Growing an already sizeable company isn’t an easy feat, and it’s even more difficult to do on a sustainable basis. Two avenues exist: You can grow from the outside through mergers and acquisitions, or you can grow from the inside through organically engineered innovation. The problem is that both approaches tend to fall short of expectations, even when used in combination.
Leaving the problem of M&As to others, we wrote this book to take the mystery out of organic growth. Why is it that only a special few companies seem to have a grip on innovation? We watch a company like Apple in reverence as it releases new product after new product that meets or beats expectations in the marketplace (or at least did for an amazing period of time if this is not true after publication of this book).
Executives in every industry wish they could be more like Apple. Or they come up with reasons why their companies just aren’t and never could be: “We’re not a technology company and don’t have the ability to make so many product revisions.” “Our core technology simply isn’t as robust as Apple’s, so our opportunities are limited.”
You name it. Sometimes it’s easier to make excuses than to admit your company just doesn’t get it.
Under Armour is an apparel company, but it’s not an apparel company that considers itself like others. That’s why it’s been pursuing innovation like a tech company. No, that’s why it’s become relentless about innovation, putting most tech companies to shame and outdoing them at their own game.
CNBC’s Jim Cramer said this in a March 2012 television segment: “Tech stocks don’t have a monopoly on using innovation to win new business. A lot of what we now consider tech isn’t innovative at all. When was the last time Hewlett-Packard invented something new? Can you even remember? I know I can’t… The real essence of tech is innovation... . I think we need to cast our net wider to hunt for game-changing inventions in places where you’d least expect them.”
Under Armour invented moisture wicking compression fit clothes, a new category of apparel that regulates body temperature. But the company didn’t stop there. In 2011, it rolled out charged cotton, which dries five times faster than ordinary cotton and is incredibly soft. Under Armour has a cotton, hooded sweatshirt (called Storm) that is waterproof. It’s built an ultra-light running shoe that, as of this writing, Morgan Stanley says will take share away from Nike.
These and more planned product releases are the reasons for Under Armour’s greatly enviable growth rate (at the time of this writing, Q4 2011 revenue growth of 34 percent and EPS growth of 40 percent). The company’s innovation and resulting pricing power is also responsible for its long-term growth target of between 20 and 25 percent.
Impressive indeed, but what lies at the core of this success? Under Armour’s mission is to make all athletes better through passion, design, and the relentless pursuit of innovation. But how can any company really achieve innovation, much less on any consistent basis?
There is a host of managerial principles and practices that must be adopted by all companies aspiring to organic growth. These include passionate and galvanized leaders who get what it takes to innovate—who not only inspire but also provide the rationale, create the roadmap, set up the systems, establish the process, deploy the know-how, staff the teams, run the committees, and otherwise actively lead and manage the innovation lifecycle.
This book is obviously a very practical guide focused on the innovation process and the many techniques that enable it. It doesn’t cover all the leadership or managerial aspects of successful innovation, namely, what executives need to know (and do) to create the right climate and set the organization up for continual reinvention of its products, processes, and business models (We address these leadership topics in our seminars and consulting).