You Cannot Cost-Cut Yourself To Future Growth

Added on by Alexander Osterwalder.

It’s more important than ever for companies to focus on inventing the future. Companies have to start giving more power and prestige to growth innovation, or risk becoming irrelevant.

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When it comes to innovation inside large companies, the balance of power tips heavily toward sustaining and efficiency innovation. In other words, most companies focus on improving their known and proven business model. They under invest in the exploration of new value propositions and business models. More importantly, there’s a considerable lack of power when it comes to growth or transformative innovation.

It’s not that growth initiatives don’t exist. There is a lot going on. Most companies, for example, run incubators and accelerators, but these initiatives are often “hidden away” and they are rarely positioned at the most strategic level. They often fail to get much attention from senior leadership. Leadership is more focused on the short-term, tangible results that come from sustainable and efficiency innovation like cost-cutting programs or the replacement of old products and services with new ones.

It’s more important than ever for companies to focus on inventing the future, while managing the present. You cannot cost cut yourself into the future, or, like my friend IMD professor Bill Fischer likes to say "No company has ever saved its way to greatness!”. It’s time that companies give more power and prestige to growth innovation that explores entirely new value propositions and business models.