The quest for innovation, improved ways of working, groundbreaking products, and new revenue streams can be alluring. Yet, a challenge often emerges: the delicate balance of novelty and tradition.
Over the years, I've observed organisations launch ambitious innovation agendas with enthusiasm. But, in this excitement, they neglect the very foundations that uphold the current business model.
Imagine this common scenario. The pursuit of the new and exciting takes precedence over the established operations. When this occurs, the cost is inevitable. It might manifest as a compromise in customer experience, a disruption of revenue streams, or even a faltering sales pipeline. The stark realisation—you must manage both facets of the business.
The Explore-Exploit Continuum (Strategyzer)
In Strategyzer's book, 'The Invincible Company,' the authors introduce a compelling framework for managing an ambidextrous business. A business that balances its ability to explore uncharted territories of opportunity, whilst still exploiting its existing strengths.
The Apple Paradox: A Lesson in Equilibrium
Consider the case of Apple. The global tech titan is celebrated for its innovative products, sleek designs, and user experiences. Apple's journey is a case study in striking the balance between innovation and core business.
At the heart of Apple's success lies a fusion of both exploration and exploitation—the very essence of an ambidextrous business. Think of their groundbreaking introduction of the iPhone, a revolutionary product that redefined the smartphone landscape (and my posture!). This move was a prime example of embracing innovation to drive growth and capture new markets. What's often unnoticed, is Apple's parallel commitment to maintaining the quality and user experience of their existing products, such as the MacBook, and at the time, the iPod.
As they ventured into uncharted waters with the iPhone, Apple didn't neglect its core business pillars. The company ensured that while they expanded into new realms, their established products continued to receive attention, updates, and enhancements. This approach not only prevented the erosion of customer trust but also sustained revenue streams from existing loyal customers.
The lesson here is clear: Apple's unwavering dedication to understanding and nurturing its core business empowered them to innovate without jeopardising their foundation. This echoes the wisdom of 'The Invincible Company'—wherein the ambidextrous approach guides businesses to explore new horizons while exploiting their existing strengths.
Apple is an example of how maintaining the balance between innovation and core business can propel a company to new heights.
Empirical Insights: The Global Innovation 1000 Report
Backing up the importance of a balanced approach to innovation is the Global Innovation 1000 report by Strategy&. This annual report delves into the innovation strategies and R&D investments of the world's largest public companies. It sheds light on how the pursuit of innovation can be harmonised with the preservation of core business operations.
This report highlights the companies that manage to balance the scales of innovation and core business with finesse. These organisations, often referred to as "balanced innovators," divide resources strategically. They recognise that the allure of the new shouldn't eclipse the reliability of the established.
The data speaks volumes! Companies that focus on innovation at the expense of core business risk unintended consequences. On the flip side, those who neglect innovation altogether face stagnation and missed opportunities. The most successful enterprises are those that skillfully blend exploration and exploitation.
Harmonising North Star Metrics with Counter Metrics: Navigating Exploration and Exploitation
So how can we protect the core business from innovation objectives? Counter metrics can serve as a protective measure against the aggressive pursuit of OKRs, and North Star metrics.
The North Star metric, or Company OKR, should serve as a guiding light. An overarching measure that encapsulates the primary value a product or business provides to its customers. Yet, like any compass, it needs balance to navigate effectively.
A counter-metric acts as a reality check. A guardrail against tunnel vision, underscoring potential drawbacks or unintended consequences of a relentless pursuit of the North Star. This interplay mirrors the delicate equilibrium between exploration and exploitation. Just as innovation shouldn't overshadow the core business, the pursuit of the North Star should remain aware of the potential detours signaled by counter-metrics.
Caveat: If it’s broken, fix it!
Of course, there are exceptions to this principle. If your current business model is fundamentally flawed, you must adapt. There's little merit in safeguarding something that's inherently broken.
Likewise, startups find themselves in a unique situation. As they embark on their exploratory journey, protecting a not-yet-profitable venture may prove counterproductive. For startups, the emphasis should lie on continuous learning and discovery, as these are the path to eventual scalability.
Conclusion: Finding Harmony in Innovation
The pursuit of innovation should not become a blind adventure that disregards the foundation of your core business. Balance is key. The concept of an ambidextrous business beckons us to embrace the best of both worlds: the audacious pursuit of novelty and the cultivation of the established.
As you tread the path of innovation, remember—don't let the allure of the new lead to the neglect of the core. After all, a ship can only sail smoothly when its sails and rudder work in harmony.