Almost all companies and organizations today are under the impetus of competition, of their customers, or simply by instinct.

Many are setting up innovation units, laboratories, or creating bootcamp, hackathon or creative retreat moments. Type any of these words in Google, and you’ll find countless examples in your city, region, country.

All these creative activities are, of course, necessary. They are, moreover, very popular.

What is much less popular among entrepreneurs and executives is the need to end some profitable activities, to destroy a business model that works or to invest in activities where they are less good and less
productive in the immediate future.

Yet this is essentially the argument that Clayton Christensen made in 1997: in order to transform businesses, one must invest sustainably in a range of activities that are less profitable than business as usual. Christensen shows that, for decades, every new generation of hard drives – whose capacity grew as the object shrank – was marked by the bankruptcy of almost all existing businesses, and their replacement by a whole ecosystem of new players.

In a very concrete way, this means that if today your main business earns you $ 2 for every dollar invested, you must anticipate the future by investing in new activities that will earn you 50 cents. Moving from a profitable product to a deficit product by choice, this is a logic a priori very singular.

Yet the learning effects make this new investment in so-called “future technology” a step ahead so that when the market is “ready” the business will be ready too.

Hence the notion, always crucial to the success of innovation projects, timing. Chance usually smiles on prepared minds.

Too slow, too big, too late

When I am questioned these days about the cases of Toy’s R Us, Sears, HMV, Jacob or Target, I can not help but notice models that have struggled to evolve, but especially to self-destruct quickly enough. The main difficulty of these retail businesses in dealing with digital competitors is often the inability to break with the past: they try to survive with high fixed cost models and asset and inventory holdings, against variable-cost players with virtually nothing.

In electronics where device obsolescence is part of the economic dynamic, many are wondering what will happen after the smart phone. In this area, the absence of interfaces and intermediaries will certainly result in many ways: voice control, augmented reality, predictive models, artificial intelligence, integration with other forms of mobility including the car. Hopefully, Quebec will play a leading role in many of these sectors. Cupertino, Mountain View, Montreal.

Contents and containers are both threatened

The advent of the “no interface” threatens screen manufacturers and those whose model is based exclusively on flat, tablet or other formats. This implies that Apple and Samsung, but also the media and advertising are beginning to anticipate their decline, or at least, that of their current product lines. If you think these sectors are in crisis, wait, you have not seen anything yet!

At a time when many companies are operating at a tight pace, with relatively tight margins, developing an ordinary capacity for innovation – that is to say, with a team or moments not endowed with extraordinary means – can be particularly difficult.

In this context, the development of a self-destruct capability is a key strategic and competitive advantage for all organizations large and small.

And you : when was the last time you destroyed something?

Via Les Affaires

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Francis Gosselin

Author Francis Gosselin

Francis holds a Ph.D. in economics from the University of Strasbourg. A graduate of HEC Montréal in International affairs, he has worked in numerous administrations in Canada, France and the United States, in the areas of culture and economic development.

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