As it appeared in the Daily Nation on January 24th 2017
Have you ever seen a business die? What was the major cause of its death? There are as many reasons why businesses die as the number of dead business. Both small and large businesses die or simply fail. Many studies point out that businesses die because of a failed leadership. In particular, poor management skills, lack of planning, inability to pay financial obligations due to poor cash flow management or low sales, lack of capital, lack of focus, failure to differentiate the business and failure to innovate are some of the reasons sighted as causes of business failure. In addition, many start-ups fail during their early years because of inexperience with a common statistic indicating that only 4% get to their 10th birthday. Whilst there are all these reasons why business fail or die, I wish to focus on the possible death that results from failure to innovate.
For the last four decades, innovation has been a major buzzword in business circles as the third industrial revolution has unfolded. There is no doubt that it remains at the center of business success today. Indeed, it is a common core value in many organizations. Whether or not every organization is living it is however debatable. Only time can tell. Innovation is associated with many aspects of business. It is seen in new products development and commercialization, process improvements, marketing innovation, management innovation, learning, creativity and the like. The innovativeness of an organization emanates from the innovativeness of individuals and teams within these organizations as well as changes happening globally.
Though it is not clear who coined the term innovate or die, the term continues to make sense today as it did three decades ago. Failure to innovate makes products, processes, people, technology and organizations obsolete. Many large corporations have died or are dying as a result of failure to innovate. The US retail giant of the 1990s Sears is a common case study in business schools and so is Nokia Corporation that failed to innovate fast enough in the era of the smart phones. 15 years ago, I recall going for movies at Blockbuster, a movie rental chain that is no more after Netflix. Closer home I think of the hit Telkom took less than 2 decades ago. In the fast foods category, I recall Wimpy with its classic coleslaw. Others such as Softa could not consistently match Coca Cola’s marketing innovation. Many other business have shut down because they failed to innovate fast enough.
At the core of innovation is keeping in touch with customers changing expectations. Globally, customers’ expectations are changing extremely fast. Two years ago, we could not have imagined that Uber would hurt our traditional taxi business. A closer focus on the customer and consumer trends helps the business change incrementally with time to stay alive. One of the sure ways of die is to lose touch with customers and to work with an outdated strategy that ignores that we live in different times. Fortunately, the entrepreneurial spirit is evident in Kenya and many smart companies are in step with innovation. As the world budges to the fourth industrial revolution, businesses lagging behind have no choice but to enhance their ability to systematically recognize and implement new and valuable ideas fast enough. Unless they do so, their future is uncertain.
Lucy Kiruthu is a Management Consultant and Trainer connect via twitter @KiruthuLucy