Replace “core competence” with “core value definition”. By framing the context of an enterprise by the value it delivers, you widen the view of opportunities and markets that the enterprise can play in. It answers Simon Sinek’s question of Why and gets away from just being “the best widget maker”. Innovation ensues.
Corporations are more focused on “shareholder value” than ever before. This drives short term thinking and minor evolutionary innovation and exposes them to disruptive innovation that is not initially viewed as a core competence of the company. Far too often the goal posts of an enterprise are set too close together, narrowly defining what the company does, ignoring the possibilities of what it could do. Innovation becomes a tiny part of everyone’s job, and no coordinated effort or resources exist to extract ideas and incubate them. Those with ideas and nowhere to go within the organization have only the option to leave for another company or create a startup to see the idea out.
I like to consider the parallel between enterprise and the optimization process. Ultimately we are all trying to optimize our product, service, or business. This is the natural result of our constant drive to improve, compete, and get ahead in the market. However, when one studies the details of numerical optimization, you discover the sobering reality that you can only optimize for one thing. However, in the context of enterprise, it seems we are always trying to strike a balance between multiple opposing desires. So how can it be that we can only optimize for one “thing”? Back to the math: If you want to take into account multiple variables in the equation, you must define a utility function that defines the tradeoff between them. This utility function is then what you can optimize to derive the best answer.
As it turns out, the hardest part in the math, and in life, is figuring out the damn utility function. As it turns out though, there is an answer that will both drive enterprise forward, but also innovation, employee engagement, and stock price. The one thing we should all optimize is Value. But again, the hardest part is defining it.
To foster innovation across an entire enterprise, that value definition is captured in the vision. It is the answer to Simon Sinek’s “Why?” Why work for this company? Why invest in it? Why buy its products? Why is it different from its competitor? Why should it be allowed to exist? Mostly it should be an answer that defines the core competency of the company and how it delivers that value. When framed in this context you get away from being the “best widget maker in the world”, and move towards the value you can deliver no matter the product or marketplace. That is the key to opening up the horizon of possibilities. If Apple had considered itself just a computer company, it would not have paid attention to music and phones. Instead, it saw a new opportunity to provide its value. If you frame your enterprise around that value definition, all of your products or services will be considered “core”.
Value has an indeterminate number of variables all competing for attention, and much like a star map, it also depends on one’s perspective. Far too often today, companies are run with too small a subset of these variables, with the greatest weight landing on “shareholder value”. However, when one variable gets excessive weight, the other variables suffer. It is time to re-examine the formula. Consider bringing the customer to the top of the pareto. Include employees, suppliers, environment, and the investors too: Everyone with a stake in the system. Let’s discard the term “shareholder value” and replace it with “Stakeholder value”. Re-examine the unique way your company delivers value and consider where else that value is needed.
With a keen eye on delivering stakeholder value, the culture will be pre-seeded with an innovative mindset and allow it to flourish. It will open the possibilities and expand whom you consider to be your benchmarks, and competition. Having come to an agreement on how the company defines value will help align priorities, and help define metrics for innovation. Keeping a close eye on how that value definition might change over time will help identify disruptive forces outside and identify opportunities as well.
It really starts at the top, with an excellent vision and understanding of the enterprise value definition.
The world has enough widgets already - provide something new.