Motivational SignpostMost companies build their strategy by focussing on the latest market changes and dynamics and extrapolating their impact into the future.

But this approach has a big problem.

The pace and scale of change in the business and financial environment continues to accelerate and is increasingly non-linear. Technological advances and the connectedness of the global economy mean that new developments can quickly overwhelm the less agile competitors – just ask HMV in music retailing or Northern Rock in banking!

Some companies take a different approach. Amazon’s leadership team, for example, have agreed the key themes that will not change in the midst of all the noise and turmoil of today’s business environment. For Amazon’s consumer business, they have identified three areas: range selection, low prices and fast delivery.

Perhaps this doesn’t sound like rocket science, but the power of the Amazon approach is the focus and relentlessness with which they can pursue their agreed themes.

  1. It creates organisation-wide focus for innovation. Amazon’s three themes are simple to understand for all in the organisation, and enables clarity of focus for radical innovation.
  2. It enables true leadership and avoids defensiveness. The Amazon team is prepared to take ongoing leadership decisions within these three areas. In this way they are continuing to stay ahead of their competitors and maintain a leadership position.

So what’s the catch? Why don’t all companies follow this approach? There are three major consequences of this approach that executives and organisations need to come to terms with:

  1. Accept cannibalisation. Constant innovation on these themes is likely to damage current business in some form or other.
  2. Accept the chaos. Innovation is a messy, disordered process. Ongoing prototyping, testing, improvement and implementation activities require an entrepreneurial mindset across the business. Not everything will work, especially to start with, and most projects require several iterations to get it right.
  3. Be right. Perhaps the most important issue for Amazon is make sure that they have picked the right themes to focus on. Only time will tell if the Amazon team are right, but, critically, they have made a clear choice and are willing to live (or die) by it.

You can begin today to identify and discuss with your team the key themes that will not change for your business and start to back-up your ideas with research and analysis. The next stage is to develop possible new business improvements around these themes.

If the consequences of these innovations appear daunting you’re probably on the right track!

© Stuart Cross 2010. All rights reserved.