Reasons to Innovate

Treacy and Wiemar’s seminal book Discipline of Market Leaders determined that the best companies had a clear focus on either Operational Excellence, Customer Intimacy, or Innovation.

The great companies focused on two of the areas. Think of Southwest Airlines. First and foremost they focus on Operational Excellence. They know they aren’t making money unless they are flying, so they’ve optimize their system to turn around a plane in 15 minutes. It takes their closest competitor 30 minutes.

Southwest Airlines delivers Customer Intimacy. Not only through fast turnaround times but also promoting flight attendants to joke during the safety speech. Those things create Customer Intimacy.

Does Southwest Airlines Innovate? When it suits them they purchase airline fuel futures. That is a sort of Innovation against rising fuel prices.

Silicon Valley

Silicon Valley is great for multiple reasons but perhaps the greatest reason is their ability to Innovate. The Silicon Valley Innovation Methodology is required use by Silicon Valley Start-Ups in order to qualify for Venture Capital Funding.

The following is a simple example of the Silicon Valley Innovation Methodology for a church. This church wanted to start their own school. First you apply the concept of a Minimum Viable Product. That involved bringing all the parishioners that were home studying their students under the school umbrella. That started the funding for the school at about $10,000 per student.

The next step was to use that funding to buy books and teaching materials for the youngest students. Once the materials were purchased, the teaching facility was determined, and the first teachers were hired, and school K-3 was started. This brought in more funding that was used to support the K-3 school as well as extend to K-6.

At this point the school was a success. Next step were to bring in additional funds and then to decide whether or not to invest in a middle school.

In Conclusion

The Silicon Valley Innovation Methodology is relatively straightforward and has general applicability outside of Silicon Valley. Since Innovation represents one of the three paths to excellence it represents a significant Critical Success Factor for any business.