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Internal competition key for innovation

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Businesses should not be afraid to compete with themselves – it is often the only key to true innovation.
It may sound like an oxymoron, but Michiel Jonker, director: advisory services at Grant Thornton believes that this kind of fearless innovation is most likely to be the key to a company’s sustainable success.
“The greatest danger to innovation is paradigm obsession – i.e. on what has worked in the past, or that which the business was originally established to do,” says Jonker. “Too many businesses cling to historic successes and products or services, which may blind them to necessary changes required to keep their offerings relevant in the future.”
Changes in our environment and advancements in technology can have a significant impact on the way a business operates. However, Jonker believes companies are often not brave enough to examine honestly how they can improve products, services and methods and adapt their way of operating, in case there is a better way that competes with the business’ proven and existing recipe for success.
“Too many organisations refuse to embrace creative destruction. Kodak is an example of this: it came up with the concept for a digital camera long before these became popular, but mooted the idea as the company believed this product would destroy its chemicals and paper revenue stream,” says Jonker. “But if they realised sooner they were actually in the business of creating memories, the method of creating these memories would not have been an issue for them and they would perhaps not have struggled when digital cameras entered the arena.”
Jonker says Blackberry is another well-known example of a company that had the first-mover advantage in the smartphone industry, but failed to innovate radically and continuously and eventually lost the battle against Apple and Android’s touch screens and apps. Blackberry stopped making handsets in September 2016 and only focuses on software development now.
He believes that one part of the problem for many organisations is also a failure to determine accurately what their value proposition is to clients. “This boils down to the fact that there are many companies offering the same service or selling similar products, but what makes your business’ offering unique and different from the rest?”
Jonker refers to the traditional taxi industry as an example of paradigm obsession. “Uber offers the same service to clients as other taxi companies, but in a way that has adapted to the technology available to make it more convenient for the client. Many of its competitors now do not know how to deal with this change in the landscape, as they are still obsessed with the way taxi services were offered to clients for the past century or so.”
Disruption, which goes hand in hand with radical innovation, encompasses the way that completely new processes, products or services are created, sometimes creating entire new markets and marking a dramatic shift away from existing business models, products and services.
He believes the key to innovation is for companies to honestly re-examine their business models (which include products and services) and clearly to establish what their unique value proposition is.
“Businesses need to adopt an attitude of constantly questioning how and why they do things and they should be in competition with themselves on an ongoing basis. This will enable them to see what they should be doing differently, even if it goes against what you have traditionally believed is the right or only way of doing things,” says Jonker.
Several studies have shown the strong correlation between the adoption of new technology and organisational success and profits, he adds. This is also applicable to countries, where the prosperity, living standards and health have proven to be improved as technology has been embraced.

“According to the World Bank, a 10% increase in broadband penetration could raise GDP growth by 1%-2% in low- and middle-income countries.”

However, Jonker believes that technology is not the most important element of innovation.

“Technology is an enabler and important building block, but people remain an organisation’s true competitive edge. People have the ability to ask the tough questions and make the difficult decisions that may put the company on a more innovative path,” Jonker concludes.