Core Competence or Bold Change?

Time magazine ran a one page article last month (April 19, 2010, page 44 of the European edition) on the struggles of telecom equipment manufacturer Alcatel-Lucent. The entire piece is an interview with the CEO, Ben Verwaayen, and it’s just 8 paragraphs long.  I bring it up because it illustrates just how difficult it is to have a coherent conversation about innovation.This is paragraph four:Time:  Has the recession changed the way you do business?Verwaayen:  For sure.  Companies now do better due diligence about where they are going and how they spend.  People are less willing to guess.  And there is more core competence in what we do.  You stay closer to what you know.  You don’t adventure so much into territories you don’t know.This is paragraph eight:Time:  The Green Touch consortium you head aims to make networks 1000 times more energy-efficient.  That’s a bold goal.Verwaayen:  If you leave organizations to their own tasks, change will always be incremental.  If you get them out of their comfort zones with leadership, then they rise to the occasion.  Most people would say this is crazy, but it sets the bar for organizations to achieve, since it’s competitive.So in paragraph four, the point is to stay close to your core competence, and in paragraph eight the point is that you can’t stay in your comfort zone.You really can’t have it both ways.Innovation methodology will tell you that if you stay close to your core competence, you will eventually die there, and Alcatel’s own history will confirm that, inasmuch as the company is now emerging from a near-death experience caused by its inability to adapt to a changing market.  And actually, staying with the core competence is often a big problem, because change doesn’t come from the core, it comes from elsewhere.  So it we keep our eyes firmly focused on our core competences, we will likely go right over the cliff of failure.  We have to pay close attention to the new, to the wild, to the changing, to the edges of our current reality.Part of the problem with this article may be the interview format, in which the interviewee just responds to a series of questions that tend to come incoherently, and so the answers aren’t necessarily coherent.  And part of the problem could be the editing, as we have no idea how much or little the responses have been taken out of context by an editor who may not have a clue about innovation.Nevertheless, recession or not, moving out boldly, according to a carefully crafted plan, in a disciplined innovation process, makes a lot more sense.  Sticking with the core competence is, more often than not, the recipe for an early grave.  It is the mission of innovation to assure that this doesn't happen!

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