In a terrific TED talk given in June 2015 at TED@BCG London by Knut Haaneas titled, “Two reasons companies fail – and how to avoid them” he raises a point that is at the heart of why a Winning Lean™ transformation is important for your organization. Mr. Haaneas tells us that many companies fail because they don’t have an effective balance between exploration and exploitation. In other words, we either rely too much on what we’ve done or we innovate ourselves beyond reality. He shares the chart below about a company’s valuation as it relates to innovation. He says, “Any company we look at, taking a one-year perspective and looking at the valuation of the company, innovation typically accounts for only about 30 percent. So when we think one year, innovation isn’t really that important. Move ahead, take a 10-year perspective on the same company — suddenly, innovation and ability to renew account for 70 percent.”
This is critical to your company as you make decisions related to the contracts you wish to pursue. Due to the multi-year nature of most Government contracts your team has to, in essence, nearly double your level of innovation today to develop the strategy and operational platform that will perform well by year 5. Add into the mix the volatile nature of Government policy, politics, the speed of innovation the marketplace, new technology and the list goes on.
The point is you simply cannot look out on a pipeline of contracts in a vacuum and plot your company’s future. The problem becomes much more acute when the operational and environmental experts within your company are not driving the process, the decisions and the strategy. To be successful in the long-term and win contracts that you can perform well while you solve your customer’s challenges, we have to lead from a different perspective.
Cici Collins
December 6, 2016
Interesting and important perspective. I don’t think the importance of an environmental scan can be overstated. Especially within the context of the timing of the big contract in which a significant investment of resources may be required to successfully compete. Identifying the innovations necessary to satisfy the customer needs to be operationalized effectively. Not only to demonstrate past performance in that specific area of delivery, but also in your company’s ability to assist your customer in optimizing innovation.