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ARTICLE MAY/JUNE 2015
 
Stephan Friedrich von den Eichen on ...
 

INNOVATION: LEARNING FROM

THE DECISIVE


Or: Why it is not just energy suppliers who are struggling to find their way out of the darkness when it comes to innovation
 


Imagine the following three scenarios:

  1. Your company has been consistently successful for years, even decades. As a result, it seems there would be no real impetus to change anything or go looking for something new. Yet the situation is becoming increasingly tricky and we can be sure of at least one thing these days: nothing, absolutely nothing, will stay the way it was.
     
  2. You have selected a colleague to take on the innovation work at the company but the results haven't been convincing (yet).
     
  3. Ideas are coming out of the organization, but they focus primarily on incremental improvements on existing elements and are not really helping the current situation get any better.

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1, 2 or 3?
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With the exception of the consistent success, we would never wish any of these three scenarios on you. Yet even businesses that are successful on an operative level can exceed their strategic sell-by date. The last blacksmith on the block presumably "enjoyed" his monopoly over the market.

If none of these scenarios apply, then well done! You just have to hope that you are honest with yourself and that your colleagues also come to a similarly positive assessment.

If, on the other hand, all of these points apply, then you are most likely working in the energy supply business. The traditional business is under immense pressure and there seems to be no relief in sight. At the same time, nobody knows what new businesses will fill the increasingly large gap in the industry. The dilemma: The chasm is so big at this point that there seem to be no ideas as to how to solve the problem. And if an attractive field is discovered, there are always non-industry invaders who already have it in their sites. In the renewable energy sector, for example, 80 percent of the market is "lost" to new entrants to the business.

We would like to take a closer look at the industry, but not from a position of relishing in anyone's shortcomings. Instead we would like to point out that even representatives of industries that are more traditional than energy supply could learn from the consequences that have recently become prevalent.
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Last chance (not quite) gone ...
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The conditions at the beginning of the game were the same for all players (mostly) and both the "innovation gene" and the necessary "innovation muscle" were not very maturely developed. Yet some players move in mysterious ways, and they have had to overcome at least one hurdle they had struggled with for a long time, namely, the…

AWARENESS BARRIER:

What we mean here is recognizing trends in time; anticipating where dangers lie and where opportunities exist; and ultimately, having a realistic assessment of how well the current business model and the existing technology fit into the future. The awareness barrier once kept Siemens from moving into the broadband arena and hurled the company's communications division toward disaster. Leica delayed its entry into the digital camera market due to this barrier, Langenscheidt suffered a famous decline, and other companies like Lufthansa and Karstadt are still hampered by their own lack of awareness.

Interestingly, the technology experts in the form of CTOs or research managers are not always much help when overcoming this barrier – at least not when they have become successful big names with "their" technologies. This proximity requires a systematic overestimation of the familiar technology and yet one tends to underestimate the force needed for something new to be truly groundbreaking.

The bitter experience among energy suppliers is that just one percent of their ideas is actually pioneering in nature and 75 percent of them are simply incremental, sales-oriented concepts, which brings us to the next issue, namely, the

SEARCH BARRIER:

Companies that move faster today have already recognized that the search

  1. is too closely related to the customer
  2. was too limited by artificial segmentation logic and
  3. was limited by the immediate need for feasibility of the idea.

Not only that, but companies tend to ignore a large portion of their own creativity. Certain functions, hierarchies and departments aren't integrated into the search for ideas and, due to unconvincing results, the search process is then broadened internally first and then externally before being expanded beyond the industry itself. Suddenly the person responsible for innovation is no longer the keeper of the Holy Grail of process bureaucracy, but an orchestrator of in-house and external knowledge. He controls the added value partnerships and the innovation portfolio and in the end becomes the innovator, at least until it is clear whether a new business has found a successful stride within existing structures or it requires increased autonomy in the form of an independent business unit.

That brings us to another barrier energy suppliers seem to have had a better time handling, namely, the...

LOGIC BARRIER:

If you call for ideas you often get some, but just as often the ideas completely lack any concept of how the sustainable business logic behind the scenes should really look. E-mobility and smart metering come to mind. Thinking about and dealing with business logic forms replaces the simple search for ideas. The job becomes, and is only done, when you have created a sustainable business logic from those ideas, all supported by multifunctional teams.

What impresses us is the determination with which some energy suppliers have approached the subject of "innovation". Indeed, it is a decisiveness from which we can certainly glean some lessons, but it took a long time before the situation was clearly recognized and the various barriers were conquered. The answer to the question of whether it took too long will reveal itself in the coming years. After all, the fortresses that have stood the test of time were not those that were built while under attack, but the ones that were built in times of peace. That is another lesson we can perhaps apply to our (innovation) lives...
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Let's see who's right with the light...
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If you have questions on this subject or would like to arrange an appointment at our premises, feel free to contact us:

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MUNICH OFFICE: Schellingstraße 45 | 80799 Munich
CONTACT: Christiane Steuer |
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ARTICLE 05-06/2015
INNOVATION >

 

 

 

 

 

 

 

 

 

 

 

 


 

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