Innovation is fun. It’s exciting. It makes you feel good and it gives you something interesting to talk about. That’s one of the reasons people do it, even when it costs them money.
But unless you’re running your business as a hobby, you need to understand which changes will make your business more profitable, and which will be value-destroying vanity projects.
The history of enterprise is littered with the corpses of trailblazing businesses, while the clever entrepreneurs who saw and learned from those mistakes went on to prosper.
It may surprise some, but many of the world’s most successful businesses started as ‘me too’ operations, picking up on technology and ideas that were pioneered elsewhere.
Boeing (NYSE:BA) didn’t make the first commercial jet aircraft, nor did McDonnell-Douglas, which Boeing later assimilated. That honour goes to British company De Havilland.
Sadly, the initial De Havilland Comets met with a series of disasters, and while it took some years for Boeing and Douglas to compete against them, they offered a superior product and went on to dominate air transport for decades.
Microsoft (NASDAQ: MSFT) rarely pioneers a new technology; it takes existing products, improves them and gets them to the market more effectively.
Its DOS operating system wasn’t the first for desktops (that was CP/M), and DOS itself wasn’t developed by Microsoft but bought in — Microsoft then successfully promoted it for the IBM PC in the early ’80s. Even the once-ubiquitous Internet Explorer was initially acquired from another company, and was later to the market than Netscape.
Visa wasn’t even the first credit card; that was Diners Club. Visa, however, had more resources at its disposal and was able to expand its business more successfully.
A study by William Boulding and Markus Christen, published by Harvard Business Review, concluded:
“Pioneers were substantially less profitable than followers over the long run, controlling for all other factors that could account for performance differences …
“If [innovation is] not backed up with clear and well-reasoned economic logic, a first-mover strategy should be approached with skepticism.”
There you have it: “clear and well-reasoned economic logic”.
“The question that needs to be asked”, they say, “is not ‘Can we be first?’ but, ‘How exactly will being first affect our costs and revenues over the long run?’ ”
In support services, where margins are tight, this matters. You may not be developing the latest technology, but there are plenty of companies that will happily sell you the latest, shiniest solutions at a premium price.
You might have a client asking you to do the same but it’s important you can challenge that ‘innovative’ idea given the risk to your bottom line, your future reputation and potentially, your survival.
To make the right decisions, you need to understand your business, and the art of the possible. At Innovise, our products – Timegate and Servicetrac – give you the data you need to make those decisions. When you need to demonstrate innovation for, or in collaboration with a client, involve us as your partner.
This is what we do, where we can add our experience, and help you leverage the exciting, lower risk options you could have at your disposal. You might also be surprised at what is already available!
Don’t lose money by trying to be the most innovative – make money by being the smartest!
“The early bird may catch the worm, but the second mouse gets the cheese.” — Anon.
Want to see how Innovise can help you innovate effectively? Why not call us now to arrange a free initial consultation.
 Boulding and Christen, First-Mover Disadvantage, Harvard Business Review (October 2001), https://hbr.org/2001/10/first-mover-disadvantage