Perspective # 31 – Competence shifting innovations :

Competence shifting innovations : Let us checkout ‘Competence shifting’ innovations … Competence shifting innovations change (shift) the Industry rules so that the Innovator can dominate.There are very few agile chameleon firms who have mastered this fine art – they continuously shift their paradigms and leave the competition gasping – as soon as competition catches with them, they change the gear again!

Many Chinese firms practice this along with govt. support (as it is not easy to change gears so often on their own). Auto-parts maker Wanxiang Group who bought 10 overseas companies in the last few years,Umax Group, the global No.2 optical-scanner producer who is pretty close to No. 1 Hewlett-Packard, Huawei who slowly killing global leaders AT&T Lucent and Nortel , Gree Electric Appliances, the world's biggest maker of air conditioners etc. are examples. (By the way 'product innovation' is not the only innovation..we discussed this in an earlier post.The fact is, you can innovate anywhere – in business models, in customer service, in processes, in strategy, in execution and the list goes on. Chinese factories innovate bigtime - For example Huawei files 10 patents everyday! )

These are vicious focused companies who demonstrated Competence shifting innovations and took the competiton (who are believers of Tylorism, and Fordism) for a spin jolly ride!Innovators who believe in competence shifting ,continuously ‘surprise’ competiton – when we all thought ‘brand’ is the differentiator they just buy them – ThinkPad is an example. Firms with funny brands like Top Lion China (TCL) acquired France’s Thomson for the RCA brand.

Flextronics the world leader in EMS industry, who made HP and Cisco Routers is cutting jobs again.. Flextronics was the poster boy and was the popular business school case study for so called ‘global supply chains’.Flextronics offers the broadest worldwide EMS capabilities, from design resources to end-to-end vertically integrated global supply chain services. They had loads of cash in hand and also acquired Hughes Software System. The big was getting bigger but..

Enter the dragon ! A small Taiwanese firm called Hon Hai was growing fast, growing by few billions every quarter!! .. They were masters in ‘competence shifting innovations’ and beat Flextronics. Flextronics divested all acquisitions including HSS and tried focusing on the core but was too late – whenever Flextronics changed gear, Hon Hai changed faster!

Last year - Sony, Nintendo and Microsoft - have all launched new gaming devices, and all were bleeding fighting the $10 billion pie.. but Hon Hai was smiling :) :) They design and manufactures the gaming consoles for the big 3. They also make iPod and iPhone. Their turnover now cross 20 Billion dollars ..it is a matter of time before they buy Flextronics -- maybe only for the 'brand' !