Why is it so hard for companies to do something truly new? After all, companies innovate all the time. They innovate products. They innovate marketing efforts. They innovate processes to increase efficiency. Through these efforts, companies innovate and improve their existing business model in incremental ways, streamlining and increasing its efficiency, tweaking the profit formula, bringing new key resources to the table, and changing and refining individual processes. But rarely do incumbent companies make the leap to reinvent their existing business models or create new ones in response to the opportunity or threat presented by a new customer value proposition.
Why not? Why can’t top executives get their employees to change course? I’ve never been comfortable with the “People don’t like change” explanation; even less convincing to me is the “My people are stubborn” or “My employees want to do what they want, not what the company wants.” If that were so, I suspect most well-run companies would have let those people go by now.
A far more interesting question to ask then is, “What’s stopping my most talented and loyal employees from doing what I want?” As an answer, let me suggest a thought experiment (taken from my recent book Seizing the White Space: Business Model Innovation for Growth and Renewal).
Imagine a fictional corporation, DogCorp, the world’s leading manufacturer of high-quality dogs. DogCorp makes the best, most efficient, most innovative dogs on the market. Its consistent success has made it the company of choice for talented designers and managers throughout the industry, who thrive in its strong canine culture.
But one day, a fairly free-thinking manager realizes that a significant number of customers hanker after a different kind of pet—a more independent and curious animal. Excited by this new growth opportunity, she puts together a team that designs something new—a cat—to satisfy this unmet need. Then she brings it to her superiors.