Category Archives: Business lessons
I was supposed to fly to Baltimore this morning to do in-home research throughout the week. With the impending “perfect storm of the century” bearing down on the East Coast, that has obviously been cancelled. I’ve been watching this storm approach since late last week trying to figure out if/how it would affect my business plans. By mid-day yesterday (Sunday) I cancelled the trip. The funny thing is, I got an email from the recruiting firm in Baltimore (that we use to help us line up consumers for the research) late afternoon stating that “we are fully planning to conduct business as usual both within our office and outside of our office”. It went on to say that if we did encounter any issues (like a delayed flight in) to please advise them, and they would help us navigate through any complications.
Unexpected delays? Really??? It turns out my flights had already been cancelled (24 hours in advance – I’ve never had that happen before). The Eastern Seaboard has shut down almost all public transportation. Baltimore alone had 7 Severe Weather Warnings as of this morning, predicting massive power outages, severe flooding, devastating winds, etc. But it’s good to know that my contact there was welcoming us in and letting us know they’d help us if we ran into any inconveniences.
Optimism is one thing. But burying your head in the sand is quite another. I’ve never personally met the guy that sent me the email, I’m sure he’s a great person. But how can anyone be so oblivious? Yet having said that… I see this in business all the time. People are warned about incoming storms, they see it on the horizon, but they remain convinced that it won’t impact them Be it economic, or personnel related most corporate crises were obvious in coming, when looking backward.
Running a business is really not that much different than planning for a storm. We need to be constantly watching the horizon, listening to the news and being aware of our surroundings. When we hear of an impending storm, we need not panic, but we should put contingency plans into place. We need to set aside ample reserves in the good times to get us through rough stretches. And we need to invest in the future to make us more resilient for future storms.
I pray that our contacts in Baltimore all weather this storm safely. But my guess is it won’t be business as usual, and they’ll probably have to deal with some unexpected delays. As for me and my business, I’m going to take this as a good reminder and lesson.
Today I have a true Shower Musing… My shower at home has two shower heads on opposing walls. While this will upset water conservationists, I admit to loving to use both at the same time. It’s a wonderful feeling to have so much water coming from two directions and totally envelope me. It’s impossible to tell where one starts and the other stops, and I love that.
This morning after my run I jumped in the shower (typically a cool shower to help me cool down). But one shower was turned on hot and the other turned on cold. My first reaction was to adjust them to be the same temperature, but then I decided not to. I adjusted the angle of the heads so that the hot shower was running on my legs (relaxing my tired muscles) and the cold shower was running on my head and shoulders (helping me to stop sweating). It was a very different feeling from my typical experience. The showers didn’t blend together at all. I was continually aware of each and the unique value that it provided. It was if each stream of water was fighting with the other to get my attention.
The analogy that came to my mind was the teams that we surround ourselves with at work. Our natural inclination is to hire a bunch of like-minded (warm water) people that fit our existing culture. Just like the shower, it is often hard to see where one individual’s contribution starts and another person’s ends. That is wonderful if quick unity is the primary goal. But effective innovation is born from conflict and difference. It is at the intersection of where the hot and cold water meet.
How diverse is your team? Do you have different temperatures coming together in one setting? Are you aware of the strengths and opinions that each person brings or have you settled for a comfortable environment where every situation and conversation feels the same? If you want to be an innovative company, surround yourself with diversity, and value the unique opinions and perspectives that surface. Avoid the temptation to achieve homogenization and the “simplicity” that brings. Just like the shower, it will feel strange at first, but you can come to appreciate the value that each player brings.
Here we go again. I spoke with a friend yesterday whose job was just eliminated. ”We’re taking the company in a new direction” he was told. My friend has spent the past several years focused on developing innovative new offerings, building brands and separating his company’s products from the competition. Like most non high-tech companies, his was constantly under threat of commoditization and he spent his time in battle against that. But… as what happens with so many mid-sized companies these days his company was sold from one equity firm to another. The latest firm ran the numbers and decided that it would be more profitable to reduce their product offerings and focus on lowering their pricing. On paper, this looks really good. How often does it pan out in reality?
I’ve seen this same scenario play out in multiple companies. ”If we just take our manufacturing off-shore, then we’ll have a tremendous price advantage…” ”Let’s outsource our design to the Chinese manufacturer, that will further lower our cost…” Fast forward eighteen months, and the big-box retailers that they were working so hard to please suddenly realize that the company no longer adds any value to the equation. So, they decide to source directly from the overseas manufacturer to avoid the US mark-up and the original company finds itself without manufacturing, without engineering, without distribution and ultimately without a need to exist at all.
