INNOVATE OR DIE

Today, success has become an impermanent achievement which can be taken away by competitors any time. It has rather become a fundamental requisite for companies to continuously innovate and evolve according to the ever-changing moods of the customers for their survival and growth. If they fail, unfortunately, there will be no tomorrow for them. We know that the bigger and better we get, the higher the hurdles become. Therefore it is incumbent upon us to challenge and continuously improve the way we run our business. -Bernie Marcus

Why Innovation? Today, business is nothing less than war and victory is ephemeral. Sustaining a position in the consumers' mind is an on-going battle and victory can be snatched away with the blink of an eye. The continuous battle for the top spot has forced companies to constantly innovate. Very few companies are successful in sustaining their dominant position and those that are, continuously innovate. They have the courage to attack their position in the market. Continuous innovation and self-attack are at the core of competitive strategy for the 21st century companies. Jack Trout and Al Ries (Trout and Ries) in their book Marketing Warfare say that the best way to improve a company's position is to constantly attack it. They feel that a company can keep strengthening its position by introducing new products. To put it more precisely, a moving target is hard to hit than a static one. Innovation, for the new breed of companies, is all about changing the environment. It is about breaking the old rules and routinized work pattern and introducing new things with new standards. It means creating a sea change in the way a consumer performs his day-to-day activities. According to Professor Gurprit S Kindra, School of Management, University of Ottawa, Canada, "the ATM was an innovation which totally changed the way people used to deal with their money". Most marketing experts agree that a company needs to continuously innovate and attack itself to be a consistent performer. According to Paul Greenberg (Greenberg), President of the 56 Group, LLC and the author of CRM at the Speed of Light: Essential Customer Strategies for the 21st Century, companies need a proactive (self-attack) effort to succeed in today's business world. Professor Theodore Lewitt of Harvard Business School in an article in the Harvard Business Review nearly fifty years ago, argued that, to survive, companies must constantly look for new ways to satisfy customers' needs. Just imagine how true it is in today's context.

Willem P Burgers (Burgers), Professor of strategy and Marketing, China Europe International Business School, (CEIBS) Shanghai, China, too feels the same. He says, "The pace of change has accelerated enormously. Thus the right approach is to attack and destroy yourself before somebody else does. While attacking yourself may not bring success to you always i.e., you may have to sacrifice your short-term profits but it will benefit the company in the long run by giving stability and prosperity". The only thing companies should remember here is that they should have the courage in them to attack themselves repeatedly and not to be afraid of small failures, because these failures will be the pillars of success for them in the long run. Professor Burgers adds, "Self-attack means a constant re-innovation and re-examination of your products and processes. It is important not to be afraid of making these attacks and spending money to make these dramatic and incremental changes." In "Marketing Warfare," Trout and Ries state that this type of self attacking and innovative strategies are well suited for the market leaders only and are not suitable for small players or firms. But most experts in marketing that we have interviewed for this article think otherwise. According to them, there is no such restriction or limitation as such in using a particular strategy in business. According to professor Kindra "it is not restricted to market leaders it is just that market leaders have an edge, deeper pockets on this strategy, because of the amount of research and money which goes into this". Professor Burgers feels that "this type of reinvention and self attack strategies are very essential for the small players to survive, as innovations create new segments and according to him the best way to become the market leader is to create a new segment. He cites the example of Dell Computers (DC) here; how it conquered the PC industry, not by inventing a better computer, but by inventing a better way of marketing and servicing computers." So it is clear that strategies are not restricted to any particular company. Self-attack to Greenburg has both the external meaning of proactively approaching the business world and the internal meaning of fearlessly transforming business culture, model and processes. Greenburg sums it up by saying, "there is no restriction in strategies any one who cares to adopt it can, irrespective of its size. It's a matter of how well you execute it and how bold and creative you dare to be". The story of dell proves this. Masters of Innovation Companies which are masters in this game of self-attack and innovation have been able to achieve and retain their position year after year irrespective of changed circumstances. The first name in innovation and self-attack is of Gillette a $9 bn global producer of personal care and grooming products. Gillette firmly believes in continuous product innovation. It has always stuck to its corporate mantra of "innovation is Gillette". It has got the knack of continuously attacking its own products. Its history proves it. From sensor to Mach3, Gillette kept on innovating and attacking it own products. It revolutionized the wet shaving market throughout the world as there has been a continuous evolution in Gillette's product line since its inception. According to professor Kindra, Gillette has been successful because "of its attitude of continually rejuvenating existing products with new features" which

