Live in the future, not in the present – Valerio Nannini
1 hour 19 min ago
Singapore ranked second in the World Economic Forum’s Global Competitiveness Report this year, its outstanding rating across markers like education, financial market development, infrastructure and labour market efficiency placing it just below Switzerland. The island-state, however, suffered a slight bump in one area described by observers as its “Achilles heel” — innovation.
As a company man who has spent more than 25 years in Nestle, research, development and innovation are my passion. Three years ago, I came to Singapore with exactly that agenda: To drive innovation in a small country and yet, ensure that my company’s products can compete in challenging big markets like China and India.
Through my interaction with public and private institutions here, I am pleasantly surprised that Singaporeans, by and large, are obsessed with innovation and recognize that it is important for securing the future.
With businesses worldwide experiencing lower labour productivity, innovation is a trendy keyword that companies can embrace to thrive and lead in a competitive marketplace. And this might be just as well, for the notion of productivity has gone a bit too far in the minds of people.
Many think productivity is the cure for everything. But while productivity — together with a friendly and conducive eco-system with good support from key stakeholders such as government and private enterprises — has brought Singapore to where it is today, where Singapore wants to be tomorrow must be reached through innovation.
SMEs and the rapidly changing game
The game for businesses is changing rapidly every day. It varies by industry and product category, and the speed of life-cycle of products could — in the past — be six to seven years. Now, in some categories, it is down to three years.
In even more highly competitive quarters, like the smartphone segment, products have a lifespan of less than a year. Just look at how often mobile phone companies like Samsung, Apple and HTC come up with newer designs or upgraded versions of handsets.
This intense competition leaves many breathless, and no one feels the impact more than small and medium enterprises (SMEs).
A characteristic of some SMEs is that they are quite dependent on another business — usually a bigger one — for survival. They don’t think they are in a position to be of influence and their mindset is “if I make this component for you today, I will make it for you forever”.
But if their patron is unable to innovate and finds itself in trouble, the SME will also be hit.
Generally, there are four broad strategies to better innovative business thinking: Leading through objectives and goals, championing continuous improvement, building business partnerships and facilitating learning.
Fuzzy road maps can be fatal
Perhaps the most crucial is the first strategy, but it is also one that many SMEs are not doing enough of.
Leading through objectives and goals means having a very clear view of your company’s identity and where it wants to be in the future, be it five or 10 years, or even more. If this road map is outlined, the journey can be tracked and performance can be measured over each milestone.
Some great firms have been brought down by fuzzy road maps.
When Eastman Kodak, a 125-year-old photography film pioneer, went bankrupt last year, many blamed the company for not adapting to the digital photography transformation quick enough. But contrary to what some thought, Kodak did innovate.
In 1975, it developed the world’s first digital camera, but the plan to develop it further was scrapped because the company was afraid that it might affect its flagship photography film business.
At the time of its bankruptcy, it had more than 1,000 patents in digital imaging under its belt. (Some were sold to an Apple-led consortium for more than US$500 million, or S$626 million, as part of bankruptcy proceedings.
In the years before its demise, more competitors moved into digital photography; so did Kodak. But it also couldn’t get print photography out of its mind. It was unable to look ahead to how business would be like in 10 years and beyond.
Thus, perhaps one of its mistakes was to hold on too dearly to its old business of film, while not doing enough in the digital segment, which was the key to the future of photography.
This is why it is important for businesses that are keen to innovate, or for those who have some form of research and development ambition, to not live in the present — they have to live in the future.
Disruption is a good thing
Some common characteristics for innovation is to either fulfill a need in the market or to satisfy an area of concern. But role models for innovation are able to do something else: They disrupt the market with new products that force people to notice them.
Apple, Facebook and Samsung are all examples of companies that can shake a market with innovative products or business models, and they do it very frequently.
Nestle joined that list when we launched our Nespresso products. The idea to let coffee lovers brew a cup of espresso in their homes using a capsule went against the practice that you need a third-party or a retailer to sell the product.
This model was “disruptive innovation” for two reasons. First, we are the market leader in terms of instant coffee, so basically we were cutting lines on ourselves and cannibalizing our earlier products. Second, roasted ground coffee was not our forte. By introducing a totally new business model based on high-end luxury goods and making coffee an experience, we jolted the market and put coffee on the same level as perfume or a Louis Vuitton bag.
Innovation = leadership + people + culture
Innovating for the future will also involve not just an “elite” group of researchers or staff who are given the mandate to innovate. Innovation has actually become more collaborative and should be open to all employees.
If you look at all the companies which are very well-known for being innovative, the common element among them is a strong culture of innovation and getting everyone involved in the process.
Google is one company that has learnt to do this well. Its innovation doctrine is extremely people-centric, and it has created physical spaces and channels for conversation and ideas between staff and management to flow.
This kind of openness and constant dialogue is easy to replicate, but managers here have to ask themselves if they can stomach it — especially when there are key performance indicators to meet and the yield of such programmes is unknown.
Culture plays a very important role in the future of innovation but it really requires strong leadership and strong buy-in from the people and, like with every change process, you need to keep on with the process because it never ends.
Just remember what the great innovation and management guru Peter Drucker once said: “The best way to predict your future is to create it.” – October 2, 2013.
* Valerio Nannini is the Managing Director of Nestle Singapore.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.
Live in the future, not in the present - Valerio Nannini
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