It’s not just a recent thing. Back in my Whirlpool days, I helped create a very innovative product road map for one of their business units. Internal management was quite excited about the possibility of how this product could change the market and bring unforeseen benefits to their customers. About that time a large consulting group out of Boston was brought in. They looked at the same business unit and suggested that Whirlpool invest no money in it, and should follow a cost-reduction strategy to become profitable. You guessed it… within two years, the product became a complete commodity and sold off at a fraction of its former worth.
You can’t cost reduce your business to profitability. You just can’t. Whatever numbers you calculate that show you will have an advantage will quickly be copied by your competition forcing you into further, deeper cuts. It’s a death spiral from which there is no recovery. Innovation is not a buzz word, it is a critical business strategy. Companies need to focus on adding value to their offerings, not cost reducing them. Separate from the pack, don’t try to dive beneath it. At what point will the number junkies look up from their spreadsheets and see what is really going on in the world?
True innovation is hard work and takes time. It needs to be a part of a strategic plan, developed and launched in a deliberate manner. There’s nothing new in that, and few would disagree. But let’s look at some corporate reality. There are two key factors that can essentially kill effective innovation; corporate culture and employee reality.
First let’s look at the corporate culture. Private and publicly held companies are both under extreme pressure to deliver financial returns for the short run. It’s hard to convince shareholders (or banks, or holding companies) to wait two years for something great to occur. Expectations are set on a quarterly basis. With such intense pressure to deliver in the short term, it’s much easier pursue incremental change than to embark on a longer term innovation strategy. Companies will begin innovation efforts with the big picture in mind, but often succumb to the pressure and pursue only those ideas that can be knocked out quickly.
From an individual employee standpoint, the pressure is very similar. Who in corporate America expects to be in their current job two years from now? Even if an individual doesn’t change jobs, the reality is the organization will most likely change around them shifting all priorities and efforts accordingly. What motivates a person to embark on an effort that lasts a long time? The person that delivers a project seems to get the credit, not the one that does the hard work on the front end. Over the course of a typical, strategic innovation project it’s not uncommon to see multiple people at the helm, each adding their own opinion and wanting to put their mark on the effort in case it happens to be successful.
It’s not lack of interest, its lack of vision beyond the immediate future. Companies spend considerable time and effort creating one, three and five year plans. But the initiatives that get pursued are those that can be delivered quickly to show an immediate impact on the bottom line. Can anything be done to shift this mindset? Or are we doomed to a culture of incrementalism?
I’m continually amazed when I do interviews with consumers just how mis-informed they are. Yesterday, we conducted four, in-home interviews with very affluent, well educated families. Each of the four began telling us with absolute certainty about products that have been launched by brands (but not the right brands), and features that they’ve seen that are highly desirable (features that don’t exist on products in the market today). They point to a product in their home and talk about the miserable experience they’ve had with it, vowing to never buy that brand again. Ask them what brand it is, and they tell you the wrong one.
Contrast this with product and brand managers at big corporations. They spend their time “fine-tuning’ their messages and focusing on minutia. Because they live and breathe their products and brands, they mistakenly assume that their target customers are doing the same. They spend countless resources on research that often serves only to validate their own opinions. Once surrounded with these “statistics” they are ready to further tweak and refine their already complex messages and offerings. This is especially true for products with long life cycles. As an example, if a typical consumer replaces their refrigerator every 10 years, they are realistically not paying attention to changes in these products between buying cycles. They’re certainly not stressed that this years model is too similar to last years. They only care about what is different when they buy their new versus the last time they were in the market. Unless an innovation really changes the way people live (and gets the necessary buzz to let the world know it), it will typically go unnoticed until people are in the position of buying.
Maybe it’s time to “dumb it down” a bit. I’m not saying that your consumer base is not comprised of intelligent people. But I am saying that no one lives and breathes your products and your brands like the corporate insiders do. What can you do to innovate your brand or your image? A huge step would be to ensure consumers know that they buy into your company when they buy their next product. Obviously some companies do this very well. No one drives a Harley without knowing exactly what it is, and no one buys an i-phone without getting caught up in the Apple mystique. These companies didn’t get there overnight, and neither will you. But maybe its time to start listening to your customers and hearing what they really say as opposed to generating reports in support of what you assume.
