improvements to existing solutions and were typically targeted at customers who required better performance from a product or service.
We were selling to a known market, so development, sales and distribution required no additional capabilities. Our goal was to get our current clients to upgrade their current product (e.g. broadband speed or router). And while this boosts profitability in the short term, it rarely expands the customer base and limits revenue growth to 3-5%.
In parallel, as competition from other telco providers and internet companies intensified, we focused on implementing efficiency innovations. Essentially, our goal was to do more with fewer resources by improving how the product was developed and delivered. Again, the upside is increased profitability; the downside is that it often resulted in lost jobs, and these people rarely had the skills to help in another part of the company.
The only innovations we sought half-heartedly were market-creating innovations. These would have required tapping into people for whom either no product existed, or existing products were too expensive or inaccessible. As a result, creating the opportunity to generate significant revenue growth, increase the company’s share price and create new, quality local jobs.
Market-creating innovations are very alluring … but who is going to take the risk?
Questions for you
What parameters do you use to categorise the different types of innovation?
How do you rate each type of innovation in terms of investment needs, risk profiles and potential rewards?
Notes
The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty by Clayton Christensen, fosa Ojomo and Karen Dillong.
