Cheaper, Better Faster.

Having worked in Innovation and Transformation in large Blue Chip companies and numbers startups, I thought I would share some of my experiences about the challenges of Innovation.

For example in BT, I worked on QUIP (a zero touch long distance startup which was a "separate" telco from BT, Airwave, and epeopleserve (A JV between BT and Accenture to create eHr services). There are numerous more projects and startups which I will be happy to share the specific lessons and challenges.

Large Organisations which have developed capability maturity and world class excellence find it difficult to changes their processes and mindset as well as the usual organisational and political challenges.

Why Established Organizations Struggle with Innovation: The Limits of "Cheaper, Better, Faster" vs. "Doing Different"

For established organizations, the path to growth often revolves around making their offerings “cheaper, better, and faster.” This strategy appeals to existing customers, refines efficiencies, and maintains steady revenue. However, as startups continue to prove, there’s another approach to innovation—one that prioritizes “doing different.” Free from legacy constraints, startups can explore fundamentally new ideas, potentially transforming entire industries while incumbents risk being left behind. Concepts like The Innovator’s Dilemma reveal why mature companies, though often capable of radical change, struggle to break out of their own success patterns and disrupt from within.

The "Cheaper, Better, Faster" Trap

For established organizations, optimizing what they already do well feels like the natural choice. Loyal customers want the same product, but better; stakeholders favour predictable returns; and processes are built around refining what works. This optimization-oriented mindset, however, can create a tunnel vision that leaves these companies vulnerable to unexpected shifts in the market.

Take Nokia and BlackBerry—once giants of mobile technology. They both focused on enhancing what they already excelled at: Nokia, with its reliable and feature-packed phones; BlackBerry, with its secure, business-oriented devices. Then Apple entered with the iPhone, a product not just slightly better, but entirely different. It was a phone reimagined for a lifestyle of apps, multimedia, and connectivity. The iPhone didn’t just optimize a device for calls and emails; it offered a new user experience, capturing what customers didn’t yet know they wanted. Nokia and BlackBerry’s incremental improvements couldn’t compete with a product that redefined the category, leading to their eventual decline.

The Innovator’s Dilemma: Why Established Companies Struggle with Disruptive Change

In The Innovator’s Dilemma, Clayton Christensen highlights a paradox facing successful companies: the very practices that make them strong—listening to existing customers and enhancing profitable products—can prevent them from recognizing and investing in disruptive technologies. Disruptive innovations often enter the market as “weaker” alternatives, initially serving niche customers with lower expectations or different needs. Over time, however, these innovations improve and eventually capture the mainstream market.

Consider Kodak, a leader in film photography and inventor of the digital camera. Despite its early role in digital imaging, Kodak hesitated to fully back this technology, fearing it would undermine their profitable film business. Digital cameras initially didn’t meet the high-quality standards film users expected. But as digital technology evolved, the market demand shifted, leaving Kodak behind and overtaken by other companies that prioritized digital from the start.

The Difference Between Sustaining and Disruptive Innovations

Christensen differentiates between sustaining and disruptive innovations. Sustaining innovations are incremental improvements to existing products, serving the mainstream market with what’s “cheaper, better, and faster.” Disruptive innovations, on the other hand, start in niche markets, initially underperforming compared to established products but gradually transforming the industry as they mature.

The iPhone is a prime example. Established companies like BlackBerry focused on refining smartphones for business users, sustaining their existing customer base with incremental improvements. Apple’s iPhone, however, entered with an entirely different approach: it was designed as a lifestyle device that prioritized usability and media. This disruptive innovation redefined expectations, pulling customers away from BlackBerry and setting the standard for the modern smartphone.

Why Startups Can “Do Different” More Easily

Startups are free from legacy products, entrenched customer expectations, and processes built for optimization. This freedom allows them to explore genuinely new ideas and address unmet needs, often by taking risks established companies avoid.

Uber, for instance, didn’t improve upon taxi services; it reimagined transportation with an app-based model. Similarly, Airbnb didn’t just make hotels more efficient—it created an entirely new concept for travelers seeking unique, affordable stays. These companies disrupted their industries by redefining what customers wanted, capitalizing on their agility and willingness to venture beyond existing frameworks.

Why Established Companies Resist Disruptive Innovations

Large organizations often hesitate to pursue disruptive innovations for several reasons:

1. Profit Margins and Existing Customers: Disruptive products usually serve smaller markets with lower profit margins, making them less attractive. Managers and stakeholders tend to focus on sustaining innovations that offer reliable returns within the current business model.
2. Cultural and Structural Rigidity: Established companies develop processes and cultures centered on their core offerings. Experimenting with radically new ideas can clash with these systems. Startups, on the other hand, operate with leaner structures that encourage flexibility.
3. Fear of Cannibalizing Existing Products: Disruptive innovation can threaten a company’s core revenue streams, as was the case with Canon and Nikon’s reluctance to embrace mirrorless cameras, which risked undermining their DSLR lines.
4. Short-Term Performance Pressure: Established organizations are often held to quarterly targets, emphasizing short-term profitability. Investing in a disruptive technology typically requires patience and a long-term view, which may not align with these immediate performance goals.
5. Internal Politics and Power Systems and different perceptions of risk.

