Innovation Concept - Group Of Three People With Question Mark, C
How often do we come across companies who identify or develop a new
product or opportunity, only to discard them as “non-core business”?
This is quite common in the world of corporate innovation. To be fair,
this is understandable and typical of the way KPI’s drive executives to remain
focused on trying to reach their often demanding targets.
So, the Orphan?
Technologies that are not seen as core business are often referred to as
“Orphan” technologies with some businesses actually plying a trade in identifying
and trying to find appropriate businesses to purchase orphans.
Alternatively, whilst many companies boast an Innovation Department that
is perhaps best described as inwards looking in trying to develop innovations
that may align with core business, other business have a different approach.
These businesses, looking to find new fields of endeavour, actually have a full
time staff position that works at looking for orphans to purchase. This is not
a silly idea and is really just an “inversion” of the innovation department.
Perhaps “having your cake and eating too” may be a good approach as many
companies have fallen for the trap of failing to embrace non-core innovation.
The most common example, of course, is Kodak and there are many others.
Many years ago a company in Melbourne manufactured and sold 28 million
matches a day. It discarded research into the Butane lighter as non-core
business, despite a warning from their sales manager that this was a mistake.
In fact he asked the Board to open their eyes to their real business of “flame
on demand”, not just matches. Alas, history told the story. They no longer
exist in their own right and were taken over and merged with another brand.
Again the outrigger!
I have mention this in recent blogs and I raise it again, this model
needs to be taken seriously.
An example: We were working with a company in regional Victoria of late,
a company that specialises in precision laser cutting that used their skills to
develop a wonderful product in their own right that they could sell direct to
end users. This was a great initiative in moving them from being a “dependant
supplier” to an “independent supplier”. In other words, a company with a
product of its own to sell, not just a service of metal cutting to companies that
may come through the door.
Our advice to this business was to employ the outrigger model and create
an independent entity and employ a young dynamic hungry entrepreneur to take
charge and let them run with this as a new business, whilst they remained
focused on their core business, which is already successful in its own right.
What’s the message?
Overlooking or discarding non-core business may be seen as opportunities
lost, but beware of the common trap of chasing too many rainbows, only to find
Think carefully about how you manage non-core assets or developments. There may be “gold” there for the taking and the outrigger model may be the best low risk approach.