Book Review:The Fast Path to Corporate Growth: Leveraging Knowledge and Technologies to New Market Applications
By: Marc H. Meyer, New York : Oxford University Press , 2007 . 326+x pages. Review by: S. S. Pal
Imperatives of growth in business organizations parallel those for biological species in the natural ecosystem. From the moment business organizations come to exist in their environment, they also need to grow like any other living entity. This is so essential that there is never any status quo. Stoppage of growth allows degeneration to set in, and unless this trend is reversed the entity will face extinction. This is clear to managers. They ceaselessly strive for it, and their decisions and tactics work toward a better result today than yesterday and a still better result tomorrow than today. Nevertheless, results in achieving growth differ. Thus, some organizations pass the test of time and continue; others become extinct. To quote Marc Meyer, “A comparison of the Fortune 100 of even 25 years ago with the current list will confirm how today's leaders often become tomorrow's laggards” (p. 3). If a firm grows at the same rate as its competitors, it will have no relative advantage. Competition allows space to only the superior performers. This book provides methods for organizations to improve their performance with their eyes set on growth.
The text begins with market life-cycle logic to reaffirm the axiom that unless there is growth, there will be decay in organizations. One established path to fight this is via acquisitions. And, according to the author, “The innovation literature and industrial practice point to two more promising paths to growth. The first path is the creation of a truly breakthrough innovation–a technological discontinuity … . The second path to enterprise growth—and a well-worn path at that—is incremental innovation” (pp. 5–6). It is assumed that gains from ordinary incremental innovations are often marginal and that breakthrough innovations are risky, expensive, and may not produce revenue for 10 or 12 years, if at all. The book, therefore, has to say in this context that “fortunately, there is a third, less understood path to growth” (p. 6). The author describes this path as of “new market applications which are new product lines and services that leverage a company's technical and, in some cases, production capabilities to serve new users and uses” (ibid.). The aim of the book is to familiarize the reader with this new third path (of innovation) to growth as the fast path and to show how companies can use this fast path to their advantage.
Meyer refers his field studies to show that innovations for such new market applications can occur in the following three areas:
Marketing innovations to identify new target users and their requirements
Technology innovations to translate the new needs to realities
Business model innovation to adopt a new earning strategy for new uses
New-market applications would not rely on technological breakthroughs but would go beyond simple incremental steps in existing offerings. These should extend the market by revising the product to incorporate adjacent markets or to capture new, emerging market space, from which returns should be achievable in the near term, that is, “two- to three-year projects” (p. 271). Such innovations should be designed to leverage current platforms and technologies to control costs.
Realization of new-market applications requires management to develop a corresponding growth strategy beforehand. It should include user-centered design and making the business case in phase one, product and platform development and market testing in phase two, and ramping up the business in phase three. Companies must then explore where and how opportunities exist for them to make new-market applications. The processes suggested here are standard methods of new product development for locating the possible innovation opportunities, in general, segmenting the market, understanding user needs there, creating design concepts, prototyping and validating design choices, and product-line and platform development to arrive at new market applications based on the adjacencyprinciple, in particular.
Business model innovations follow, which involves reassigning how the organization provides value for its customers to maintain a stream of enhanced revenues for the organization. Although to experienced industry managers many of these steps may be seemingly familiar routines, refinement in their practice can certainly yield rewards for their organizations to drive growth. Readers may wish to try the ideas and the action templates from these areas in their own work situations. The book provides several reader exercises in these operational areas that are quite engaging.
The book begins with examples from IBM to illustrate its propositions for the previously mentioned three areas of innovation, which helped them achieve a turnaround during the 1990s. Meyer emphasizes that their efforts in customer-based segmentation of the market, advancements in product line architecture, and changes in the business model from “sale of operating system” to “development and licensing of software created to run on that operating system” (p. 29) made the difference. Besides ones from IBM, the book includes examples from many others drawn from the author's consulting experiences. Two prominent ones are how Honda Motor Company Ltd. and Mars, Inc., develop new brands and product lines, short of technological breakthroughs, for earning money via their innovative market applications. Readers will enjoy learning about these powerful innovation examples.
Meyer's case in point is that they all resorted to making such new-market applications to grow their businesses. Possibly all these successful companies brought about innovations in the substantial sense of the term: Innovations should be notable improvements over what exists, should address some specific values of the customer, and should have significant earning potential to justify their investment. Of course, breakthrough innovations are no everyday affair. But lesser innovations can be introduced more frequently to reinforce the top line. All such innovation attempts for extending, expanding, or penetrating the market further—up to the point of technical discontinuities—commonly go by the name of incremental innovations. However, the basic premise of Meyer's growth proposition is to demarcate a subcategory of more substantial ones from all the other varieties of incremental innovations, because in his scheme “a new market application does not rely on a technological breakthrough” (p. 6). Meyer calls this specific approach to substantial although nonbreakthrough innovation the fast path to growth.
Given the amount of detail for building the case for substantial innovations, the multitude of tables and charts, and the details provided in the examples, this book is interesting executive reading material. However, for the same reason, the Fast Path is not a fast read. Although the book is produced well and is written in friendly style, the breadth of its frame of reference to keep it comprehensive across organizations, its case examples to back up its arguments, and its several templates for carrying out its agenda for improvement require considerable effort to read. Even by omitting the reader exercises in the first pass, it may require multiple sittings to understand. The book will be good for seasoned practitioners in areas of new product development and for budding consultants as a comparative text on making better innovations. It could also be useful for those desiring to enter product development.
Released: October 2, 2013, 2:42 pm
| Updated: November 20, 2013, 10:00 am