Enabling the disruptors
Updated: Nov 6, 2020
To solve the existential climate crisis, we need new and disruptive solutions. We therefore need to find ways to enable the disruptors. The easiest (and probably most efficient) way to do this would be to encourage big companies to take the lead.
But big companies are not good at disruption. They are generally good at managing and funding product development that aligns with their core business and existing product and process expertise. But they are generally bad at developing truly innovative products and services that might disrupt their existing business or industry.
There are two aligned reasons for this:
Corporate antibodies Company systems and processes are designed to resist change that may erode the profitability of existing business activities.
More than my job's worth Individuals very rarely take decisions to adopt unproven solutions or work with unknown suppliers because if it goes wrong, they fear losing their jobs. And if they don't, their boss will stop it for the same reason.
Balance Sheet vs P&L Developing engineering technologies takes time and investment. In the early stages of research and development, most big companies treat the expenditure as a cost on their P&L account, reducing the value of the company. If, on the other hand, they are able to acquire a later stage product or business that is generating revenue and has a clear route to profitability, they can treat this as an asset on their balance sheet, which increases the value of the company.
Truly disruptive innovation and invention therefore needs to happen in small companies, where the advantage of winning significantly outweighs the risk of failure. The interests of everyone involved are also, usually, better aligned than in big companies.
But small companies need support, particularly when developing engineered products, which takes significant time and money as well as expertise.
Over the last 10 years, at Productiv, The Proving Factory and Clean Engineering, we have worked with over 50 engineering product development projects, the majority being led by small companies. We have distilled the need for support down to three key ingredients:
A structured and proven product development process, such as the Green Staircase, which adapts industry standard tools and techniques such as APQP to suit the needs of accelerating businesses;
The flexible engineering, product development and commercial expertise, skills and support of specialist partners like Productiv and The Proving Factory;
Aligned and staged investment funding that understands the risks and rewards of engineered products.
Solving the climate crisis requires hundreds, if not thousands, of new engineered solutions in every sector, from power through transport to agriculture. While the existing large players are trying to adapt and evolve, there is a huge opportunity to encourage and enable the investors and innovators of new technologies that will help us get there faster.