The innovations at these two companies were serendipitous. What does it take to capitalize on anomalies systematically?
For starters, you need to have metrics and information systems that are sufficiently refined to identify anomalies in the first place. Knowing the average margins and market share isn’t enough; look at the entire range of outcomes—across customers, geographies, products, and the like. This allows you to surface out-of-the-ordinary results for closer inspection.
The next step is to separate wheat from chaff: those anomalies that signal a potential business opportunity from those that are merely one-time events. The key is to examine the pattern of unusual performance over time. The customer who consistently buys high volumes or the market that outperforms the average year after year are, by definition, not random. Is there an underlying cause that can be identified and then replicated elsewhere?
Finally, you need to understand the precise mechanisms that animate the anomalies you identify. Why is the unusual pattern of performance happening? What specific features of the product, or the local environment, or the customer experience are bringing it about? Don’t accept the usual firstorder explanations. It’s not enough to know that a particular customer has been loyal for years; find out precisely why.
It’s up to senior management to create the forum for asking why and to persist until the question is answered with genuine insight. Business unit personnel may be closest to the details of the anomaly in question, but they are usually too caught up in the day-to-day demands of the business to recognize the strategic significance of unusual patterns and practices. It often takes someone one step removed—regularly scanning the business for unexpected results—to notice and act on anomalies. It also takes an appreciation of differences, a lively sense of curiosity, a willingness to “play” with the taken-for-granted rules of the business.
Timing is important. The worst time to look for anomalies is during a budget review, when everyone is worried about control numbers. A much better time is in a strategic review, when everyone should be prepared to think creatively about the future. Companies that consistently exploit anomalies plan for their future by reflecting on their past. A retrospective look at their strategy and business results allows them to take advantage of the serendipitous in a highly systematic way. As one executive put it, “we innovate from our own accidents.”
Taking advantage of anomalies is an opportunity to inject into your company some of the experimentation and vitality characteristic of start-ups. Every day, entrepreneurs are working to reinvent your business and carve out a piece of it for themselves. By capitalizing on anomalies, you can harness the same kind of creative energy and put growth back on your company’s agenda.