A few weeks ago, I had the opportunity of spending time with the executive team of one of the largest real estate organizations in the country. It’s a great success story of an independent company starting small and eventually expanding operations into a region that encompasses 11 states.
While this company’s growth was not unusually fast (they started over 35 years ago), it was remarkably steady. They had a knack for marching into new markets and putting small, poor performing companies out of business.
I asked one of the executives how they grew so consistently and his answer was surprisingly simple,
“We had information to which smaller firms didn’t have access.”
He went on to explain how this information (collected mostly from his peers in professional networking groups) sparked innovations in his company. The innovations, along with great business execution, produced the predictable and consistent growth.
Here’s the important question successful companies frequently ask:
How can we continue to innovate and capture growth opportunities in the future?
Managing Innovation
In the next few WorkPuzzles, we’ll be discussing the topic of managing innovation. The basis of the discussion comes from Scott Anthony, the managing partner of Innosight, a consulting firm that specializes in helping mature companies predictably innovate. Some of Anthony’s work (along with two of his peers) was recently highlighted in the Harvard Business Review.
If you’re interested in this topic, I would strongly recommend you read the HBR article. It’s HBR Reprint R1412C. I’ll only be able to scratch the surface of this complex topic in WorkPuzzle, and there is much to learn.
Innovations originate from new information. In the real estate industry, new information comes from many different sources. Two of the most common sources are:
Networking Forums–various groups where noncompetitive companies meet regularly to share ideas.
New-to-Market Vendors—companies introducing new products and services aimed at the real estate industry.
As you know, most industry conferences (such as last week’s LeadingRE conference) contain both of these components. They’re natural crucibles of interaction where the best ideas rise to the surface.
These ideas will not magically turn into innovations by themselves. So, how do you take the great ideas you’ve collected and turn them into true innovations that will make you more competitive?
Create Two Innovation Buckets
Anthony encourages his clients to take all of their innovative ideas and divide them into two buckets. The first bucket is called “core innovations” and the second bucket is called “new-growth innovations.”
Core Innovations. Innovation projects meant to strengthen the core should be tied to the current strategy and managed mostly within the main business’s organizational structure. They’re the projects expected to offer rapid and substantial returns in the near future and need to be funded [from normal operating funds].
New Growth Innovations. These initiatives push the frontier of your strategy by offering new or complimentary products to existing customers, moving into adjacent or geographic markets, or developing something utterly original, perhaps in a novel way. [New growth initiatives] are far from your core…and it will take substantially longer to realize revenue from them.
By dividing the ideas into these two categories, you’ll be better equipped to focus the appropriate energy and resources on each idea. Also, it forces you to acknowledge expectations and funding cannot be equitably applied across both buckets.
By grouping all innovation ideas into one bucket, companies often overemphasize the core innovations that produce a quick return ROI. In turn, they tend to ignore and underfund the new growth innovations.
While everyone likes implementing something that produces a quick ROI, competitors can quickly copy core innovations. This is a great way to “keep up with the Jones’,” but you’ll never create any separation unless new growth innovations are also pursued.
In our next WorkPuzzle, we’ll discuss how to select the right new growth innovations for your organization. Until then, try categorizing the ideas from the last conference you attended into the buckets outlined above. You might be surprised what patterns emerge.
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