| Danial Norjidi |
IT IS through continuous innovation that a business can gain a competitive advantage and sustain its organisation into the future, said Javed Ahmad, the CEO of DARe (Darussalam Enterprise), while delivering his speech yesterday during the opening ceremony of the inaugural Brunei CEO Summit 2017.
He began by saying that in an innovation economy, size does not matter. “If you look at the Fortune 500 companies in 1955, out of those 500 companies, only 61 exist today, and that basically gives you an impression – in terms of size, in today’s world it’s no longer important. Financial resources and other resources are, again, not necessarily the key importance in terms of building the success of organisations.
“Now, when we look at businesses, business decisions – like all decisions – are all about making hard choices. And when you make hard choices, you focus on specifically addressing a customer’s needs, and to a very large extent, innovation in business can be summed up not in terms of technological breakthrough, but new application of existing products and services.
Ahmad also said that there are three questions that need to be effectively addressed when looking at business models.
“These are, simply put, ‘Who are your customers? What are you trying to sell to them? And how are you trying to address their specific needs?’
“The Who, What and How of business. It’s very simple, but applied in a systematic way, it will usually lead to insight in terms of business opportunities that might be totally not addressed by the existing players.”
He then gave an example: “Enterprise is a company that happens to be the largest car rental company in the world. It has not gone out and focused on trying to compete based on existing business models, but going out and trying to create a new unique business proposition and built a business based on that.
Javed Ahmad, CEO of DARe at the event. – DANIAL NORJIDI
“Whilst everyone focuses on providing car rental to the travelling public in terms of individuals who are on holiday or business travels, enterprise looks at providing cars to individuals who might have a car, but for whatever reason would need another one. Rather than going out and competing with the rest with offices at airports and hotels, they basically make sure that the car is available wherever the customer needs it. By doing something as simple as that, they are able to generate profits that are far superior to any other car rental company and a business that is highly targeted to a specific customer’s needs. And that basically is, to a very large extent, what innovation and business models can lead to.”
Another factor he highlighted was that of agility. “Now, together with business model, of course, agility is an important competitive advantage. What I mean by agility is the ability to sense every change that is happening in the business environment and being able to take action based on those changes that are taking place.”
He outlined another example: “If you have a frog and you throw it into boiling water it will immediately jump out, and it will survive. But if you put a frog into cold water and slowly boil it, it will not recognise the environment that is changing around it, and unfortunately will boil to death.
“Individuals, as well as businesses, have a very similar problem; that we are able to understand and take corrective action when the change happens dramatically. But if the change happens to be small and you can’t really follow it or understand it, very few realise that the entire business environment has changed, and the business model that we are working on is no longer relevant.
“No matter how much in terms of business model strategy or agility you focus on, the real competitive advantage that can be provided or gained by a business entity is through continuous innovation, and that is the only thing that can sustain an organisation into the future.
“Now, how can we as organisations achieve innovation that can allow us to be innovative not only tomorrow but in 10, 20 and 30 years from now? What creates behaviour in an organisation is the underlying environment in that organisation. By environment what I mean, the culture of the organisation, the structure, the processes and the people.”
Ahmad also outlined the four questions that a company needs to ask if it wants achieve innovation. Firstly, “How can I create a culture that allows my people to behave in an innovative way? This is because without that culture, no innovation can exist. Many organisations that focus on allowing individuals free time in terms of being able to experiment with things, basically lead to the creation of new and innovative products.
“The second question is, ‘How can I create structures that allow an enable my people to be innovative?’ When we look at the industrial economy, generally they are very much focused on providing efficiency; and generally, efficiency is very much the hallmark of a bureaucratic organisation – their rules and regulations based on the way the organisation is run, and the key element is how do we continue to be efficient?
“In an organisation that is meritocratic, it’s basically a lot of analytics that drive the structure of that particular organisation,” he said, while also noting that some organisations utilise the ability of teams to make huge changes in the business environment.
“The third question is ‘How can I put processes that foster innovation?’ Processes, again, like culture and structure are important in terms of generating the ecosystem within an organisation to create the innovative process.
“The fourth and probably most important aspect is, ‘How can I hire the kind of people that will embrace the kind of innovation that I’m trying to achieve?’
“These, are in my view, some of the broad parameters in terms of how organisations will be able to generate innovation in order to not only survive but thrive in the ever-changing business environment,” he said.
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