Innovation has been a business ‘buzz’ word for some time now and has, in and of itself, become ‘big business’. Everyone wants to be innovative; everyone wants to be associated with the perceived benefits of innovation; everyone knows that they simply have to be innovative because the future will be unlike anything we have encountered in the past.
As far back as 2005 The Economist identified the need for ‘business model’ innovation rather than that of mere product and / or service innovation. In other words, the real need when it comes to innovation goes far deeper that surface issues such as product and service. This ‘finding’ was reinforced by some research done by IBM in 2008.
To innovate your business model is not easy.
It represents a fundamental rearranging or dismantling that more often than not proves beyond the capability of most companies. Kodak’s failure was not because they didn’t see the arrival of digital; their failure was that they were incapable of shifting their business model. The Kodak slogan was, ‘You press the button and we will do the rest’ and it was in ‘doing the rest’ where the gravity of their business model was centred.
Professional service firms are currently experiencing a similar challenge. One in the pillars supporting their business model is longevity of their professional staff; by retaining staff you add increasing value to the business as they grow their ‘book’ or client base. However, with the reality of generational churn and a younger generation who do not embrace career building in the same way that allowed the current business model to prosper, there exists a very real and future danger to the professional service business model.
Innovating your business model might mean ‘cannibalizing’ the very thing on which your business is built.
It takes extraordinary courage and foresight to even begin the conversation and process to this end.
For leaders a helpful motivator and message might be communicating the understanding that the ‘fear of not changing’ needs to be greater than the ‘fear of changing’ as you lead such a process.