Innovation – Buzz word. Change. Strategy. Radical. New paradigm.

We have heard it multiple times; eccentric consultants pushing change, change and more change. Thomas Stewart (Fortune Magazine) likened this to either a machine or a garden – if a machine, companies should design, build and manage it – if a garden, companies should create the conditions in which it can flourish and let the magic occur. What is this change? Intrinsically it is the product of innovation…

Innovation has become the ultimate buzz word for the 21st Century and beyond. With markets and environments changing at close to warp speed businesses feel that they have no future without a strong focus on this metamorphosing process. However, the fundamental question is whether this “buzz word” is a strategy or a new business paradigm? Does it signify improvement or fundamental change? Can it be boxed and planned or is it simply a radical and irrational phenomena?

There is no guaranteed master key that will turn your successful business into an innovative venture. Innovation, implicitly, is the growing garden; radical and in most part irrational – this is clear as it seems we have to accept failure rate greater than 50% as a road to becoming radical innovators. So why subject ourselves and our businesses to this kind of risk?

The consequential damaged caused by a lack of innovation can be severe; often clearly shown in economic performances – South Africa in the 1960s represented 6% of the world GDP- today the figure is closer to 0.5% – but year on year the South African economy has never shrunk – South Africa has unfortunately been out-innovated by other nations who saw the signs and made the decisions to act. Today half of America’s economic growth comes from products that barely existed a decade ago – the degree to which this happens has become a key measure of national success.

Innovation is an irrational phenomenon as it can lead to decisions and direction that are unpredictable and not forecast-able. Ever wondered how a venerable French water and waste management company transferred itself into a multinational multimedia conglomerate? Welcome to the story of Vivendi Universal. Originally called Compagnie Générale des Eaux, founded by Napoleon III, it grew to encompass everything from waste management to construction to transport to property to communications – all in just one and a half centuries. Then in 1995 it faced debt exceeding $9.6bn and was wallowing under the weight of its own bureaucracy. A change was about to occur. A distillation. A diversion of energies. CGE asked itself – “Water is the source of this company – who says it is the future” – and so from within CGE’s vast network of operations and interests a controlling stake in a small multi-lingual pay television was isolated, invigorated and exposed to the light of new possibilities. And so was born Vivendi Universal using the pay station as a spring board for an intricate series of mergers (the most being with Seagram for $23 billion – “Universal Studios”) and acquisitions, mutations and transformations (removing $25bn of poor-performing holdings).

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