BQF Innovation

Is there a completely different way to operate in your business?  If all your competitors are using a broadly similar approach, is there an entirely separate approach that could deliver what your customers want?

In the early 1980s the leading manufacturers of Personal Computers were companies such as IBM, Compaq, Toshiba, Hewlett Packard and Olivetti.  They operated a similar model.  They built PCs to standard specifications and then shipped them to dealers who sold to end-users.  Michael Dell conceived a different model.  He allowed end-users to specify the exact configuration they wanted (e.g. memory, disk size, special function cards etc) and then built it to order.  The Dell PC was then shipped direct to the customer who could get telephone support to help set it up.  Because there was no inventory waiting in distribution channels Dell was able to operate with much lower stock levels than his competitors.  In a world where components were continually falling in cost and improving in specification this was a huge advantage.

Geoff Bezos used internet technology to develop an entirely different model for book and CD distribution when he set up Amazon.  The traditional book and CD retailers had high overheads in retail premises and inventories.  They could not compete with Amazon’s huge selections, slick search facilities, customised recommendations and fast deliveries.

ARM was launched in 1990 as a tiny microprocessor company competing with huge players like IBM, Intel and Motorola who all designed and manufactured their own chips.  ARM took a radically different approach.  Sir Robin Saxby, the visionary CEO, said. ‘We had very little money so our only hope of creating a global standard was to license the design to everybody – turning our enemies into our friends.  That put ARM into a different space.  It was our open licensing business model and the power of our connected community that was the most significant factor in changing the world.’ By 2006 some 98% of the world’s mobile phones were using at least one ARM designed processor and hundreds of companies have licensed ARM designs (including Intel).

How could you change your business model to completely bypass your competitor and delight customers with a radically better service?

Paul Sloane

Watching the Olympics leads me to comment on the lessons that sport has for business.  I believe that the benefits of sporting lessons for business are exaggerated.  Business success is based on more than motivation, discipline and hard work.  It depends heavily on innovation - and sport is a very poor guide to that.  In sport the rules are clearly defined and everyone has to conform to them.  In business every assumption and rule can be challenged. Organisations must be prepared to change everything including their fundamental business model.  Sporting coaches cannot help here.  Creativity, lateral thinking and innovative leadership are needed.

Of course there are innovations in sporting methods but compared to the pace of change in business they are tiny.  There is little real innovation in top level sport - mainly because the rules are so stringent. The Fosbury flop is a true example of lateral thinking and an entirely new approach.  But it is 40 years since Dick Fosbury came up with it and there have been precious few similar examples since.  What creativity can a 400 metre runner really show?  Sure he can train differently but this is not radical innovation.  If you look at business you see innovative companies taking big risks with completely different models, methods, combinations and approaches.  Torvill and Dean doing a different ice dance is creative but it is not in the same league as the Nintendo Wii. If T & D tried anything really innovative, like jet powered skates, the judges would ban it. But you can try just about anything in business and that is the crucial difference.  Sports can teach us about mental toughness, goals, belief, handling pressure, motivation and concentration.  In other words mostly left brain disciplines.  If you want to develop right brain skills in creativity, lateral thinking and innovation then look to the arts, theatre even warfare - but not sport.

The 100m race is essentially exactly the same event now as it was 50 years ago. Golf has hardly changed. If you took Arnold Palmer or Sam Snead or Bobby Jones and put them into a golf tournament today they would be completely at home. Similary Lew Hoad or Fred Perry could compete at Wimbledon.  The standard would be higher but the only significant innovation they would notice would be the tiebreaker.  Now think about taking a businessman from the 1950s and dropping him into business today.  He would be amazed at how everything had changed and he would struggle to cope. Business faces innovation challenges every day and has to adapt, learn and innovate to survive.  Most sports are frozen in one mode which essentially changes very little. Sport is artificially constrained by rules that make it easy to understand for spectators, officials and participants.  Business is real life where all bets are off and anything can happen. That is the difference and that is why sport has little to teach us about the most important aspect of business today - innovation.

Paul Sloane