Navigating the Innovator’s Dilemma: How Established Companies Can Embrace Disruption

To address the Innovator’s Dilemma, some established companies adopt strategies that allow them to explore disruptive opportunities without undermining their core business:

1. Separate Teams or Business Units: Creating independent units focused solely on disruptive projects can help free innovation from core business constraints. IN BT we created QUIP as a separate startup where it actually competed with the parent's core business.
2. Dual Strategy: Companies like Amazon and Alphabet (Google) balance sustaining improvements with investment in “moonshot” projects. Google’s ventures into autonomous vehicles (Waymo) and life sciences (Verily) show a willingness to explore growth areas beyond the ad-driven core.
3. Encourage a Growth Mindset: A culture that values experimentation and tolerates failure can foster innovation. Amazon’s "Day 1" philosophy, which sees every day as an opportunity to reinvent, encourages employees to approach work with a startup mentality.
4. Invest in Emerging Technologies Early: Companies like Microsoft have successfully adapted by investing in new technologies. Under Satya Nadella’s leadership, Microsoft shifted from traditional software to cloud computing and AI, transforming its business model and positioning itself as a tech leader.

Embracing Both Approaches: A Balanced Path Forward

For established companies to remain competitive, they must balance “cheaper, better, faster” with “doing different.” For example, Amazon continually optimizes its retail and logistics operations, but it also invests in transformative areas like cloud computing and artificial intelligence. This approach requires a long-term vision and a willingness to prioritize new ideas over immediate profitability.

Moving Beyond Incremental Gains to Embrace Transformative Change

While “cheaper, better, faster” helps established companies retain their customer base and meet immediate demands, it can limit their view of innovation and prevent them from exploring transformative opportunities. Startups naturally have an edge in disruptive innovation, but with the right strategies, established companies can also nurture disruptive ideas. By recognizing the constraints of the “cheaper, better, faster” approach and fostering an environment that values risk-taking and experimentation, established organizations can break out of the Innovator’s Dilemma and remain relevant in a world that’s always evolving.

Cheaper Better Faster

So what are the techniques companies evolve as their capability maturity model evolves to become more cost efficient, faster and improve quality.

• Efficiency and Waste Reduction
• Smart Outsourcing and Delegation
• Technology for Time and Cost Savings
• Prioritizing Quality and Longevity
• Inventory and Resource Management
• Continuous Learning and Skill Building
• Customer-Centric Innovation

Techniques

Lean and Six Sigma Practices

• Lean: Focuses on eliminating waste in production and processes, such as reducing overproduction, excess inventory, and minimizing delays.
• Six Sigma: Emphasizes reducing defects and improving quality through rigorous process control and statistical analysis, aiming to make products and services more reliable and of higher quality.

2. Automation and AI Integration

• Robotic Process Automation (RPA): Automates repetitive, manual tasks (like data entry) to reduce labour costs and speed up workflows.
• Artificial Intelligence (AI): Enables predictive maintenance, improves customer service through chatbots, and streamlines supply chain management, making operations faster and more cost-effective.
• Machine Learning for Forecasting: Helps optimize inventory, staffing, and pricing based on accurate demand forecasts.

3. Supply Chain Optimization

• Supplier Consolidation: Working with fewer, trusted suppliers to reduce variability and increase discounts, often leading to reduced purchasing costs.
• Just-In-Time (JIT) Inventory: Reduces storage and carrying costs by keeping inventory levels low and aligning inventory with demand.
• End-to-End Visibility: Technologies like IoT and blockchain allow companies to monitor and optimize supply chains in real time, reducing bottlenecks and improving response times.

4. Agile Methodologies

• Agile Development and Operations: Encourages iterative processes, quicker responses to market changes, and more efficient project management.
• Scrum and Kanban Boards: Use task-oriented approaches to manage work, prioritize, and streamline team collaboration, ensuring faster project turnaround times.

5. Cost-Cutting Through Outsourcing and Offshoring

• Outsourcing Non-Core Activities: Tasks such as customer support, HR functions, and even IT operations can be outsourced to specialists who provide these services at a lower cost.
• Global Talent and Offshoring: Allows companies to access lower-cost labor markets while maintaining quality, especially for roles that can be performed remotely.

6. Data-Driven Decision Making

• Business Intelligence (BI) Tools: Real-time data analytics platforms help companies make faster, more informed decisions, minimizing trial and error.
• Customer Insights and Feedback: Leveraging customer data to continuously refine and improve products, tailoring offerings to meet demand efficiently.

7. Energy and Resource Efficiency

• Green and Sustainable Practices: Reduces energy costs through practices like switching to energy-efficient lighting, renewable energy, and resource recycling.
• Waste Reduction Programs: Minimizing waste in production, packaging, and shipping not only reduces costs but also aligns with sustainability goals, improving brand image.

8. Employee Training and Upskilling

• Continuous Training Programs: Building a well-trained, versatile workforce can lead to faster production times, improved service quality, and reduced error rates.
• Cross-Training Staff: Allows employees to fill multiple roles, increasing flexibility and reducing downtime or delays due to staffing gaps.

9. Product and Service Standardization

• Modular Product Design: Standardized components and modular design reduce production costs and simplify customization.
• Limiting Product Variants: Reducing the number of variants for each product simplifies production, reduces inventory requirements, and minimizes quality control efforts.

10. Digital Transformation and Cloud Services

• Cloud Computing: Lowers IT infrastructure costs and improves scalability, making it easier and cheaper to scale operations based on demand.
• Digital Tools for Collaboration: Online platforms for project management, video conferencing, and team collaboration (e.g., Slack, Zoom, Asana) facilitate faster communication and decision-making, especially for remote teams.

The bigger challenge is that companies rush to optimise and reduce costs to early. As the says goes do the right thing and then do it the right way.