One of the most frequent mistakes is made as a result of the success of companies.
They repeat the same formula that has worked for them on other occasions. They relax and trust the position acquired, their brand or reputation. However, what led to success on one occasion will not necessarily continue to work on another.
The market is constantly changing, the consumer more demanding and with little loyalty. Therefore, in order to continue with the successes, it is necessary to renew and create products and services that satisfy the needs of an increasingly competitive market.
Immobilism is an error that can be both a cause and a consequence of the three mistakes mentioned in the previous post:
- Excessive focus on the financial side.
- Not renewing the corporate culture.
- Creating Products from the Company’s Perspective.
This inactivity occurs frequently in leading companies or with important market positions, although it also occurs in other organisations. The reason is that they do not have the urgency to invest heavily in disruptive innovations. They offset their need for growth with actions such as geographic expansion, pricing strategies and brand extensions, among others.
Mark Dziersk in his article for McKinsey & Company, September 2018 ‘From lab to leader: How consumer companies can drive growth at scale with disruptive innovation’ comments that
this means that most innovations were largely incremental moves with the occasional one-off disruptive success. This slow and steady approach worked because CPGs didn’t really need disruptive innovation to grow. (…) As a result, most systems designed to manage these innovations were optimized for fairly predictable, low-volatility initiatives. They emphasized reliability and risk management.
Reviewing this position, we ask ourselves why is this happening? The answer is simple, because there are factors inherent in human nature and business that can create immobility.
When being a leader translates into passivity
A determining factor for inactivity is that the leader fears change and tends to protect the source of income that has always given him results. If the business goes well, they stay there because it has given them success, but that also has consequences. x
That very success, however, led to calcified thinking as companies built large brands and poured resources into supporting and protecting them. In recent years, as they have tried to respond to new entrants and rapidly changing consumer needs, CPGs found their innovation systems tended to stifle and stall more disruptive efforts. (“From lab to leader: How consumer companies can drive growth at scale with disruptive innovation“, McKinsey & Company, September 2018)
To conclude, there are many factors that lead to not making sufficient efforts in innovation. Nor does it invest in what is necessary to create efficient innovation processes and generate disruptive products or services. All these factors are related to the position of the leader. Among them are underestimating competition, staying on past successes, being very optimistic or not detecting new customer demands.