Our Series:

If you do not know yet what the Boring-Wheel is, you may start to read the earlier parts of this series:

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PART 0: The IMAGINE Innovation Mindset.‍

PART 1 : From Submarines to Flywheels.

PART 2 : The Disruptive Innovation: From Flywheels to Boring-Wheels.‍

PART 3 : The Innovation Boring-Wheel Paradox.

PART 4 : Breaking free from Boring-wheels… USE CASE.

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The Comeback

When companies manage innovation effectively, there is light at the end of the boring tunnel… and it is not another boring machine.

While many companies are dying after being disrupted, few of them manage to transform The Boring-Wheel in a Flywheel.

Probably the most famous “Come back” company is General Motors which bounced back from the recession while keeping focus on the same industry and segment. One of the biggest comebacks in American history!!!

General Motors cut back on costs and revamped its supply chain and manufacturing departments. Additionally, they increased investment in the research division and introduced various models which led to a stream of income. They were able to sell 10 million cars in 2014 to rank as the third-largest automaker in the world. Yet, while General Motors was not disrupted by a competitor but rather by an industry cycle, their success shows some tracks on how a company should react when in trouble.

As it was demonstrated by Clayton Christensen, innovative projects can not depend on financial decisions of the traditional business stakeholders. Only a separate monitoring entity that sets the rules of the game permits to understand how the company can effectively handle an official innovation budget. It does not mean that Business Units will lose their decision power on innovation. it is simply clarifying what the Business Units should invest in and what they should not. It also creates the transparency needed to find synergies and even cross fertilization. The aim of the game is therefore to move from a vicious boring-wheel to a virtuous flywheel of innovation or rather into a multiple flywheel of innovation as shown below.

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How to force the submarine/boring machine to come back to the surface?

The first thing to do is to build torpedoes that will hit the Submarine Innovation. Each torpedo targets a defined barrier to innovation. As described earlier, the main consequences of Submarine Innovation are:

•  delayed roadmap,
•  high turnover among innovators & talents,
•  higher than competition overhead costs.

But their root causes are unique to every single company. Never the less, two torpedoes are common to every organization.

1.  By defining an innovation mandate and budget, everyone should understand the rules of the game. Innovators and Business Managers will be attracted by the prospect of new budget allocations. That’s the power of clarity.
2. As there is nothing for free, the counterpart of this money should be that the Managers should commit to stopping the delays in the existing roadmap. New budgets can only be assigned to people who show that they can deliver. It will straight away realign resources:-)
   That’s the Focus

With Clarity and Focus, your flywheel is near the momentum! 

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Case Study: A Technology Manufacturer SME

At this stage, you may think : ” yeah, good in theory but in real life… it is different '' and you are right. It's true that companies are complex. In addition to business unit politics, various other departments, like Sales, Purchasing, IT, Legal, Finance and more, can obstruct innovation due to their focus on their specific areas of responsibility and KPIs.

Let me share a step-by-step example of a successful turnaround in an SME manufacturing electronic equipment, 300 employees, in business for years, struggling with a new entrant in the market.

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1.The Boring-Wheel Detection

The company was divided into the long tail business and strategic customers. The former brought in margins, while the latter provided volume. The Board of Directors consistently rejected innovation investment requests for the long tail, citing reasons like:

•  no available R&D resources, 
• priority on next-generation products for strategic customers, which will produce volume and allow to sell to the long tail with margin
• “We do not believe in it”: often happening when the objections to the 2 here-upper reasons were well prepared;-) 

Consequently, revenue and margins steadily declined.

Does this BORING-WHEEL pattern look familiar?

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2.The Innovation Readiness Audit

In a situation like this, a leader can either move on to the next adventure or dig deeper into the innovation barriers. An audit was conducted, starting with in-depth interviews with stakeholders from R&D, purchasing, sales, marketing, and other areas. It revealed that :

• R&D engineers were frequently redesigning products due to the end-of-life of components, a decision often ‘automatically’ triggered by the purchasing department EOL information. Sometimes Sales was consulted and they consistently replied that this product was still having traction. 
• Purchasing was explaining low margin by the low negotiating power due to low volumes per component.
• Long tail Sales were having 50% of their sales from “old” products to very loyal customers but were struggling to enter new customers with the current offer. 
• Manufacturing lines were at full capacity, swapping twice a week from one product to another adding logistics complexity and extra costs at each swap as well as a delay in order-to-cash. 
• The company had never made an End of Life announcement for any product in the last 30 years! 

Yes! The company was still selling electronics products from a 30 year old technology!  Every new product line with a new technology would simply amplify the problem.

It became clear that the main issue wasn't about the quality of innovation or the talent within the company, but the resources being cannibalized by submarine redesign projects with an unexpected root cause: components’ End of Life resulting in a double Boring-wheel.

Worse than that!  This was even a triple Boring-Wheel as Product Managers were escaping from the company after a few investment refusals that were not explained. 

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3. The Flywheel of Innovation

End-of-life announcements for several product lines resulted in a 20% decrease in long tail income but  many customers transitioned to new product lines with increased volumes, purchasing power, and cost efficiency, which allowed for more investments in innovation.

The cost reduction did benefit both “Long tail” and “Strategic customer” business units as the company started to have a more universal offer. The operation production cost and complexity did as well decrease as the manufactory did have more flexibility on its two production lines and less of product swap. Instead of investing in a new production line for future growth, the company did gain extra capacity without any investment.

The business case is more than positive!

4. 'I' for Identify

Now, let's return to the 'I' in our IMAGINE acronym.

The identification process in our use case focused on understanding the barriers to innovation, solving some but not all issues. However, another dimension of "Identify" involves defining the innovation target. 

At the beginning of the use case I was indicating the investment refusal reasons was always a combination of:

• No R&D resources available (SOLVED)
• Priority in on the next generation product for strategic customer which will produce volume and allow to sell to the long tail with margin (SOLVED)
• “We do not believe in it”: often happening when the objections to the 2 here-upper reasons were well prepared:-)  (UNSOLVED)

Without addressing the third point, the company would not enter the optimal flywheel or may even break it. Clear rules should be established to help the Product Team understand the vision and requirements of stakeholders. When decisions are influenced by politics or appear arbitrary, the talent drain will continue or intensify because the budget excuse has ceased to exist.

Companies often stop their transformation efforts after one successful change, even before the change's sustainability is ensured. The next step for this company was to define an investment mandate to fully leverage the INNOVATION FLYWHEEL.

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Conclusion

In conclusion, it's essential for companies to establish an effective innovation model, break down silos, and move from the submarine innovation model to a virtuous flywheel of innovation. This requires transparency, clarity in decision-making, and a commitment to overcome the challenges presented by the Boring-Wheels. While it's a complex journey, it's necessary to secure a company's position as an industry leader.

You will do it once. At Intranove, we have done it several times, do not hesitate to ask for help. If you are not sure that your company works in that Boring-Wheel Model or you recognize it but you do not know how to change it: Just book a free 15 min call HERE and we will help you in your next step.
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This blog post is part of a series "IMAGINE: I for Identify".

PART 0: The IMAGINE Innovation Mindset.
‍PART 1 : From Submarines to Flywheels
PART 2 : The Disruptive Innovation: From Flywheels to Boring-Wheels.
PART 3 : The Innovation Boring-Wheel Paradox.
PART 4 : Breaking free from Boring-wheels… USE CASE

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