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Innovate or sustain? Why savvy digital age businesses do both.
Innovation shouldn’t be an all-or-nothing moonshot. Develop a balanced approach to innovation by building out new opportunities while…
Innovation shouldn’t be an all-or-nothing moonshot. Develop a balanced approach to innovation by building out new opportunities while keeping heartland customers satisfied.
By Mark Wilson, Founder Partner, Wilson Fletcher
One of the most common problems we hear from organisations we work with is: “We make all of our revenue from this thing that we’ve been doing forever. We know we need to change but we can’t afford to risk the existing income.”
The patterns are always similar: stalling or declining revenue, an increasingly desperate focus on retaining it, a drive for more efficiency to keep profits up, and progressively more disaffected customers.
Should you try to sustain your existing operation, or risk a leap into a new, more innovative area? It’s a critical question.
We think of this as the strategic conflict between sustaining initiatives and greenfield initiatives. In our experience, the right approach for almost every organisation in the digital age lies in achieving a balanced — and complementary — approach to both.
The basic truth for most organisations is that you simply can’t afford to switch off whatever you offer today to create what you need to offer tomorrow, and nor should you try to.
There’s an old farming saying — ‘the value in milking an old cow is to feed new calves’ — that I think almost perfectly sums up how to think about transforming any organisation in the digital age.
Using what you have today to fund and inform your future is a pragmatic approach; switching blindly to something new is not. It’s tough to feed those new calves without milk.
There’s a formula for every organisation that balances sustaining the old while developing the new. While that formula is unique to each organisation, it is built around a few key questions, including:
How long can you sustain your existing services without causing identifiable harm to customer relationships?
What initiatives could be put in place to keep existing customers happy? Sustaining successfully does not equal sitting back and biding your time.
Are there opportunities for what you offer (markets, types of service, types of customer) that you currently cannot service? Non-consumption is often a great place to start exploring new initiatives without risking existing business.
Get it right and you’ll thrive in the most opportunity-rich business environment the world has ever known.
In what direction are your current customers moving, and what do you need to understand about what their future looks like in order to meet their needs effectively? Most new opportunity is bound up in the unknown.
The best sustaining initiatives strike the perfect balance of keeping revenues up while retaining customer loyalty and goodwill. Frequently, that means creating improved versions of things you offer already and communicating with them more than you did before.
The best greenfield initiatives do two things: they allow you to explore new opportunities and learn how to service future markets; plus, they help you understand the journey that your existing customers will go on so that you can be ready to service their future needs and help them get there. That involves creating entirely new services or substantially revised approaches to existing ones.
There’s often a nice surprise in greenfield initiatives too: you learn new things that can feed back into those sustaining initiatives. Frequently the old customers want to be more like the new ones; they just don’t know how.
No matter who you are, building a successful digital age strategy demands an optimal blend of sustaining and greenfield initiatives. Ignore either and you’re unlikely to have much of a future. Get it right and you’ll thrive in the most opportunity-rich business environment the world has ever known.
This post first appeared on director.co.uk.