Gaurav Sharma

In a world where strategy life cycles are shrinking, innovation is the only way a company can renew its lease on success. It’s also the only way it can survive in a world of bare-knuckle competition.
Not every management innovation creates a competitive advantage. Some are incremental. Some are wrongheaded. And many never pay off. But’s that no excuse no to innovate.

There are different flavors of innovation and can be stacked in the increasing order of importance as follows : Operational Innovation > Product and Service Innovation > Strategic Innovation > Management Innovation.

With rapid transformation of businesses , the nature of relationships between consumers and the firm has changed radically.Let’s take an example here of open ( collaborative) innovation - central theme of our blog!) . Who can forget the Ford Model-T? - large assembly lines , huge production units in Detroit , you can have any car as long as the color is black ( assumption here was that the end consumer is an undifferentiated lot). Now compare this to iPOD ( my favorite! ). The iPOD as a device is manufactured with partners across the globe ( disk drive from Toshiba, display modules by Matushita and Toshiba in Japan, SDRAM by Samsung of Korea , Video processors by BroadCOM of Unites states, final assemble in China ( by a Taiwanese firm , Inventec) and designed by Apple inc in California . The Music content is from large and small players across the globe (iTunes) and it is customized to the end users requirements.

There are other examples of customized service - iGoogle (personalized desktop) , TutorVista ( on-line tutions) etc.The competitive arena is shifting from product-centric view of value creation to personalized experience -centric view.

Gary Hamel in his latest book -”the future of management” clearly illustrates the message ..” you cannot drive ahead by looking in the ‘rear-view’ mirror “.

Perhaps , we in financial services should take cognizance of the changing paradigm. Maybe we can start by asking - what is our competitive advantage ? Is it sustainable on a long term basis ? what can be do to change the paradigm of lending business (and in the process create immense value for stakeholders) ? Can we create value , based on personalized experiences of consumer?

More on it in next post…..

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