Like traditional businesses can innovate

March 24, 2019

Many traditional corporate presidents or executives have the opinion that innovation is only a matter of high-tech or emerging industries, but the true logic of innovation is the opposite. It is that the success rate of innovation in traditional industries is much higher than that of emerging industries or high-tech industries. Toyota, for example, belongs to the traditional automobile manufacturing industry, but Toyota creates new production methods internally and creates miracles that have been selling for decades on the outside.

According to Drucker, innovation is to change the output of resources. From an internal perspective, it is to change the efficiency of resource use. From the outside, it is to change the perception of customers. From this definition, innovation in traditional industries is indeed easier than emerging industries. Internally, traditional companies can improve efficiency by changing production processes, team cooperation methods, and the use of production tools. Externally, they can redefine and promote the social attributes of products to change customer perceptions, such as Coca-Cola, forever. The same products, people of different ages have totally different views on them. Coca-Cola is “forever young” and is the best case for traditional industries to innovate by changing customer perceptions.

On the contrary, innovation in emerging industries is often difficult because there is no role model to learn, and everything must be explored. Moreover, to allow customers to recognize a new product is not easier than changing customer perception of old products.

The reality is that most of the innovation happens in high-tech industries in new industries, rather than in traditional industries. What caused this strange phenomenon? The answer is people's ideas, not real difficulties. Motorola missed the opportunity to transform from analog phones to digital phones. Nokia has missed the opportunity of smart phones as mobile platforms. It is not that they do not have the ability to innovate, but that the two companies use the same way of thinking to understand the future. This is traditional. The first reason why an enterprise misses the opportunity for innovation is to treat visible success as eternal and superstitious to its own success. It does not dare to break the “illusion” of success and thus moves toward being conservative and declining.

The second reason traditional companies miss out on innovation opportunities is their unwillingness to admit defeat. The higher the status and the greater the achievement, the harder it is to admit mistakes. This is the weakness of human nature. If from an innovation perspective, difficulties or failures are actually the best entrance for innovation. The reason is simple. Why is there a difficulty or failure? It must be because it is not doing well enough, and not doing it well is the source of improvement or innovation.

There is an allegory about a person who sees that a butterfly is struggling to break free from his nephew. Since the mouth is too small, it has worked hard for a long time or has made little progress. This man took a pair of scissors to make his mouth bigger, and the butterfly finally burst out. , but its wings are dry and small, and the body is dry. When the butterfly breaks free from the cocoon, it will secrete liquids and make the wings plump. Without going through this process, it will not fly. The kindness of this person has helped and the butterfly has never been able to fly. It can only be trembling. This shows that difficulties or failures are sometimes part of the maturity process. Eliminating difficulties or failures may eliminate success itself.

How many traditional corporate CEOs are like this good-hearted person, do not allow companies to make a mistake, and immediately help correct after an error. They may not realize that the biggest enemy of innovation is to find ways to eliminate the problem, not to regard the problem as an opportunity, or even to punish the parties, and to smash the seeds of innovation in the cradle. On the contrary, if the issue is tolerant, it is more to failure. Ask a few why, they can find innovative solutions to the problem.

The third reason why traditional companies miss the opportunity for innovation is the hindrance of high-level vested interests in enterprises. Any business model is associated with a group of "capable people", and any change in business model, the introduction of any new method, may make the original "capable" lose its status or wealth, Intel CEO Grew In his book "Only Paranoid to Survive," the husband said that the biggest cost of change is that the senior leaders around lose their interests or are emotionally unacceptable. He further concluded that the reforms are successful and that senior executives can only half stay. It's good to go down.

It is precisely in these three areas that emerging companies do not have so many concerns. First of all, there is not much success for emerging companies, and there is no such thing as superstitious success. Second, most emerging companies are progressing in failure, so they will truly see failure as the mother of success. Third, emerging companies do not have much vested interest. Their goal is to create new benefits. Similarly, high-tech companies innovate more because technology itself is progressing faster and product renewal is faster. Failure to progress is tantamount to death. It is the “enforced” living environment or industrial environment that has promoted the rise of innovation.

Therefore, for traditional enterprises to innovate, we must first surpass success and “clear” the past. The second is to cherish failures and regard failure as an opportunity. It is precisely because of mistakes that leads us to find the entrance to perfection. The third is to break vested interests, focus on the interests of customers rather than high-level interests, and focus on future interests rather than current interests.

I am often asked what is an entrepreneur? I think that the leaders who can do the above three points are probably even entrepreneurs.

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