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Changing Perspective

How seeing risk can help shape a smart innovation strategy

by Kate Pavao

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When it comes to innovating, executives may focus their thinking on creating something their customers want—and figuring out how to get it to market. “That’s necessary,” says Ron Adner, author of The Wide Lens: A New Strategy For Innovation (Portfolio/Penguin, March 2012), “but it’s no longer sufficient.”

Instead, Adner, a professor of strategy at the Tuck School of Business at Dartmouth College, tells Profit readers they need a new point of view that prepares them for a business world increasingly dependent on globalization and collaboration. After all, he says, “You can’t manage risks that you don’t see.” Here’s how to see through the wide lens.

On innovation: “Everybody is feeling an imperative to innovate. And at the same time, everyone is feeling resource constrained. So, whether you’re a large company or a small company, there’s a need for effective, efficient innovation.

Sometimes you fail because you had a bad idea, or you had a good idea that you delivered badly. But more and more you fail because you had a great idea, but the rest of the ecosystem wasn’t there to support you, and you didn’t realize it until after the fact.”

75%
of new product development efforts never reach the stage of commercial launch (Source: Survey from the Product Development and Management Association)

On the wide lens: “The idea behind ‘The Wide Lens’ is to expand our perspective to recognize not just whether we have a good idea, but also to really see the full set of dependencies that will determine whether our great idea actually has a chance to impress customers or not.”

On successful launches: “The Amazon Kindle offers a couple of key messages. In the end, what e-reader customers are buying is not a great reader; it’s a great read. When the value proposition depends on parties other than you—in this case publishers—you have to make sure they’re going to want to participate just as much as the end customers are going to want to purchase. Amazon took benefits away from their customers by making the Kindle so unbelievably closed: You couldn’t share anything or print anything. As a reader, it degraded your experience. But it allowed them to give the publishers a critical guarantee.”

On understanding risk: “Look beyond your own execution challenges at the risks that lie in your ecosystem. There are two critical kinds of risks. There are what I call co-innovation risks. Does anyone else need to innovate successfully in order for your innovation to matter? There are also adoption chain risks. Does anyone else need to buy into the proposition in order for the end customer for whom you’re innovating to be able to evaluate the entire value proposition?

Ideally, you want to have your ecosystem strategy in mind before you start building your own product. If you see it in advance, the way you run your development effort—whether it’s for a product or a service or software—will be different. You will build it with the entire set of stakeholders in mind. That will make success dramatically more likely.”

Kate Pavao

 
 
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