Introduction
It is true that “Long Term Innovation is saying no to 1000 things.”
You can’t achieve digital transformation and innovation by asking customers or examining the competition and trying to build something and get back to them. By the time you get it built, they’ll either change their minds and want something new or be given one. For example, Blockbuster tried competing with peer stores on a traditional brick-and-mortar model and got beaten by Netflix on streaming services.
Today’s business environment is volatile and demands quick returns, where quarterly reports and immediate results often dictate strategic decisions. However, visionaries at brands like Apple and Microsoft understood that real success lies beyond the next fiscal quarter, and strategic innovation should be separated from the usual business. It is about nurturing a business model prioritising sustainable growth, continuous improvement, and strategic planning.
The article explores the profound impact of incremental innovation strategies through the lens of NVIDIA and INTEL, offering insights into why some companies thrive while others become part of history.
“The Drivers of Innovation understand that innovation is not measured in quarters but in generations.”
They are seismic wave-spotting geniuses and arguably the best strategic executors. They have a resume of deep and accurate analyses of their company’s competitive status, market trends, and macro environment, developing clear and well-defined business model innovations and strategic visions and addressing all potential strategic bottlenecks with process innovation, policies and coherent actions to guide the company forward.
Shift from Short Term Gains to Long Term Vision: NVIDIA vs INTEL perspective.
NVIDIA: The Long Term Innovator
NVIDIA’s journey is a testament to the power of disruptive innovation. Until 2022, 80% of NVIDIA’s revenue came from Gaming Products. Zoom to Q3 FY24—Data Centre accounts for 80% of NVIDIA revenue and has grown 41% Q/Q with a 51% net profit margin. Once primarily known for gaming graphics cards, NVIDIA has become a powerhouse in AI and deep learning. What did it do right in terms of its long term success?
- Persistent R&D: NVIDIA’s investment in R&D has been relentless. Despite a global economic slowdown in 2020 alone, they allocated $3.9 billion to research and development. This business strategy, product innovation, advancements in AI, deep learning, graphics and gaming technologies give NVIDIA a 51% market share in discrete graphics.
- Business Model Innovation: NVIDIA has diversified its portfolio by venturing beyond gaming into AI and autonomous vehicles, reducing dependency on a single market. This strategic foresight has resulted in exponential growth and a dominant market share of 51% in discrete graphics.
- Open Innovation: Unlocking industries beyond gaming using the CUDA platform—a general-purpose programming platform that allows smart people to unlock and harness their GPU’s processing ability beyond games.
Intel: The Established Giant
Intel, a titan in the semiconductor industry, has enjoyed a dominant position for decades. However, their journey highlights the challenges of balancing short-term and long-term innovation.
- Historical Dominance: Intel’s long-standing 80% share in the CPU market results from years of consistent performance and innovation. However, their focus has often been on incremental improvements to maintain this dominance.
- Technological Advancement: Innovations like Alder Lake and Sapphire Rapids, part of Intel’s 7nm portfolio, show Intel’s effort to promote technological innovation. Yet, these efforts are often seen as reactive measures to catch up with competitors like NVIDIA.
- Short Term Focus: Intel’s strategy can be criticised for focusing on immediate competition rather than visionary leadership. This approach has made them stable but has also resulted in significant revenue losses to competitors in emerging fields like AI chips.
Learning ~
INTEL’s innovation initiatives had a short term goal—just focusing on existing product and market demand—which may have helped them stabilize revenues, restore some investor confidence, and recover to some extent the 80% revenue loss to NVIDIA and AMD in AI chips.
NVIDIA spent years building on the new idea, a comprehensive and integrated ecosystem stack of chips, systems, software, and services for accelerated computing—with a major emphasis on data centers, cloud computing, and edge computing. As they say, Fortune favours the brave. Due to the hype around generative AI, they got into a massive demand cycle.
Other Notable Case Studies on Breakthrough Innovations
- Microsoft Zune vs. Apple iPod:
- Apple: With a focus on creating an entire ecosystem, Apple’s long term vision with the iPod paved the way for sustaining innovation with subsequent launches like iPhone and iPad.
- Microsoft: However, despite being technically sound, Zune failed because it lacked a visionary strategy and broader consumer integration.
- BMW vs. Mercedes-Benz:
- BMW: BMW’s investment in electric vehicles (EVs) and sustainable mobility showcases its commitment to continuous innovation.
- Mercedes-Benz: Although innovative, Mercedes initially lagged in the EV space; however, it’s now catching up with a more aggressive strategy.
- Netflix vs. Amazon Prime:
- Netflix: Netflix’s foresight in streaming and content creation has made it a leader through specialisation and long-term vision.
- Amazon Prime: Integrated as part of a broader service ecosystem, leveraging Amazon’s resources drove business innovation instead of just focusing on challenging Netflix head-on.
- Microsoft Azure vs. IBM:
- Microsoft: Azure’s architectural innovation and integration with other Microsoft services have made it a formidable player in cloud computing.
- IBM: Despite a strong start, IBM’s slower transition to cloud computing has seen it fall behind more agile competitors.
- Shopify vs. Magento:
- Shopify: The long-term vision of empowering businesses of all sizes to create online stores has driven tremendous growth.
- Magento: While robust, Magento’s slower innovation pace has resulted in a smaller market share than Shopify.
The UAE government prioritises digital transformation and artificial intelligence to accelerate its long-term innovation goals. This will deliver the country many benefits across many sectors via technological advancement, economic growth, and citizen Engagement. — Read More
Building Innovation Culture: Value Creation, Access, and Translation
Successful innovation is not just about having a great idea; it’s about executing it effectively across multiple dimensions. This can be encapsulated in the innovation equation:
Innovation = Value Creation x Value Access x Value Translation.
