General Electric (GE) was founded right after the American civil war at the early stage of the industrial revolution. Today, with around 300,000 employees working worldwide in a dozen of markets from home appliances, to energy and aircraft engines, GE is still a force to be reckoned with. Think of it as a Google that would have emerged from the birth of electricity, not the internet. But since 2008, GE market leadership steadily declined, making it the worst stock on the Dow Jones index on a constant basis. This decline devolved abruptly in 2016 with the retirement of its CEO Jeffrey IMMELT, a market cap divided by two while the stock market was up 41%, and a cascade of divestments (some of them to the Chinese HAIER — sign of times). Since then, while GE jet engines, medical scanners or power plants are still state of the art, the company went in a spiraling free fall.
Last year, I briefly teased one of the most strategic tools we’ve been using for years rebuilding innovation capabilities with industries. The innovation reverse pipeline. This way of working solves the usual conundrum of a typical innovation pipeline where you start with a hundred smart ideas, select the best ones, refine a few, invest in one or two, bake for a two to three years, launch… and fail.
The digital wake-up call you need is maybe not the one you think. You are understandably worried that you don’t own the platform where your customer experience and your brand are dissected live every second. But what is the option anyway? PR you way back to relevance?
Most of the startups participating in one of my trainings are initially shocked at the inordinate amount of time I spend working on ‘the problem’. I’m certainly not alone there. Everyone who is regularly dealing with startups gets eventually frustrated to see how they concentrate en masse on building a product and not focusing on what the market actually needs. And while anyone who ambitions to shake a market’s status quo shouldn’t be too pragmatic, as much rationality as possible should nevertheless prevail. But, very few are the startups committed from launch to tackle a clear-cut problem.
While the first wave of the digital revolution is now well over, most corporations are victims of some level of rude awakening. Surprisingly enough for me, the sovereign cure for their lack of strategic vision has been isolated: startups. As it seems, six-month-old post-internet companies without cash-flow are deemed better than multi-billion global businesses are figuring out the market. Even if you might be very lucid about this foolishness, some of your executive committee is already victim of such startup fever. Let me offer one of the many ways to deal with that issue. And then maybe, you’ll find realreasons to work with startups.
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Two weeks in Shanghai working with dozens of MBA students holding managerial and executive positions in various industries always ground me back to the basics of business. One of the most basic questioning that managers, innovators, or would-be entrepreneurs are asked is: can you explain your business? The answer is always a mess.
It’s not about product or service anymore. It never was. Since the beginning of times, every transaction has always been both a product and a service. But you might be confused because finance is still looking hard at Capex versus Opex and that’s fair. Tax people might also still lag behind and account for VAT, investment, and transfer of ownership in different ways, but why would that mean that your customers should care?
I’ll be giving another Executive MBA class this week in Paris, which is an activity that I fairly enjoy — and if I may say so, my students too. Such three-day classes are usually very educative for me. They always keep me in touch with what most professionals still find difficult to grasp in the logic of launching innovative businesses and sustaining them later on.