The How: Use what you have in a different way – Excubation
Once disruption occurs, traditional companies often react with paralysis, and then panic, mostly reverting to traditional innovation behaviors. When telco SMS revenues were disrupted by WhatsApp in 2009, the approach was to copy it and try to build a better one. This, however, resulted in an overengineered solution, taking 2 years and endless funding only to end up not having a chance against the disruptor who had gathered 500M users by then.
While, in the traditional, non-digital space, the incumbent would have had the chance to mobilize and outmaneuver a disruptor with its sheer resources in the scaling phase, digital innovations enjoy substantially faster global scaling, leaving little chance for followers to catch up.
The good news for traditional industries is that they do possess most ingredients for successful digital innovation, some in vast excess, compared to startups: Smart people, good ideas, access to customers, financial and technological resources, patents, etc.
It is merely the approach to using and combining these resources that must be fundamentally revised.
Despite all the behaviors engrained in traditional corporate culture and massive organizational inertia, companies must adopt the startup-way of doing things, as only that will eventually ensure sufficient speed, focus and nimbleness. And despite all reassurance of corporate management, that this isn’t possible: It is possible. Almost more importantly, the existing resources (unfair advantages over startups) need to be leveraged thoughtfully and effectively to create a strong competitive advantage.
There are three levels on which digital innovation needs to be approached differently: Company level, innovation portfolio level, and individual innovation level – all of which we want to briefly touch upon and provide a quick intro to.
Digital innovation on company level: The Excubation model
The Excubation model enables a new way of innovating by separating innovation from the core business, while retaining selective linkage to the core to ensure best possible access to the right resources. An innovation unit will be tasked with identifying, building and scaling digital innovations and business models. It is critical to smartly separate the innovation unit from the core, such that fast and autonomous innovation can happen while customers, technology, and supporting resources of the core business can be accessed swiftly.
This not only requires a thoughtful setup of the innovation unit, but also enablement from within the core, e.g. in educating employees, setting respective incentives and fueling the innovation unit with people, ideas and resources.