“When the business paradigm changes, businesses return to zero”

When business paradigms change and organisations fail to recognise and act on these changes, catastrophic consequences can occur and siverely disrupt the steps towards innovation.

The Applied Innovation Centre’s 4P model looks at the application of the 4P’s:

• People
• Process
• Product
• Press

These factors need to be considered in the organisation’s journey towards an innovative organisation.

One of the P’s can have a profound effect on the future of any organisation wishing to become innovative. This is known as "Press," which looks at the external and internal environment in which an organisation operates.

History is littered with examples of large successful organisations suffering catastrophic consequences by not recognising the impact of a changing external environment. Some example of these are:

• The effect of digital technology on Kodak who built their business in the photographic industry on film base technology.
• The effect of digital technology on the Swiss watch industry
• The introduction of sharing economies such as Uber and it's effect on the transport industry

Organisations are now faced with a rapidly changing environment. This highlights the imporatnce of concentration on the external environment, and correctly predicting the impact on their organisation for innnovation, survival, competitive advantage and profitability. Not long ago the typical strategic planning exercise considered economic factor such as the state of the economy, predictions for growth, political influences, etc.

These days the rapidly changing technological environment is changing at an ever-increasing pace. Examples of this are:

• Evolution of the internet, mobile phone technology and other forms of communication have had a profound effect on the structure of the business where very small businesses do not need base premises or reception staff
• The dreaded telephone directory has allowed customers to determine what part of the business to connect to before taking to a person
• The rapid adoption of solar and other clean energy solutions is having an impact on traditional energy suppliers.  Solar panel technology is improving and the price for solar panels are reducing. This combined with the reducing costs of lithium storage devices could see businesses and households become independent of traditional energy suppliers. This will have a major financial and operational impact on traditional energy suppliers who have extensive infrastructure to maintain

It is important for businesses to take account of these changes to become innovative.

But, there is an additional component that organisations need to consider when planning the direction of their business. These are more subtle and require a degree of interpretation of the external environment.

Over history there have been many famous quotes about business paradigms. A few are listed below:

• “Computers in the future may weigh no more than 1.5 tons." --Popular Mechanics, forecasting the relentless march of science, 1949
• "I think there is a world market for maybe five computers." --Thomas Watson, chairman of IBM, 1943
• "I have travelled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won't last out the year." --The editor in charge of business books for Prentice Hall, 1957
• "But what ... is it good for?" --Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip.
• "There is no reason anyone would want a computer in their home." --Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
• "This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." --Western Union internal memo, 1876.
• "The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?" --David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s

Those visionaries in business who even got it half right and acted on these occurrences have prospered. Examples of this include IBM, Dell, Microsoft, Google, Apple and Facebook.

There is a pattern to this with each company either pioneering a new technology or feeding off the technology by using it to create significant applications.

However, whilst we focus on the significant development, other organisations have also benefitted from these developments in the support industry. By paying attention to the changing paradigms and positioning their organisation to benefit from these significant changes the supporting organisations have been able to prosper.

To be successful and maximise benefits, organisations need to take these issues into account when developing business strategies and innovation strategies.