Realising New Business Growth
Create a Movement not a Department By Arun SwamiPersaud and Betti Rockwell
White Paper January 2008
The Bridge business innovaters member of Twijnstra Gudde
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The Bridge + business innovaters member of Twijnstra Gudde
Adres
Stationplein 1 P.O. Box 907 3800 AX Amersfoort The Netherlands
Phone
+31 334 677 470
arunswamipersaud@thebridge.nl; bettirockwell@thebridge.nl
Website
www.thebridge.nl
Š The Bridge Business Innovators Niets uit dit werk mag worden verveelvoudigd en/of openbaar gemaakt worden door middel van druk, fotokopie, microďŹ lm of op welke andere wijze dan ook, daaronder mede begrepen gehele of gedeeltelijke bewerking van het werk, zonder voorafgaande schriftelijke toestemming van de uitgever.
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Abstract In the quest for new growth, companies often start a corporate entrepreneuring or innovation program aimed at new business creation. The initiatives are often accompanied by the creation of a new department. We are astonished by the number of new business development departments and projects that fail to meet up to expectations and are then discontinued. We argue that organisations looking for business growth should not just set up new business departments and projects, but should additionally work at creating a culture that evokes innovation, new business search and development. We offer seven principles to energise the zest for new business in organizations.
Keywords: business growth strategies, new business development, innovation, wcorporate entrepreneurship, intrapreneuring
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1. Introduction In January of this year Bobby Katz made a telephone call to his boss to announce that he was quitting his job. Until then, Bobby was the ambitious new business manager at the coating division of a large chemical multinational. He told his boss that he had enough of it. At the large bureaucratic coating division, he could not be the innovator he wanted to be. Bobby was not the ďŹ rst new business manager or head of an innovation department who lost hope. Over the past years we have worked with a number of enterprises and cooperated in many in innovation and new business projects. What we have seen is that being the head of a new business department or innovation unit in a large corporation is not an easy task. A decade ago Western European and American companies had an important advantage; they could claim superior quality and design. But slowly this advantage is disappearing. Some of the best high tech products that are now available have been designed and developed in countries we formerly would have called developing economies. The speed of global market and technological developments makes the need for more exibility in organisations imperative. And yet the emphasis on stability in many organisations is one of the major barriers to more exibility. Innovation, new business development, revitalisation of the current business - it seems to be important for companies. In a number of companies growing new business has been on the management agenda for years. In recent years it seems to have become one of the top priorities. In the various visions, mission statements and strategic plans new business is a recurring theme. It is seen as an important source of revenue growth and is considered key to enhancing the value of business. There is enough talk, but what is actually being accomplished?
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2. Large enterprises suffer from paradigm paralysis Why is it so difficult for Bobby and those like him? The answer is rather straightforward: large companies are focused on creating and maintaining stability. People who try to change things, who come up with new products, who want to enter new markets and agitate for new radical business models are not always received with enthusiasm. In established organisations, operations are kept under control and are managed as efficiently as possible. Production managers focus on mastering the operational processes and once things work as they should, stability should be maintained. If you expect change and turbulence to come from the sales & marketing people – you may be disappointed. In most large enterprises commercial people also strive for a controllable environment. Just consider the fact that in most sales organisations, great effort is aimed at carefully building the customer relations. Sales people are told to sell more in the markets they already know. Why? It is believed that developing new markets and customers requires a lot more time and resources. The smartest way to reach the sales targets is by selling more of your products to your current market. Just as with the call for stability and efficiency this approach to selling represents a paradigm that prevents successful innovation and new business development. The theme of the paradigm is ‘don’t rock the boat’. It keeps people thinking along traditional lines and hinders the creation of the new. New business initiatives do not prosper in such an environment. Our experience is that innovation and new business development are not very likely to occur in organisations where the structure, systems, culture and sometimes even the strategy (explicitly or implicitly) demands stability and avoids risk. Most people in these organisations are singularly occupied with managing the known business. There is little time for new projects and those who are entrusted with that task – often the innovation and new business managers – are required to deliver results fast. And instead of appreciation for their efforts, they are often seen as nuisances. We would argue that these patterns in organisations – pursuing stability, efficiency and milking the cash cows- are exactly the reason why a different approach is needed. Of course we are not saying that stability and efficiency are unimportant, but they are imbedded in our unconscious and in our organisations in a way that has become contra-productive. Indeed the striving for efficiency and stability in most organisations is exactly the reason why setting up a new separate department for NBD is so vociferously propagated. What will the management or board of a company do when they become 7
aware of the fact that something about innovation and new business development has to be done? First, they initiate a project to study the question of how to organise ‘new business and innovation’ within the organisation? Nine times out of ten, the result of this study is the start of a special unit or department that can be entrusted with the task of creating new business growth. A person will be found who may lead this department. The assumption is that by creating a new organisational structure the issue is tackled and the problem will be solved! Unfortunately ‘the problem’ is often not solved. It is argued that you need at least lasting commitment and support from top management (Tushman & O’Reilly III, 2004). Otherwise these new business development departments are doomed to fail because they are left to flounder on their own.
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download de hele White Paper ‘Create a Movement not a Department’: www.thebridge.nl/downloads/create-a-movement-not-a-department/