Want to increase your innovation rate? The global consulting firm, McKinsey, has been conducting extensive research into the prerequisites for innovation. Their findings can be simplified and conveyed with eight verbs:
First there are the strategizing and creative actions that must be taken:
#1 Aspire
#2 Choose
#3 Develop
#4 Evolve
Followed by implementation:
#5 Accelerate
#6 Scale
#7 Extend
#8 Mobilize Continue reading 83. The Innovating Eight: Action Verbs for Innovation
My title is a quote that had 83,000 Google hits. The quip – attributed to Peter Drucker – is business mainstream. Have you defined your culture? Have you tested your culture against present realities?
To help, search Google for “how to define your culture”. It’s tedious, but worthwhile. Uncovering what you already suspect you are guilty of is the first step towards a culture of innovation and being able to execute well. Like fish, we don’t know we are in water, and getting out of your own pond can lead to great things. As humans, our familiar pond includes cognitive biases like group-thinking and informational obeisance (Google “Emperor’s New Clothes” to learn more).
Want to expose the ways you in which you can beat Amazon (AMZ)? Start with a line item cost-to-serve model for your distribution company or for several of your most innovative distributors. Then, create profit and loss rankings for every SKU and vendor, as well as for customers, territories and niches. Get ready for some shocking revelations. The biggest: big profit/loss cross-subsidies fault lines likely exist between your most profitable and unprofitable customers and SKUs.
The most profitable warehouse items:
Another way to think of this is using the Profit Equation: GP$s (-) CTS$s = P$s. Continue reading 81. Find (and Fill) Your Cross-Subsidy Fault Lines
Richard Thaler, author of Nudge, recently won the 2017 Nobel Prize in economics. He’s been uncovering and popularizing cognitive biases in his study of behavioral economics for over 30 years. Thaler studies the human behaviors that don’t fit rational economic expectations, or the dumb stuff people do.
You too can use the study of dumb stuff to your advantage. First, have your C-suite independently, and perhaps anonymously, write down their top three dumb profit draining activities within the company. What’s the consensus? Which activity is the number one dumb activity? Continue reading 80. Using Dumb Stuff to Boost Your Profits
The year 1994 was a vintage year for high-growth company analysis. David Birch concluded that 3% of the fastest growing companies, known as gazelles, created most of the new jobs in the U.S. Also, Bruce Kirchhoff concluded that 4% of firms formed in 1977-78 started growing and hiring rapidly six years after being founded. And, David Storey concluded that 4% of startups that survived 10 years were responsible for 50% of new jobs in the overall economy.
Researchers have gone on to try to correlate the gazelles with high innovation rates, and no one disputes the idea that firms with superior growth and profitability—compared to their peers–do so by differentiating themselves through innovation. Continue reading 79. How to Join the Gazelle Club
Amazon’s digital channel has eclipsed much of the information value and cost efficiencies once enjoyed by traditional distributors. When a disruptor eats into your space, you need a dual response strategy:
Back in the day, Kodak had a massive camera film franchise. They also invented the first digital camera. But, they let the technology languish. As others began to chomp into their film sales, Kodak put film veterans in charge of a catch-up digital-camera strategy. The strategy was to get digital photographers to print out their best photos in order to stimulate film sales. Mighty Kodak collapsed. Continue reading 78. A Dual Strategy Against Amazon’s Digital Channel Disruption