The multiplicative nature of this equation means excelling in one or two areas is not enough; all components must be addressed to ensure success.
Value Creation
Value Creation is the bedrock of the innovation process. It creates new intellectual property or enough incremental value to persuade users to switch from current solutions. This value can enhance efficiency, create new functionalities, or provide emotional and psychological benefits.
- Example: Apple’s iPhone combined a phone, music player, and internet communicator into one, creating significant new value. This convergence of technologies offered unprecedented convenience and capabilities, justifying the switch from traditional cell phones and iPods.
Value Access
Value Access makes it easy for the existing market to experience the value you’ve created. It involves reducing friction and ensuring the product or service is accessible and user-friendly.
- Example: Amazon Prime’s streamlined service ecosystem reduces friction for consumers. By bundling fast shipping, streaming services, and exclusive deals, Amazon makes it extremely easy for users to access and enjoy the value they provide, fostering a loyal customer base.
Value Translation
Value Translation is about effectively communicating the created value and helping users understand its relevance in their lives. It involves a continuum of explanation and education, especially crucial for radical or disruptive innovations.
- Example: Tesla’s educational marketing approach for its electric vehicles (EVs) is a prime example of creating long term value for its customers. Tesla invests heavily in educating the market about the benefits of EVs, addressing concerns about range, charging infrastructure, and performance. This has helped shift public perception and adoption of EVs.
The Strategic Pivot: Letting Go of Short-Term Battles
Sometimes, true innovation requires the courage to forgo immediate wins. NVIDIA’s strategic pivot from a gaming-centric company to a leader in AI and autonomous technologies exemplifies this. By investing in R&D for long-term growth and exploring new product development categories, NVIDIA has outpaced competitors — busy focussing on short-term gains.
Infinite Innovation Management: Creating a Unified Vision
Infinite innovation management requires a unifying force that inspires, collaborates, and builds brand loyalty across all departments. Even with a well-defined business plan, if the innovation strategy isn’t unified, different areas of the organization may pursue conflicting objectives. For example, marketing might focus on expanding products and markets, while sales prioritize acquiring the largest customers. Department heads may be preoccupied with personal profit and loss statements and performance evaluation criteria. Meanwhile, research and development remain on the sidelines, awaiting the new product launch. While diverse perspectives are vital, a unified innovation vision is crucial for coherence.
In organisations driven by Disruptive Innovation, employees don’t just work. They invest in the future.
This holistic approach to continuous innovation ensures the company remains resilient and thrives even in challenging times, leading to economic growth for employees, itself and the market.
Tips for Practicing Long Term Innovation in Your Organisation
| # | What to Do? | How to Do? |
|---|---|---|
| 1 | Cultivate Visionary Leadership | Encourage leaders to think beyond short-term gains. Leaders should inspire their teams with a clear, long-term innovation vision that aligns with the company’s core values and future goals. AI transforms HR by enhancing talent acquisition, employee engagement, and process optimization, making HR more data-driven and strategic. Read More |
| 2 | Adopt a “Future Back” approach to long-term innovation planning | Envision your industry’s future state and work backwards to identify and create a North Star vision for your business. The approach ensures alignment with your long-term goals. |
| 3 | Prioritise Customer-Centric Innovation | First, solve customer problems. Centre your innovation efforts on understanding customer needs and pain points so that you can develop products and services that provide genuine value. |
| 4 | Create a portfolio of Innovation Projects. | Develop a balanced innovation portfolio—short-term improvements like process optimisation, medium-term growth projects like new product development, and long-term transformation initiatives like digital transformation. This portfolio ensures that current market demands are addressed and investments are made in the future. |
| 5 | Empower cross-functional teams | Form cross-functional teams and collaborate with people with different perspectives, skills, and experiences. This approach fosters innovation, improves measurability and transparency, and empowers and values each team member’s contributions. |
| 6 | Implement Agile Methodologies | Use agile methodologies to foster a culture of rapid iteration, continuous feedback, and flexibility, which allows you to pivot quickly when necessary, ensuring that long-term innovation is on track even in a dynamic setting. |
| 7 | Focus on Sustainable Growth | Prioritise sustainable practices and long-term growth over short-term profits. This could involve integrating renewability, ethical practices, recycling, and waste management into your business. |
| 8 | Invest in Continuous Learning and Development | Foster a culture of continuous learning. Encourage employees to pursue new skills and knowledge that align with future industry trends and organisational innovation vision. |
| 9 | Establish Innovation Metric | Develop and deploy metrics that measure the impact of innovation efforts. KPIs should go beyond financial metrics and drive long-term innovation, including customer satisfaction, time to market, and the number of innovations identified, evaluated, and deployed. |
| 1o | Set long-term goals and milestones. | Develop long-term goals with clear milestones. This focused approach will help track progress and ensure that short-term actions align with the broader vision, instilling a sense of determination in the audience. |
Conclusion – Innovation begins
Balancing short-term wins with a future-orientated vision is the hallmark of transformative leadership and sustained success. As NVIDIA, Intel, and several others have demonstrated, a commitment to long term innovation is a legacy-building endeavour. Prioritize long-term innovation, even at the expense of immediate gains, for a lasting impact beyond quarterly reports.
Your Turn: How do you balance short-term gains with long-term vision in your industry? Have you ever sacrificed immediate wins for greater future success? Share your thoughts!
