In this blog series I’ll be examining the art of mapping innovation opportunities for your business. As a consultant, I have done this for a number of major companies, including Nike, Experian and PepsiCo.
From new entrants stealing market share to new technologies changing the rules of service delivery, disruption is everywhere, and it affects all businesses. But disruption brings with it opportunity: to carve out new forms of competitive advantage and serve your customers in a more effective and differentiated way.
Ignore disruption at your peril. Almost everyone is familiar with Kodak’s failure to respond to the digital photography revolution, but not so many people know that the company was on an upward trajectory right up until the point it fell off a cliff in the late 90s. Its revenues peaked in 1996 at $16bn, with profits of $1.3bn, and its share price (below) reflects that performance. It must have been tempting indeed to stick to the strategy that had served the company so well to that point — after all, analog film is far more profitable than digital photography. Just five years later, Kodak’s share price had plunged to about a third of its high water mark. It’s not that the company didn’t see digital coming — the digital camera was actually invented at Kodak in 1975 — it’s that it wasn’t willing to sacrifice short-term profits for long-term growth. Or to put it another way: it saw the disruption, but didn’t see the opportunity.
The posts in this series will help you to avoid your ‘Kodak moment’, by spotting disruption in your market, and reframing this disruption as an opportunity for your business.
But first, a little more on what I mean by ‘opportunity’. Opportunity presents itself when disruptive forces open up new ways for you to create value for your customers and your business. The emphasis is important. Two competing businesses might have a very different set of opportunities, depending on their capabilities, resources, internal culture and customer base. On top of that, there is only an opportunity where there is potential for your business to execute in a commercially viable way — otherwise it’s just a pipe dream. All companies will draw their own lines in the sand about what is within the scope of viable innovation — product, brand, service ecosystem, business model etc. — and it can be useful to set some parameters to encourage focus. But getting too narrow too soon is a recipe for being blind-sided by the market further down the line.
Mapping opportunities is about more than just trend watching. It requires deep understanding across three areas:
your business and how you currently deliver value to your customers
your customers and their needs (and future needs)
the disruptive forces at play in the market
In this series, I’ll be looking at how to acquire this understanding, and how to translate it into a compelling set of opportunities for your business.
A final semantic point: ‘opportunity’ is not the same as ‘idea’. Opportunity mapping is primarily a research activity, and it precedes ideation. For example, a team may identify an opportunity to start using customer data to deliver a more personalised service experience. The next stage would then be to develop ideas on how to activate that opportunity, then prototype these ideas, then release these prototypes into the market more quickly than feels comfortable…