Last week, I attended The International Society for Professional Innovation Management (ISPIM) Asia-Pacific Innovation Forum 2014 in Singapore. ISPIM (www.ispim.org) is a worldwide network of innovation management professionals that builds bridges between academic researchers, industry experts and intermediary organizations. I always come away from events like this with new ideas and inspirations, and this one was no different.

Are you ready to become a cannibal — or would you rather be eaten?

About a hundred years ago, the Austrian economist Joseph Schumpeter introduced the concept of “creative destruction,” which describes the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” This process means that organizations that fail to innovate will inevitably be replaced by those that do innovate.

For example, Kodak dominated film-based photography, but failed to make the move to digital. Similarly, Nokia and Blackberry dominated cell phones and e-mail devices, but were left behind when consumers moved to smartphones with touchscreens.

In contrast, Gillette has managed to stay atop the disposable razor market with an innovative, counterintuitive strategy — they launch a new razor model just before sales of the previous model are about to peak. They believe that cannibalizing sales of its current razor by introducing a more advanced product is better than losing out to a more innovative competitor.

Question: What best-selling product’s sales should you start cannibalizing now by launching a new, improved product?

Are you ready to face your real competition?

Suppose you were one of the dominant players in an established industry, competing with others like you. What if a new market player entered your market with a similar product or service? How threatened would you feel? Probably not much. But what if the new competitor had a history of producing innovative products and services? You might feel a little apprehensive, but not very much. After all, you’re a market leader with loyal customers and a long, successful history.

But what if this new competitor’s innovations had earned it a huge pile of cash? And what if this rich, innovative upstart noticed that your industry’s products really do suck, and thought it would be fun to focus its creative and financial resources on creating and delivering to your customers new, radically improved products? If that doesn’t make you feel nervous or even panicked, well, it should.

Coming disruptions are likely to sweep away many old, solid, well-established companies, and the only way for you to avoid being one of them is to innovate.

What if you were a bank and suddenly realized that your future competitors were not Citibank, HSBC, JPMorgan Chase, and the like, but instead Apple, Alibaba, or Bitcoin? What if you’re Mercedes-Benz, BMW or Audi and can see that the companies that are reinventing cars, commuting, and transportation are Google, Uber, and Tesla? What if you produce luxury watches, but have only just now seen the emergence of smart watches and wearable devices?

Questions: Who are your real competitors? Who’s on the periphery of your industry that might completely change it? How can you lead that change instead — what long-established beliefs must you let go of before you can create the future? Isn’t now the best time to start?

Are you in the right place at the right time?

Where are the markets your company should focus on now to ensure future success? Where will most innovation happen in the future? Where will most solutions to the great challenges of our time — sustainability, changing demographics, energy, and many others — come from? Most likely, the answer to these questions is: Asia.

During the ISPIM conference, I learned that over the next 15 years, the world’s middle class will double in size, and will shift from West to East. By 2030, Asia will be home to about two thirds of the global middle class, and account for about 60% of global middle-class consumption.

Why is this important? The middle class is the motor of economic growth. The bigger the middle class in a region, the more entrepreneurial and innovative it is, and the better its research and educational institutions are. Also, the increased consumption and investment boost the economy.

This is good news for Asia, but the doubling of the global middle class and the attendant increase in consumption means that we need to move toward better sustainability. To do that, we will have to innovate.

Questions: How can you prepare for the emergence of a large, affluent, Asian middle class? What can you do today to develop better, more sustainable products?

Postscript: ISPIM not only provided me with lots of new ideas, but also gave me a very nice, unexpected surprise — my paper titled “X-IDEA: The structured magic of systematic innovation” on my company’s innovation process won the “Best Paper on Practical Implications for Technology” Award, and I am very grateful to Nokia, who sponsored the award, and to their Global Head of Innovation Management, who selected my paper, for the recognition.

© Dr. Detlef Reis 2014. This article was published in parallel in the Bangkok Post under the same title on 18 December 2014.