Successful companies have well-defined business models. They know what works and what doesn’t. They have a formula for generating revenue and controlling expenses. It’s all good — until the business model needs to change.
Why would a successful company want to change its business model? New product competition, disruptive technologies, lower-cost competitors, marketplace demands, rising costs, etc. Business models get stale and obsolete. It’s only a matter of time.
Business models are a kind of corporate DNA. They affect everything — corporate culture, business partner selection, hiring practices, financial controls, and even project management approaches. Companies with good genes prosper, at least until a company with better genes comes along.
Usually by the time a company realizes that its business model is outdated, it’s too late. DNA can be changed but it’s difficult to do, it takes time, and the results are often unpredictable. Large enterprises and Wall Street analysts like predictable, reliable results. Yet, real innovation demands levels of uncertainty and instability that will make many people uncomfortable.
Every company wants to be innovative. They know they have to be agile to get there. Most companies claim to be agile, but we know they’re not. It’s not in their DNA. So, how do big companies innovate while maintaining a high-degree of predictability and reliability?
Change the Attitude, Change the DNA
Here are seven ways to change corporate DNA, become truly agile, and achieve real innovation:
- Build a business model that thrives on change by consistently reinforcing the notion that change is good for everyone — employees, customers, partners and suppliers — even if it means destroying the existing business and reinventing it.
- Be adaptive by continually making small changes throughout the organization. Everything must change — products, techniques, technologies, suppliers, employees, reports — everything. If you find something stagnating, it’s a prime candidate for replacement.
- Diversify by allowing teams to try new ideas. Give them latitude to make product changes, process changes and people changes. Be aware that some of those changes will threaten other teams and product lines. That’s good. Give the threatened teams the latitude they need to respond.
- Re-architect and re-design then test, test, test. No matter how good your software architecture is today, it will have to change. No matter how elegant your product design is today, it, too, will have to change. Don’t fight it, drive it.
- Reward people who innovate and drive new ideas. Eliminate those who don’t (unless they have a job description that is narrowly focused on the here and now). Those things that make your company successful today could be its undoing tomorrow.
- Never shrug-off a potential competitor even if their approach is drastically different and not very appealing — today. Ask “why didn’t we think of that?”. Encourage real “R&D” (research and development), not just the “D”.
- Be open to partnerships with other big companies and small potential rivals. The “not-invented-here” attitude (that is, if we didn’t think of it, it can’t be any good) is a disease. Fight it.
Business models are stubborn and highly-resistant to change. Overcome that resistance by continually making small changes thus conditioning the organization to be receptive to change and creating a culture that thrives on it. That’s the heart and soul of being agile.