Large organizations depend on processes that are strictly adhered to in order to produce consistent results.  The problem is, that many times those processes don't always produce the intended results, they can have unintended results such as an accident or injury.  The attitude toward the occasional unintended outcome is what determines the opportunity.  If the attitude toward the mishap is that no process is perfect and it’s just part of doing business, then the unintended outcomes will continue.  However, if any unintended consequence is seen as an indication that there is a breakdown in the process then it opens the door for innovation.  Much of innovation is a result of attitude, what we are willing to accept and what we are willing to roll up our sleeves and do something about.  George Bernard Shaw’s quote about all progress depends on the unreasonable man, because he tries to adapt the world to himself, is so appropriate since the unwillingness to accept the current results is what drives innovation and progress.  If we live by the popular phrase “if it ain’t broke don’t fix it” we will perpetuate what exists at the expense of discovering better products and services.  Sometimes what is profitable and working for our business is not working for the customer.  Eventually, someone will find a better way to serve the customer and it might be too late for us to change.  Like the obsolete business model of Block Buster Video that fell to the Netflix business model that served the customer better.  So, adopt an attitude of upending your own business model or processes to serve the customer better, even if they are profitable and working, or some other innovator will!!!

To continue on the course of being open to changing strategy and creating a new strength and core business.  Let's think for a little bit in more extreme terms, such as what to do with your business when the economy is in real trouble.  When I used to pilot single engine airplanes, there was a constant awareness that the one engine that was keeping me airborne might fail, then what?  If you were a passenger on that airplane you wouldn't wan't a positive thinking pilot just thinking happy thoughts, you would want a pilot that had already thought of what to do if the unthinkable happened.  With any business there are times when the engine of your growth fails and you need to have a plan in advance of any trouble.  And, if you look at the world economy and the financial system you don't have to look very far to see a few clouds on the horizon.  Now, none of us know absolutely whether those clouds will turn into a real storm but we don't have to, our job is to make sure we have alternate routes for our businesses if it does.  

If the banking system or our currency were in real trouble, (and it might be) most businesses haven't given any thought about what to do in that situation.  Most businesses need to have a minimum of two strategies, one for growth and one for endurance.  We are due for the recession that pretty dependably comes every 6-7 years.  So, it may be that we are in a business that is recession proof but if we are not, we should think about what our strengths need to be in a recession.  The new strengths we may need could be a different kind of selling, maybe to a different customer and maybe even a new or at least different line of products that do well when money is tight and banks are not lending.  If you go a little further you could think about what you might do to endure a high inflation or more extreme circumstance.  There was a study that produced the "Hyperinflation survival guide - Strategies for American businesses", (Written by Gerald Swanson) that researched the effects of Hyperinflation on businesses in South America.  That might be a start, one key point from that study is that once inflation takes off only the flexible survive.  For manufacturing, (as resources dry up) it may turn out that production is not the best use of capital.  Some businesses survived by leaving their core business to speculate in commodities, so desperation can be the mother of invention.  This may not happen but being willing to look at this kind of event and its effects on your business can be very helpful and can actually bring to light opportunities outside of your core business that you would not have seen without your new perspective.  Remember that competitiveness is not about doing what you are good at, but being able to adapt and provide what customers value!  Customers have different values in recessions vs growth economies. 

Walmart has the largest retail distribution of any company in the world, so you would think that your sales problems would be over if you could get your product in their stores.  However, even though they sell massive quantities of goods, they are only good at selling a very specific list of goods to fulfill a certain kind of customer need.  They are not, for instance, good at selling at the higher end of the market, speciality products, autos, airplanes, lumber, computers or anything that isn’t on their list.  And really, if you were to dig deep you would probably find that they are not all that great at selling any specific item, they just provide product access and very basic help and because of their size they have the volume.  So that leaves the door wide open for just about anyone to sell their own product much better than Walmart especially if your product doesn’t fit into their specific requirements.  You might even keep more profit and create more brand value by keeping it out of their stores.  Unique products do upset Walmart because they already have a business model that has worked and they are not about to change it.  That is one very critical barrier to selling a new product or service, you may need to find or create completely new distribution channels to have it sold effectively.  The point is, that what we see as someone else's core strength might not be, and it might be easier to create that function in house rather than outsource it.  Some of the reason we have such a compulsion to outsourcing is that we measure profitability by gross profit margins and not net profit.  Just changing the way we measure success can give new incentives to innovate with your business model and processes.  Dow Corning is one company that changed the way they measured success from gross profit margin to total net profit and it kept them in product lines that they would otherwise have gotten out of.  The new measurement helped them see the benefits of staying in those businesses that the old measurement kept them blind to.  Look at Virgin Group limited, its core business areas are travel, entertainment and lifestyle, and it also manages ventures in financial services, transport, healthcare, food and drink, media and telecommunications; together, Virgin's businesses consist of more than 400 companies worldwide.  So, what is their core strength?  I would say that the core strength of Virgin Group Limited is actually unlimited and so is yours but you have to think critically about what you need your strengths to be in order to make your business more successful and then go make it happen!

