Renovate or Innovate?
In order for businesses to inject growth into their sales revenue, they often look to renovate or innovate processes, strategies or brands. But what is the better option? Firstly, let’s be clear on what the difference is: Renovation is to renew or revamp something - to make it look new again. Whereas Innovation is to alter and change into something new – to revolutionise. In the case of brand marketing, innovation involves introducing new variants into a market, renovation involves re-staging or re-launching a brand. For process improvement, innovation is starting a new way of working from scratch with new systems and structures, vs. renovation which is building on or tweaking your current approach.
There are some great examples of how CEO’s of large corporations have turned their businesses around by renovating or innovating:
Probably one of the best accolades of innovation is Steve Jobs. He left Apple in 1985 only to return in 1996 to serve as interim CEO when the company was struggling, and stock prices had plummeted. He completely overhauled Apples approach by reducing the 350 projects Apple had in development to 50 and then to 10. He wanted his employees and business to focus solely on creating the next big thing; and thus the iMac, the iPod, iTunes and the iPhone was born. He also restored Apple's hip image. Perhaps the best turnaround story of all time, under Jobs’ leadership, Apple stock rose more than 9,000 percent.
Likewise, Terry Semel turned around Yahoo, by looking at new avenues for growth. Yahoo's ad sales were dropping, and company morale was low. Semel shifted the company's focus to distributing media and user-generated content through channels that included Yahoo News, Yahoo Finance and Flickr. Just one year after he took the helm, Yahoo earned $43 million in revenue; the previous year had ended in a $93 million loss.
But renovating can also reap rewards as in the case of car manufacturer Chrysler who was near bankruptcy in 1979. Lee Iacocca stepped in as CEO and moved the business from the red into the black in just 3 years. He focused on renovating, working with what he had to make things more viable by restructuring management and departments and negotiating concessions from suppliers, creditors and unions.
Richard Teerlink became CEO if Harley Davidson in 1989. The company had a U.S. market share of 15% and had reported a loss of $15 million. The U.S. icon was facing steep competition from Japanese motorcycle manufacturers, such as Honda, and it was struggling. Teerlink returned the company's focus to increasing quality, improving service to customers and dealers, and producing world-class heavyweight motorcycles. By the end of Teerlink's tenure, just 9 years later, Harley Davidson recovered its U.S. market share to 50 percent and posted annual sales of more than $1.7 billion.
So how do you decide to renovate or innovate? To be honest it depends on the circumstances and what needs fixing and why. Some issues do just need a little tweak, others need an overhaul. The trick is to be holistic in your evaluation of your company’s performance and challenge yourself and your teams, customers and suppliers to be honest and say what is working and what isn’t. Only then can you give an accurate assessment of where you stand.
If you need help with renovation or innovation of your business, get in touch at firstname.lastname@example.org