Innovation and implementation must go hand-in-hand
By Robin Speculand
Identifying the next great innovation is hard enough, but you must also successfully implement it. Sure Steve Jobs made it look easy, but then he was a once in a lifetime innovator along with the likes of Thomas Edison. In this article we look at two companies who successfully innovated, only one of which also successfully implemented: Encyclopedia Britannica and Toys R Us.
Many companies around the world have benefited from Tirian’s teaching about what it takes to be innovative, how to create an innovative work culture, how to encourage people to think differently and how to bring disruptive innovation to the workplace. This is all desperately needed, as more so than any other time in history we are changing faster than ever before, and it is the companies who are most agile who are thriving, such as Google.
Just 20 years ago we were setting strategies for 15 years, and once we created a success we could rely on it for many years. Today the average company strategy is just four years. Consider how fast Apple is already being challenged in the smart phone business. Leaders must starting innovating their next great thing as soon as they launch their current success. Encyclopedia Britannica’s story exemplifies this point.
Encyclopedia Britannica was founded in Edinburgh, Scotland, in the 18th century. The first edition took three years to create and twice in the last 20 years Encyclopedia Britannica has had to reinvent itself and implement a new strategy to survive.
In 1990 the business peaked. 2000 sales people sold over 100,000 units. In 1991 people started owning their own PCs and could buy CD-ROMs. Encyclopedia Britannica reacted to this change by inventing in 1994 its first CD_ROM for US$1,200.
Then Microsoft created Encarta as a loss leader. In response in 1995 Britannica produced Britannica Online. In 1996 just 3,000 units were sold and the door-to-door sales force dismantled. The CD_ROM price dropped from $1,200 to $1,000 to $150 to under $100. Then, Wikipedia arrived.
Once again Britannica was forced to redesign its model. It did not compete with Wikipedia but instead focused on editorial quality with Britannica Online. Scholars around the world were engaged to review, revise and refresh content. Today 500,000 households subscribe and the digital addition is updated every 20 minutes. Over the past five years it has seen 17% compound annual growth in digital education services business and a 95% renewal rate.
Britannica has been successful not only because it reacted to market changes and was able to reinvent itself but also because it successfully implemented the changes. Many companies have invented new strategies but failed to execute them. At the same time Encyclopedia Britannica was responding to the challenge of online information so was Toys R Us. Toys R Us had built a very strong brand for physical shopping, and when internet shopping threatened their physical business they did what you might have expected by extending the brand name into the online world. But it went terribly wrong, and for almost 20 years straight years they have seen declining cash flow.
In the mid 1990s Toys R Us had the right components in place to develop an online presence. They had the relationship with toy suppliers, they had the inventory in warehouses and they had a strong brand name. The launch of “Toysrus.com” attracted millions of visitors, so what went wrong?
The lesson learned from Toys R Us is that you can have great innovation but you also have to be able to implement it. Toys R Us was used to shipping large quantities of products to single stores to restock them. It was not set up or ready to ship single products to multiple addresses.
At Christmas time Toys R Us was overwhelmed and failed to deliver on time for Christmas children’s toys because it had the wrong implementation model. The damage was devastating to the Toys R Us brand with customers not only swearing they would never use the online shopping again but also never visit the physical stores.
After thinking through your latest innovation, make sure that innovation and implementation go “Hand-In-Hand.” Make sure your implementation structure supports your new innovation.
Tags: innovation culture