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Determining when and how to evolve is a question every founder confronts in the course of running their business. Stray from your core offering too much — like Colgate did in the ‘80s with its doomed frozen dinners — and you risk irreparable harm to your brand. Don’t change anything, and risk becoming obsolete (see: Blockbuster, Dell, Sun Microsystems).
There is no silver bullet for figuring out how to evolve your company. But there are ways to think strategically about what sort of growth makes sense, and the impact it will have across your organization.
Related: Change Is Not Enough — We Must Evolve
Make data-driven decisions
It should go without saying that any major decisions made should have data to back them up. But it isn’t always as obvious as it should be.
The core offering of my company is online forms. Our data shows that our forms get approximately 160 million views each month, with about 28 million forms being submitted each month.
Given how many people use our forms, it would make sense that much of our operations would be dedicated to improving them. But until recently, we haven’t actually paid as much attention to our forms. Instead, we were concentrating on evolving our form builder and creating useful tools like our PDF editor and workflow builder. This is largely because our customers — the people who buy our product — benefit from these tools.
But according to our data, our form builder is accessed only a fraction as often as our forms themselves — 1.1 million times per month, to be exact. With this in mind, we’ve been focusing more on the experience of using the forms: updating the design, improving the form fields and thinking about tools that will make our end-users’ lives easier. By making upgrades that reach the largest number of people, even modest tweaks will have an outsized impact.
This was an important lesson to learn. And had we not compiled and analyzed the data, we might never have noticed this blind spot. Instead, we would have spun our wheels working on something that wouldn’t have the same returns.
Related: Don’t Drown in Your Convictions: How to Let Your Ideals Evolve …
Have an innovation strategy
Organizations may be a single entity, but they are composed of several different parts, from marketing to finance to operations. A good innovation strategy involves aligning all of these moving parts under a clear objective, Harvard Business School’s Gary P. Pisano points out. But even though companies regularly define their strategies, they are much less likely to map out how to align their innovation efforts with their business strategies.
Without an innovation strategy, Pisano writes, “different parts of an organization can easily wind up pursuing conflicting priorities — even if there’s a clear business strategy.”
Pisano continues, “Diverse perspectives are critical to successful innovation. But without a strategy to integrate and align those perspectives around common priorities, the power of diversity is blunted or, worse, becomes self-defeating.”
Mapping a successful strategy requires a clear understanding of what specific objectives will help the company, and should answer these three questions:
1. How will innovation create value for potential customers?
Value can be created in many ways. But a crucial part of innovation strategy is deciding what type of value you’re creating and sticking with it. Apple, for instance, is known for making products that are easy to use and offer a seamless experience across its range of devices. Therefore, its focus is consistently on integrated hardware-software development, proprietary operating systems and design.
2. How will the company capture a share of the value its innovations generate?
Innovations are quick to spawn copycats. As such, companies need to think about what they can offer — be it complementary assets, capabilities, products or services — that will keep customers from turning to competitors. Continually investing in innovation is one way to do that.
3. What types of innovations will allow the company to create and capture value, and what resources should each type receive?
Technological innovation creates both economic value and competitive advantage. But Pisano notes that companies like Netflix, Uber and LinkedIn found success not through technology per se, but because they mastered the art of business model innovation. When considering innovation opportunities, companies need to decide how to balance the two.
While it’s important to follow your own vision, evolving your company will inevitably involve getting a range of perspectives. Starting with your customers, what do they want from your product?
It turns out that even though most large companies gather ample data on the people who buy and use their goods, most don’t actually understand their needs. One survey from Bain asked respondents to identify capabilities that would trigger a new wave of growth. At the top of the list? Capabilities to better understand core customers. These insights can be invaluable when it comes to figuring out how your offerings should evolve.
Customers, of course, aren’t the only stakeholders whose input you should seek. Ask your team about their ideas, and really listen. If you find no one is speaking up, make sure that everyone clearly understands the company’s overall objective. Employees who are on board with the organization’s goals are more dedicated to its success, and will have more suggestions for how to move forward.
Finally, keep an eye on your competitors, and stay on top of current trends and changes to your industry. This doesn’t mean you should be chasing the latest fad or totally reshaping your business on a passing whim. It does, however, mean being aware of the markets and what innovations are coming down the pike. We all know companies who got too comfortable with their success — Nokia, Blackberry and Yahoo, to name just a few — and became obsolete just a few years after hitting their peak.
Change is scary, because success is never guaranteed. Stagnation, though, is a surefire way to fail. By making decisions informed by data, having a clear innovation strategy and seeking input from key stakeholders, you’ll be well-positioned to successfully evolve.
Related: Why Consumer-Facing Enterprises Need To Evolve With The …