Friday, November 20, 2009

The Line Between "Beyond" and "Too Far"

Continuing with my focus on this year's IBM CEO study, I would like to continue to focus on the qualities of the enterprise of the future. Nearly every element of this global survey points to the need for change leaders, people on the edge of innovation and change leadership!

The second characteristic of the enterprise of the future, according to the responses of over 1100 successful CEOs, is being "innovative beyond customer imagination." One could argue the level of innovation required in today's global markets goes beyond the innovation required at any time in human history. It is difficult to imagine a consumer in ancient Egypt browsing for gold jewelry pausing to check competitor's offerings on their Blackberry only to find that the emerging Babylonian empire offered jewelry of finer quality for half the price! Yet today communication about a company's offerings can travel at light speed, around the world, instantly communicating the good, the bad, and the ugly. My wife and hundreds of thousands of others still refuse to use plastic wrap in the microwave because of an internet rumor about it causing cancer; a loss to the folks who make Saran Wrap but a boom the makers of wax paper. I'm frankly shocked some enterprising entrepreneur hasn't come out with "microwave safe" plastic wrap to earn back market share! But I digress...The enterprise of the future must be innovative beyond the levels of past performance, beyond what even their customers can imagine.

Where do change leaders fit in this process? The CEO study identifies several implications. The enterprise of the future will be required to constantly experiment to find the balance between economies of scale and customer demands that demand customization. The thought of this kind of experimentation is enough to bring fear and trepidation into the hearts of those trapped in their risk adverse comfort zones. They will require leaders who can effectively manage the balance between constant experimentation and the need for stability. They will need to effectively manage the message of long-term stability through short-term innovation and change. Consider IBM: Once the largest maker of PCs, now the world leader in "smart." Or GE, once the world leader in manufacturing, now making its money through its various financial services. One could argue they manufacture today only to open the door to the financing opportunities it offers to customers. I'm sure this has not been an easy transformation for many within these organizations.

Innovation beyond customer imagination will also require a level of connection between an enterprise and its customers beyond anything we have seen in the past. Through technology and good, old fashioned interpersonal contact, deep relationships must be built between employees and key customers. Good change leaders will develop these relationships, seek to deeply understand what consumers require, and will then push their enterprise (and their customers) beyond what they believe is possible or expect. This requires the vision to see beyond today's expectations to where those expectations are going in the future. In a sense innovation creates new expectations rather than just anticipating where those expectations are going.

Maybe the best example of this I've seen recently is the dramatic announcement that the first "space hotel" may open as soon as 2012. I must confess that it has never crossed my mind that a vacation in space would ever be something I could consider in my lifetime, yet there are many around the world working toward this goal. It is anticipated that the first space hotel will charge 4 million dollars for a 3 day stay, but hey, isn't that what plasma televisions sold for just a few years ago? Okay, maybe not that much but just as out of reach for me... This is certainly an innovation that goes beyond most of our expectations; yet don't be surprised if the much anticipated trip to Disneyworld isn't soon replaced by the family vacation into orbit. I'm sure Disney has this somewhere in their strategic plan!

Back to the title of this blog post. There exists a fine line between "beyond customer expectation" and "too far." Possibly the greatest challenge for change leaders that thrive on risk and change is finding this line and carefully maneuvering their efforts around it. Consider for a moment GM and Segway's joint venture to build a car on Segway technology. While this certainly may go beyond expectations, is it going too far for where consumers are willing to go? Will this introduction in 2012 (what's the deal with 2012 and innovation anyway?) redefine consumer expectations or be a colossal waste of research money (or should I say US taxpayer money since the government owns GM now?). Only time will tell, but you have to admire the change leaders at GM and Segway that would invest in such a move...