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            [post_title] => "China is the next innovation powerhouse" Six Word Wisdom from George S. Yip
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            [post_content] => Frances Ruane picFrances Ruane served as Director of the ESRI from 2006 to 2015.  She previously taught in the Dept of Economics at TCD, and earlier in her career she work at Queens University in Canada and at the Central Bank of Ireland and the IDA. In Ireland, her current activities include chair of the Interdepartmental Group on Making Work Pay for People with Disabilities at the Department of Social Welfare, membership of the Public Interest Committee of KPMG, and an Honorary Professor in the Department of Economics at Trinity College, where she contributes to the MSc in Economic Policy Studies. She is also a Research Affiliate at the ESRI and a member of the Royal Irish Academy.

IMI: Based on your current work – if you only had 6 words of advice to give a business – what would they be?

FR: Look positively beyond the immediate.

  IMI: What does this mean? FR: After a period of rapid growth, the global financial crisis meant that Irish businesses had to concentrate on handling immediate challenges.  They managed that disruption well and this contributed to the strength of Ireland’s recovery.   But the focus on the immediate has left many businesses with legacy issues (debt burdens, under-investment in innovation, poor staff morale). And now businesses need to prepare for the medium term when we discover what is really meant by ‘Brexit means Brexit’.  Forward looking businesses leaders need now to ask: what could Brexit mean for my market and company? Where am I exposed to risk and how can I mitigate it?   [post_title] => "Look positively beyond the immediate" Six Word Wisdom from Frances Ruane [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => look-positively-beyond-immediate-six-word-wisdom-frances-ruane [to_ping] => [pinged] => [post_modified] => 2020-05-11 19:52:32 [post_modified_gmt] => 2020-05-11 19:52:32 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 8268 [post_author] => 39 [post_date] => 2014-09-29 11:53:40 [post_date_gmt] => 2014-09-29 11:53:40 [post_content] => Described as ‘The Jane Bond of Innovation’, Nilofer Merchant has grown businesses — from Fortune 500s and silicon valley web start-ups — for 20 years.  She will be a keynote speaker at the IMI National Management Conference on 9 October 2014.  As an innovative thinker and practitioner, Nilofer will share her thoughts and experience on how we best align our organisations to succeed against our business challenges today and into the future. nmweb150 IMI: Based on your current work – if you only had 6 words of advice to give a business - what would they be? NM: Not everyone will, but anyone can. IMI: What does this mean? NM: Most organizations think of work in boxes. As in engineering does this and marketing does that. Or, even more personally as Tom is responsible for delivering X and Susan is responsible for Y. This is to put work into neat little boxes to create some type of measurability. It’s a relic of the industrial era when the way to profitability and market performance was on efficiency and productivity. But if you look around your workplace, you’ll notice the most obvious truth. Most things are not failing because so and so didn’t do such and such. It’s because of a gap. A gap between organizational silos. A gap between understanding. A gap between the organizational boxes. In order to close the box, you need to organize not around boxes but around purpose. Organize not by “who should be here” but who wants to be here. And while not everybody will rise up to solve the situation, create new products, etc … what you’ll discover is an amazing reserve of talent that exists. Things you didn’t know were possible will happen. Because anybody can. IMI: Where should we look for further information? NM: Visit my website Nilofer Merchant is a keynote speaker at the IMI National Management Conference taking place on Thursday 9 October. If you are interested in attending click here to register. [post_title] => "Not everyone will, but anyone can" Six Word Wisdom from Nilofer Merchant [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => everyone-will-anyone-can-six-word-wisdom-nilofer-merchant [to_ping] => [pinged] => [post_modified] => 2020-05-11 21:02:28 [post_modified_gmt] => 2020-05-11 21:02:28 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )
Costas Markides

Costas Markides

17th May 2017

Costas Markides is an IMI associate who teaches on the Senior Executive Programme.  

Related Articles

"China is the next innovation powerhouse" Six Word Wisdom from George S. Yip
"Look positively beyond the immediate" Six Word Wisdom from Frances Ruane
"Not everyone will, but anyone can" Six Word Wisdom from Nilofer Merchant

Business Model Innovation

Over the last thirty years, we have accumulated a lot of academic evidence on the topic of new market entry.  The most consistent finding is that the majority of firms that attempt to enter a new market (by, in effect, attacking bigger established competitors) fail.  It has been estimated that almost 80% of all entrants fail within ten years.

Yet, without disputing the academic evidence, we all know of examples of companies that entered new markets with great success.  In several instances, not only did the new entrant survive but often managed to emerge as one of the leaders in the industry! IKEA did it in the furniture retail business, Canon in copiers, Bright Horizons in the child care and early education market, Starbucks in coffee, Amazon in bookselling, Southwest, easyJet and Ryanair in the airline industry and Enterprise in the car-rental market. The list could go on!

Innovation (Photo source)

What explains the success of these outliers?  The evidence points to a simple enough answer: successful attackers do not try to be better than their bigger rivals.  Rather, they actively adopt a different strategy (or business model) and aim to compete by changing the rules of the game in the industry.  Over and over, what we see is that significant shifts in market share and company fortunes took place not by trying to play the game better than the competition but by trying to be different—in a sense, by avoiding head-on competition.  This is what has come to be known as business-model innovation.

Obviously, I am not the first person to praise business model innovation and this is not the first time that managers are encouraged to actively seek and exploit a new business model in their industry.  Numerous books have been written and many ideas have been proposed on how firms could innovate in this way.  But here’s the problem.  Despite all the advice and despite the wealth of ideas, it is very rare to find a business-model innovation that originated from an established big company.

Why—despite all the ideas and advice—do big, established firms fail to pioneer new business models in their industries?  These firms have the resources, the skills and the technologies to do a much better job at innovation than the new start-up firms.  Furthermore, the advice that has come their way on how to do so is good advice coming from some of the best academic minds.  Yet, they continue to allow new firms to take the initiative when it comes to business-model innovation despite the obvious benefits of this type of innovation.  What can explain this?

The answer is that all business model innovations display certain characteristics that make them particularly unattractive to established firms.  For example, new business models often conflict with the business models of the established firms.  They also attract customers that the established firm is not (initially) interested in.

This suggests that giving more and better advice to established firms on how to become more creative so as to discover new business models is pointless.  The issue is not discovery.  The real issue is organisational and the only advice that can prove helpful to established firms is how to overcome the organisational obstacles that prevent them from growing a new business model next to their existing one.

Costas Markides is an IMI associate who teaches on the Senior Executive Programme.  Costas is Professor of Strategy and Entrepreneurship and holds the Robert P. Bauman Chair of Strategic Leadership at the London Business School.  He is a researcher and widely published author on the topics of diversification, strategic innovation, business-model innovation and international acquisitions.   He was named one of the Top 50  Most Influential Management Gurus by Thinkers50 in 2011.