helps it in staying far ahead of its competitors. Commenting on Gillette's relentless strategy of attacking itself, professor Burgers says, "Gillette has done an excellent job for many years in continuous innovation. I sometimes wonder if there should not be some level of shaving perfection where improvements are no longer possible". The next popular player in this game is IBM, which from its very inception has been introducing new lines of mainframe computers with a significant price performance advantage over its existing products. It has never hesitated or missed out the chance to crush its competitors whenever the situation demanded. It earned the reputation of 'irreplaceable' with its strategy of continuous innovation and self-attack in its competitive struggle with Dell, HP, Apple and many more companies in order to achieve its present position. It seems to adhere to the golden rule of the business that says, "if you fail to crush your competitor or leave him, it will crush you back. So never ever fail to crush your competitor whenever the situation arises or demands so." Another example of successful innovation is Sony. It always kept its focus on its core business of consumer electronics, but at the same time constantly kept introducing breakthrough products and new models even if they were hurting the sales of its existing products. Jason Jennings, the author of the bestselling book Less is More gives another example of a highly innovative company. His favorite is the 60-year old Koch industry of America, the second largest privately held company, about which he is writing in his forthcoming book Think Big Act Small. Koch industries has got the capability and the commitment of continuously searching for new ways to create value and long-lasting relationships with the customers, which resulted in increasing revenues and profits by 10% annually for 10 consecutive years. Then of course is the classic story of Microsoft. Microsoft is one of the most spectacular innovative success stories in today's business scenario. Nevertheless, organizations such as, Walt Disney, 3M, Intel, SMH, Johnson & Johnson, GE, Rolls Royce, P&G, Mc Donald's etc., have mastered the art of creating consistent and sustainable positions year after year irrespective of different circumstances by continuously re-innovating and attacking themselves. A number of companies in India also, who are market leaders in their respective industries and maintain a dominant position in the market place, have embraced these strategies. The first among these is the name of Hero Honda, the No.1 two-wheeler company in India and also the largest selling motorbike company of the world. Hero knew the importance of change and continuous innovation and attacked itself with better and new products, without any fear of failure. The history and line-up of its products reflect this. Other successful innovative companies include VIP, Bajaj and Nirma, to name a few. All these companies have mastered the art of consistently generating revenues and doing better than all other competitors, i.e., they knew how to create the demand for new products and grow revenues even in recessionary times. Why companies fail to retain their position? There are a few great names in today's business world, which are there in business but probably not in their favorite position. The story for them would have been entirely different; if they had not resisted change and more importantly had they not ignored the importance of innovation in business. The first in this list is Coca-Cola (one of the world's strongest brands) the more than

100 year old soft drink company first started as a patent medicine but later developed into a regular drink. Coca-Cola in its early days was a monopoly in soft drinks market. This resulted in complacency for the company. It failed to act on the changing taste of customers and seemed to have forgotten that to be the leader in this business it must innovate and not just deliver the same products year after year. Coca-Cola missed out the biggest opportunity to block Pepsi (or any other competitor at that point of time) by not introducing a second brand of a different (sweeter) taste. Though Coca-Cola later tried to come up with new versions, it was too late. And so it paid the price for its overconfidence and relaxed attitude by losing its monopoly. Its market share also reduced drastically. Though, it's true that Pepsi is still second to Coca-Cola, the important point here is that it is the closest competitor in this war. Next is the story of Nike, one of the major companies in sportswear. In the late 1990s, Nike's sales jumped by 140%, net profits rose by 40% and the stock prices by 320%. All these would have been a dream for any company. But it's true, Nike achieved all this. But it failed to sustain its position because of its resistance to change! It failed to identify the changing trend in the teenagers' choice from traditional athletic shoes to the casual leather shoes. This attitude of Nike resulted in the dramatic fall of its market share in the medium and low priced shoes. It forgot that winners have to achieve both growth and efficiency at the same time. The late Sumantra Ghoshal of the London Business School had once said, 'Winners are like chefs, they must learn how to cook sweet and sour". Unfortunately, Nike didn't. Undoubtedly, it had the talent and capability to grow big very fast and bounce back to its classic standard, but it failed to do so again and again because of its resistance to innovate, self-attack and inability to learn from mistakes. Another example of a company which failed to sustain its position is Revlon, a mega global brand in cosmetics which is in deep trouble nowadays, because of its inability to transform according to the changing taste of its customers. Regaining its prior market position will be tough as climbing back to the top is much harder than falling, because one has to improve performance on multiple dimensions simultaneously. Attack or Get Attacked Companies today must operate at a much faster pace (proactive) than their competitors in order to have a real competitive edge over them. They should be faster in developing and introducing products, implementing strategies and responding to the changing customer needs and wants. Companies like Gillette, Walt Disney, 3M or Hero Honda all survived because they evolved, innovated and attacked themselves from time to time, i.e., they transformed according to the changing priorities of their customers. They all have in them the ability to focus on the future rather than dwell in the past, which is so crucial for success in this global environment. Going back to the theory of Charles Darwin 'Survival of the fittest' in this context, "You have to evolve and transform according to the changing times. If you don't you won't survive". Just think how important and contextual this is for today's companies. The message is simple and loud the faster the companies evolve the better for them, if they don't there will be no tomorrow for them. The choice is theirs.