But companies with such high innovation reputation can pick and choose how they address the markets. In most cases, like Google, the bifocal become multifocal and the link with the core becomes harder to discern. These secondary foci allow them to experiment with new idea generation techniques and non-financial KPIs. In this category companies grow a second strategic focus away from, but strongly related to, their core business. Does your firm have a knee jerk reaction to what is perceives as threats to the brand from innovation? Are you personally reactive in that sense too? If someone questions your core competency do your pick a fight with them rather than ask what you can do to change? There's a question or two in there for all of us. Being brand-centric and core competency-led is an innovation handicap for companies outside of innovative sectors like tech. But there aren't many stellar CEOs around and the practice of top-down innovation that they bring to the table is going out of fashion. This type of decision maker sees change as a cultural challenge rather than one that has fundamental technological or process solutions and, given that the brand is the culture, they will always frame the discussion in terms of improvement rather than transition.Ĭompanies like this work really well when they have a great CEO - Apple is a classic example.
But the idea of building an innovative ecosystem is threatening because it might dilute the brand or have a Trojan horse effect on intangible value. And typically their “transformation” efforts will be in the direction of greater customer-centricity, which is good. There is nothing necessarily negative about that. Companies in this category believe the brand, rather than any specific decision that they can take now or in future, is the North Star. In the hospitality industry and in banking, in particular, they seek customer trust from an overarching narrative based around corporate traditions. They have a very strong narrative around core competencies, rather than core business, and have quite static or traditional brand values.
This category of company takes a very traditional approach to decision making and is very bound by financial KPIs. So, does that happen in your company? Maybe in your personal life you have that tendency - to make decisions based on what you expect others will approve of, or even to seek out excuses before you make a decision? And its decisions are mostly conservative in nature, outside of it's M&A program. This kind of company uses the power and influence of others (analysts, institutional investors) to justify conservative decisions to employees. Taken together all that means their decision-making leads them to under-invest in innovations that have a transformational effect. They tend to maintain strong, conventional, financial KPIs and have a strong narrative around the core business. They do not deny the need for transformation, and indeed do initiate transformation projects, but they are more preoccupied than their peers with what the markets demand now. They see transformation as a risk to their strategy for creating (at least the impression of) internal unity. The problem arises when there are transformational opportunities that they are too hidebound to take. That in turn leads them to focus strategic decision-making away from transformation. They are typically AGGREGATING companies, drawing in new acquisitions so that the growth story remains strong. In this category companies typically have a strong orientation towards the stock markets and the demand for predictable growth.
Please critique it - there's not enough peer review out there and I am actively seeking critics). We came up with a brief and simple classification of decision-making based on a company's relationship to traditional business planning tools like ROI and NPV (you can read the paper here. I've been studying that problem lately, along with Bryan Kirschner of the Apigee Institute (who met my costs on the project). So how do you make critical decisions in business and what kind of decision maker are you? It could by now be the premier supplier of rubber to the Russian tire industry. Here you see rationality of a sort - Nokia already had a high reputation in mobile in the mid-1990s and that was one motivation for its choices. That time-span alone is a lesson to everyone about the importance of crisp decision-making.īusiness decision-making then is a rare game. It will exit devices in the early part of 2014, after five years of decline. In essence Nokia had only twelve years of unhindered glory in mobile - from 1996 to 2008 - before it had to make a put up or shut up decision once more.
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