Personal Finance

Innovate before necessity is obvious

finance
scottbellows

Summary

  • Trepidation lingers partially over the national election next year, supply chain shortages, and upheavals in international relations and stability.
  • Innovation solves problems before they become crises, solves crises before they become stampedes, and solves stampedes to bring compassion and progress to the world.

As 2021 winds to a close before many of us take our New Year holiday leaves in late December and early January, we look forward with both excitement and trepidation to 2022.

The excitement stems partly from health advances, economic gains, and technology expectations.

Kenya and the world are benefiting from greater scientific breakthroughs in better vaccine efficacy and care treatment for the Covid-19 plague. Economically, the African Development Bank projects a world-leading gross domestic product growth of five percent for Kenya in 2022.

Exciting new financial technology (termed “fintech”), education technology (Kidato and Pata Tutor), technology accelerators (iHub, CoELIB Centre, and NaiLab among many others), and software developers (Techsavanna and Craft Silicon among dozens more) are emerging from Kenya to transform our region and our world.

Meanwhile, trepidation lingers partially over the national election next year, supply chain shortages, and upheavals in international relations and stability. But what drives much of the excitement that we hope will outweigh our fears and anxiety? Innovation across multiple sectors.

Creativity drives the world forward. Innovation solves problems before they become crises, solves crises before they become stampedes, and solves stampedes to bring compassion and progress to the world.

But most organisations err in that they make deliberate efforts to innovate too late. University of Chicago faculty Gregory Bunch refers to the tardiness of organisational innovation as mistakes along a company’s s-curve.

The s-curve follows the trajectory of most business ventures. They start out leaping into the abyss with a largely untested product or service not entirely sure that enough customer demand will greet their market entry. As such, the s-curve points flat or down.

They tumble along putting in time, money, and networking resources with no or minimal return until either they start to gain traction through customer discovery and commensurate sales or burn through their start-up capital before revenues overtake expenditures and crash out of the market.

The survivors then experience an uptick in the s-curve until eventually reaching a plateau. Not even the most successful companies like Facebook, Amazon, Apple, or Safaricom can continue with the same rate of growth indefinitely.

But eventually, all great products hit their peak and then start to decline down the s-curve. Airplanes cannot fly indefinitely and humans cannot live forever. Similarly, companies sticking to one product or one service type will die out.

Safaricom branched into financial services with the advent of M-Pesa in 2007. Amazon leapt from selling books to selling anything and everything spurring similar business from Alibaba to Jumia.

Apple shifted from selling desktop computers to producing iPhones, iPads, iPods, Apple Pay, and even iTunes for a while. If any of these mentioned companies had stuck only to their original business models, then they could not have survived the decades since their founding.

But most entities wait to innovate until the sales of their original products or services start to wane. However, by then, it is too late. Instead, firms must innovate before the necessity is obvious.

In countering such cataclysmic errors, Gregory Bunch advocates for a “POP” model: people, opportunity, and proof.

First, retain only staff who show curiosity and constantly look for trends and understand the next big thing. Their curiosity propels them to amass a sizable professional network in the field. They must further be of impeccable moral probity above reproach.

S-curve dilemma

Second, take the opportunity to understand customers and why they purchase or fail to purchase products. Do not ever make assumptions. The third involves the proof needed to make decisions. Obtain multiple levels and sources of data. Then robustly analyse the data to look back historically and to make future predictions.

People, opportunity, and proof will help your business overcome the s-curve dilemma that could doom your business to innovating too late.

[email protected] Twitter: @ScottProfessor