by Dimis Michaelides
Who are the most innovative companies? Apple, Microsoft, Amazon, Facebook, Google, Facebook, Alibaba, Tesla spring to mind. They created a new era of technology for mass markets. Uber, AirBnB and Netflix tout their new business models, also technology based. And there’s IBM, Samsung, Toyota, Philips, Adidas and Nestle, big old elephants. All these firms made the 2018 list of Boston Consulting Group’s most innovative companies.
Each company innovates in its own way and there are more differences in the innovation of the more recent start-ups and that of the older established firms. Getting the “elephants” to dance is not so easy.
The elephants thrive because of their commitment to continuous improvement, a fact which hampers engaging in the more radical forms of innovation that are necessary for survival today. To stop doing some things and start doing significantly new things is easier said than done. Achieving more radical forms of innovation calls for the will and the skills to change internal structures and cultures. For the “elephants” this is considerably harder because their own business models have a proven legacy of success. But it is possible.
IBM is a case in point. It is now over 100 years old, employs nearly 380,000 people and it has for years been a world record holder for new patent approvals. In the 1980s it had over 60 per cent of the world computer market but in the early 1990s it was losing money.
When Lou Gerstner took over as CEO in 1993 he began with slashing costs and jobs, abandoning the development of a new operating system and, most importantly, re-defining the company’s mission as a primarily business-to-business technology services provider. Today it no longer produces PCs and is successfully offering cloud computing, among many other services. That was the easy part.
In his book Who Says Elephants Can’t Dance? (2002) Gerstner describes how culture was the hardest nut to crack. He fostered teamwork, a centralised identity and combated “obsessive perfectionism”. In the new IBM, people would be rewarded for getting things done fast. He reckoned he could change the culture in five years and being an outsider helped (Gerstner came from the food business). He was too optimistic, but he did succeed.
Similar cases of elephants dancing abound (Whirlpool has been brilliantly documented in a book by Nancy Snyder and Deborah Duarte Strategic Innovation – 2003). The opposite is true too. The price of not keeping up with the times due to past successes can be hefty, as Kodak – the company that first invented, but never marketed, a digital camera – found out too late.
You might ask what is the value of 20-year old elephant case studies? Well elephants must never be forgotten in the days in which the young upstarts have most of the innovation limelight. These companies still have a tremendous business presence and their experiences of organisational change provide insights relevant for all large established companies. After all the Facebooks and the Googles of today will be the IBMs of tomorrow.
The two big lessons: It’s possible. It’s not easy.