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How scaling brings real value … from the shop floor to the tarmac

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By Clifton Menezes, India Head of Group Portfolio, Capgemini

All great inventions are the harbinger of creativity. In the business world, all ideas perceived to be industry game-changers have been characterized by uncertainty and risk, making it imperative for organizations to develop a foolproof system for their effective development and disbursement. And to succeed in today’s competitive world, organizations must scale up.

In his book Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, American organizational theorist Geoffrey Moore says, to build upon any invention, it isn’t sufficient to merely be an early adopter but one must move swiftly to the mainstream market. Scaling is therefore a matter of speed of adoption – or diffusion – of ideations to maximize impact.

It’s about creating value in business

According to Gartner, CIOs must focus on three elements to scale successful ideas: ownership, behaviour, and process. But it’s also imperative that organizations do not focus only on scaling. The focus should also be on the viability and value it brings to business. Any innovation is built around the question: What does a company needs to expand business? The answer: strategic direction – in accurately identifying the nature of change needed and employing the right design to deliver on it.

The expansion of Facebook is a case in point. In 2013, Facebook appeared to falter – its profits were down, its stock was low, and its mobile revenue was negligible. Today, Facebook has successfully transitioned from a “move fast and break things” company to one with stable infrastructure, with offerings that are assessed on their social impact. Today, it’s a leader in revenue generation, with most of it coming from mobile.

Another case in point is Google’s transition to Alphabet, now a company with surging cloud business, developments in self-driving cars to life sciences, and a future focused on AI and ML. FMCG giant Hindustan Unilever is India’s largest consumer packaged goods company by sales, with a market capitalisation of $50.1 billion. It has consistently innovated across product categories, adding enhanced features to existing products and by launching entirely new products as well. The result? HUL leads in 90% of all its portfolio categor                                                                                                                                                                                                                                             ies.

Goonj is an interesting non-business here. Founded in 1999 by communications professional Anshu Gupta, Goonj’s idea to “connect urban surplus to rural deficit” helped in giving dignity to rural communities by providing disaster relief and focusing on clothing as a basic need. Today, it has scaled its activities to 23 states and is a great example of starting off with a small idea but gradually scaling to make a big impact. Anshu was awarded the Ramon Magsaysay award in 2015.

An ‘ocean’ of possibilities … and disruptions!

Companies should always revisit the suitability of new concepts. They must know whether their offerings, and its value, align with stakeholders’ expectations and then boost their relative advantage. To succeed in a fast-moving digital economy, organizations must be capable of scaling up an idea to a viable product or service, aligned with business and technology drivers.

When a company’s current strategies do not work, it calls for a shift in direction. This form of change is closely monitored across all forms of business – and gained popularity in the form of concepts like Blue Ocean or Disruptive Innovation. A blue ocean is the successful development of any new initiative that customers value, whether by an incumbent company or a new entrant seeking to secure market space.

Years back, Walmart’s disruptive operations reduced friction in the consumer purchase experience and improved recurring revenue — which helped it to provide next-day delivery to three-quarters of the US population during COVID. Uberization of the travel industry, without ownership of a single car, is a  great example of disruptive innovation and quick adaption by market through scaling.

Scaling new ideas need not always function by challenging established business norms and offering competitive price points, as Clayton Christensen argues in Theory of Disruptive Innovation. Elon Musk has stood this theory on its head. Tesla’s products and services cater to the luxury market. In short, by offering a substantive improvement in your existing way of business, companies can be game-changers in how they think up new concepts.

It’s the time of the Great Learning!

If a new model is to have an impact, it needs to scale. But it’s on the journey towards scaling that we find obstacles to long-term success. The world is replete with failures of new initiatives, even great ones. Companies face the need for a radical change in direction when the dynamics of their industry changes (shift to renewable energy, shift to electric vehicles, leverage Metaverse, etc.) or due to underperformance of their current strategy. In short, if we understand what has gone wrong, we have a better chance of success.

Every type of change — in magnitude, activity, direction — is best served by different forms of ingenuity. Recognizing what type of change is appropriate to you can help one understand which forms of innovation are likely to yield the greatest impact for business. That will help organisations make the successful transition from idea to practice … from the lab to the tarmac!

 

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