INSIGHTS

Why do Businesses Struggle to Grow through New Products?
It All Starts at the Top

Published 5 March 2019

I’ve worked for too many businesses that said they were entrepreneurial and weren’t, that said they were collaborative and weren’t, that said that they wanted to grow by developing new products but struggled to deliver. But why? I’m sure the leadership meant well, I’m sure they wanted these things, but why didn’t they happen?

Over time, it became clear to those of us working in these businesses that such proclamations were all just words in a mission statement, or part of a CEO’s high level speech, and that they never actually transformed into real, practical action. I’m sure in every case the CEO and the Executive team wanted to have all these things in their business, but why didn’t they get them? What stopped them? What I learnt as I moved up the corporate ladder and progressed into the C-suite myself, was that what stopped them was that their organisations were not actually set up to be entrepreneurial, or to collaborate or to develop and deliver new products. Experience has taught me that when business leaders announce such things, there is too often a tendency for them to just sit back and expect that the business would just get on and do them (they didn’t), and that delivering these things was someone else’s job. The boss has done their job haven’t they? He or she has said what they want, surely that’s enough?

 

Why do businesses regularly make these same mistakes? To state something at the top is a great and necessary start, but if you don’t follow it up, don’t be surprised if it doesn’t actually happen. But why do organisations struggle with fostering entrepreneurial and collaborative behaviours and with developing and delivering new products? Why is it so difficult to deliver on such high level aspirations?

 

As Businesses Grow, they Undergo a Natural Evolutionary Cycle

 

As a business evolves from a start-up it grows organically through sales growth of its start-up product, then eventually it will naturally get to the point that it needs to diversify as it saturates its initial market or meets strong competition. It then needs to expand and diversify its product offering to grow. It may do this through acquisition, but if it chooses to do it organically, then all the skills and strengths that made it grow from a successful start-up suddenly grind to a halt when it comes to diversification and new product development. Why? Because businesses initially develop as organisations designed to deliver the day to day business of doing business; make stuff – sell stuff – deliver stuff – collect money – repeat. That’s how business works, that’s how they are therefore organised. But innovation & new product development doesn’t work like that and needs a different style of organisation to succeed.

In their first attempts in trying to diversify and create new products to grow, businesses typically try to squeeze out new products by trying to drag the process through the existing organisation and by handing out ‘and’ jobs to those good people that helped the business get where it is. Those people do their best, but they inevitably find it really hard to deliver because the mechanisms and resources to support innovation are lacking in the organisation, leading to plenty of frustration and finger pointing all round. This is the stage where developing new products is often viewed as an ‘and’ job because there is just too much day to day stuff to do for everyone that takes priority. Whilst the need for new product development may be well recognised to grow the business, executing it is not an easy thing, as most businesses find out the hard way. The next stage of the evolution is that the business then hires in new people, good technical people, good business development people, and then tries again and sits back and waits again. Surely this will succeed? Maybe, but often not. These experts soon find themselves trying to work within organisations that just don’t have the right business processes, no clear chain of accountability, lack of handover of ownership of projects down the pipeline and suffer from a weak culture of collaboration and innovation.

The evolution of a business from a traditional ‘make stuff – sell stuff’ structure to one that seamlessly integrates an innovation organisation delivering profitable new products successfully to market efficiently is a long and challenging one. It can take a company many painful years to achieve this. If left to evolve naturally, the transformation can take 5 years for some businesses, and much longer than this for bigger, more complex multinationals. The only way to shortcut this is to recognise this early on in the evolution of your business and take steps to manage the transformation rather than let it try to happen naturally.

So What Can You do About it?

In my 30 years in industry, I have observed that there are 4 key things you need to put in place right at the start if you want to lead your business down the road of transforming it into one that can develop and deliver new products effectively; 

  1. Authenticity – You’ve got to really mean it. Don’t just say it, you need to follow up with action and make it happen.

  2. Honesty – Be self-critical about your organisation, recognise the limitations of your organisational structure and that things need to change.

  3. Invest – Put your money where your mouth is. Understand that reorienting your business for growth through new products requires targeted funding and is an investment like any other. Ring fence and dedicate resources or you will never deliver what you set out to.

  4. Plan – Treat the transformation like a project, put in a plan, KPIs and manage and monitor progress regularly.

 

If you start with these four things, then you will put your business on the right path to reorganisation, ready to profit and grow from new product development and you can then lead it with confidence into its next phase of growth. Good luck on your journey!

Dr Andy Wynn

Managing Director, TTIP Consulting

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