The Japanese Keiretsu was made famous by Toyota (the largest and most profitable auto manufacturer in the world).  Keiretsu is close-knit networks of vendors that continuously learn, improve, and prosper along with their parent companies. Toyota city is an example of deep vendor relationships that inspires interdependencies that benefit the whole.  

Is it time for the home building industry to embrace keiretsu and learn like Japanese auto manufactures to keep your friends close but your subcontractors and vendors closer?  American auto manufactures dipped a tentative toe in Keiretsu and began to lower the number of vendors they used and award long term contract but they never moved away from adversarial relationships and thus have never reached the kind of productivity that Toyota and other Japanese manufacturers have.  It wasn’t long before american auto manufacturers jumped to the conclusion that the immediate benefits of low wage costs out of mainly China outweighed the long-term benefits of investing in relationships.  As a result the supplier relationships with american auto manufacturers is worse now than ever.  Fortunately, Toyota and Honda both have created successful supplier relationships here in america and proven it is possible.  See Jeffrey Liker and Thomas Choi for more on this article in the Harvard Business Review.  

For home builders in america it is clearly not an option to outsource much of their labor globally like the american auto manufacturers.  So, it makes sense that the old “arms length” relationship with vendors and subcontractors might need to be abandoned in order to reach new cycle time reductions that benefit the whole (which would include the customer).  The caveat being that the new deep relationship is a real one not just a paper one.

But what do “Real” relationships look like and how are they formed?  If you have spent a lifetime squeezing the last nickel out of your vendors and getting along in what might resemble a fragile ceasefire it won’t come easy.  Old habits are difficult to overcome but thankfully there is relatively new research that can help us replace them with new habits faster.  Practicing the following list over and over with vendors and suppliers can help jump start a new collaborative relationship quickly.   




1.  Lighten up!  Studies show that a little levity and a sense of humor engenders trust.

2.  Ask for help on a challenging problem.  There is no more powerful connection than helping a fellow human.

3.  Increase the number of connection points.  It is like the various touch points in sales, the more the better because anyone can get it right once.

4.  Tell the truth!!  Most of Americans think telling lies is a regular part of work but nothing builds trust like truth!

5.  Empathize with real care and concern.  Anything that is not genuine will sabotage the whole effort.

6.  Bring donuts, food is the proverbial olive leaf that says “I come in peace.”

7.  Schedule quarterly meetings to celebrate accomplishments and identify problem areas and do something about the problems.  If you ignore the problems your effort will be seen a total waste of time.

The goal of innovation and innovative thinking is of course to make money.  The deep empathetic study of the product users’ needs is certainly to provide a worthwhile and possibly world changing solution to their problems but only if it can be done at a profit.  All the ideation, collaboration and utilization of cross functional teams must be resulting in a cost savings or a profit making.  Better ideas and solutions are a vital part of the long term sustainability of a business if it doesn’t cost more than it produces.  The goal is to make money!  In Jack Welches book “Winning” he makes it crystal clear that making money is very simply the reason for being in business.  If you can make money you can do a lot of great things for mankind but if not you become a drag on society.  Making money is what your guiding light for innovation should be.  Thomas Edison didn’t invent the light bulb to display it in a museum and Steve Jobs and Bill Gates were not creating innovative products to stay in the garage, they did it to make money and then to maybe get a shot at changing the world.  The best idea in the world is destined to die an obscure death if it cannot be made economically feasible.  Understanding how your efforts in any job you perform affect the profit picture of your company is so critical to being able to produce real value.  If all you are doing is performing work to accomplish some arbitrary goal set by someone in upper management or if you are doing it as a business owner because that is the measurement the industry uses and you don’t understand how it really affects the profitability of the business then it is time to learn or abandon.  There are many who would argue that most workers don’t need to understand how their job affects the profitability of the business but is that the truth or is it just hard to measure the effect of that knowledge?  True profit doesn’t come from selling one job but from establishing a track record of adding real value to the customer consistently over time.  Sometimes it might be easy to get a little too caught up in the mechanics of innovating and lose sight of the reason you are doing it.  To Make Money!