Three Questions Every Innovation-Minded CEO Should Ask
Growth was hard enough before the world economy hit speed bumps in 2008. With industries colliding, competitors springing up in every corner of the globe, and the pace of change intensifying, companies have had to work harder and harder to maintain their competitive position, let along improve it.
Consider Microsoft. A decade ago the only threat to the company seemed to be the prospect of a breakup orchestrated by the U.S. Justice Department. The company has grown steadily over the past decade, from $15 billion in revenues in 1998 to $60 billion in revenues in its most recently completed fiscal year. It has entered new markets, like mobile, video gaming, and home entertainment. Its reward? A stock price that has essentially treaded water and widespread concern that there is no way the company can counter the threat posed by Google.
Or think about beleaguered newspaper companies. The emergence of the Internet in the late 1990s seemed to be an obvious threat to most companies. Yet by 2002 most newspaper companies had launched successful Web sites and enjoyed operating margins approaching 30 percent. Today the industry is fighting for its very survival. Three short years ago Lee Enterprises purchased Pulitzer "a company two-thirds its size" for roughly $1.5 billion. Today, the combined entity is worth about $150 million.
In today’s difficult market conditions there is an overwhelming pressure to focus almost exclusively on near-term actions at the expense of initiatives that promise prosperity several years down the road. But Schumpeter’s gales of creative destruction have never blown fiercer. Smart executives know that adopting a series of short-term strategies is tantamount to corporate suicide. They know that achieving material, organic growth through innovation is no longer an interesting experiment but a strategic imperative. Companies that don’t develop the ability to improve what they have and create what they don’t face the prospects of dwindling growth, tumbling profits, and ultimate destruction.
Meeting the innovation imperative can seem like an insurmountable task. After all, innovation feels fuzzy, unpredictable, and fraught with failure.