I’m reading a great book called “Snap Selling” by Jill Konrath. It is an intriguing sales strategy book that provides tactics on “getting through” to busy executives. One of the points she makes (that I certainly find true in selling my business) is that harried professionals prefer to stay in their comfort zones whenever possible. They may appreciate what you have to sell, but if it complicates their lives in the near term, the odds are you will be put off until “later”.
Wow. How true is this in the world of innovation? While an executive may be able to imagine the benefits that could be had by pursuing an innovation strategy, doing so will cause them a significant amount of stress and turmoil. Even when led by a competent, external professional there are individuals to coordinate, other duties to re-prioritize and other personal objectives that still have to be accomplished. Innovation becomes just another item on an already crowded plate. Human nature dictates that we simplify today even at the expense of tomorrow.
What causes some companies to consistently innovate new products and services?
- They overcome the inertia of inactivity and force themselves to move forward (even in chaotic, challenging times)
- They are hyper-aware of the true cost of doing nothing (in terms of lost market share and eroding margins)
- They establish a corporate culture where comfort zones are discouraged, and risk-taking is rewarded
- They look past this quarters financial returns and focus on a 1-3 year strategy
- They prioritize innovation in their schedules and eliminate less strategic initiatives instead
These things don’t just happen. They are the result of an innovation-driven vision. But let’s be honest. That’s not for most companies, or for most individuals. It really is just easier not to innovate at all.
I have a good friend (Eduardo) from Brazil that shares my love of innovation. We were talking the other day about our collective experiences with different companies. One common theme that we both came across was the high level of disappointment many firms have in regards to their innovation output. These companies express a need for innovation, and have multiple projects running at any given time, but looking back it never seems that their target revenues were achieved. It doesn’t take an organizational design specialist to understand their key issue. Anyone looking objectively at the organization can spot the problem.
Thanks to Eduardo for illustrating this point so beautifully in the following cartoon!
Does this look familiar? How are you really allocating your resources? Are your “innovation people” protected from day to day firefighting? Do you have a group is charged with seeing beyond the financial returns of the given quarter? Innovation never just happens, and it is not painless. It seems that most companies get what they organize for.
When most companies think of innovation, they think of overhauling their current product lines. While that may not be a bad goal, taking a myopic
approach is typically self-limiting. Taking a step back and looking at your product in the context in which it’s used (“peripheral vision”) can lead to more, high-potential ideas. Let me give you an example.
I recently wanted to find a gym that my company could join. Since this was not only for myself, but also for my employees, I spent some time finding
out what their interests and needs were for this opportunity. Good exercise equipment (treadmills, ellipticals, weight machines, etc.) was a given. A few other offerings made our wish list, and these items were compiled as well. With that information in hand, we began looking and comparing. The
closest gym to our office (proximity was high on the list of “needs”) had all of the exercise equipment that we needed, but had no locker room with showers. Since our office does not have showers, this is a must to be practical. We ended up joining a gym further away that could provide us with both the desired equipment and the locker rooms with showers. Interestingly enough, the first gym provided everything that was needed for fitness and exercise. In fact, much of their equipment was state of the art in terms of design and innovation. However they did not get our business. The
second gym used a bit of peripheral vision when designing their facility and realized that showers and a changing room, while not directly tied to exercise or fitness, were important features for their customers.
How could they take this peripheral vision concept a step further? Providing showers allows customers to leave the facility clean, but what are they
lugging out with them? A gym bag full of nasty, sweaty clothes. These clothes can’t be worn again in their current state, so the exerciser must now keep them contained in their car and remember to wash them. The act of exercising has caused the need for additional time and effort. How much would a gym separate themselves from the pack by expanding their offering? Why not provide members with a locker and laundry service? Imagine putting your sweaty clothes in a bin when you were done and finding them washed, dried and in your locker upon your next visit? This could be an optional, up-sell service. How many customers would pay a monthly premium to not have to deal with the extra laundry or to have the ability to go to the gym
on a moment’s notice knowing they’ll have clean workout clothes waiting for them? While a laundry service has even less to do with fitness than a shower does, this compelling offering would satisfy even more unmet needs of their customer.
What approach are you taking with your business? Are you just keeping your core offerings competitive? Or are you looking at the bigger picture of your consumers’ unmet needs? The next time you embark on an innovation project, try the peripheral vision approach. It will open up many opportunities that you would not otherwise consider.
In the last couple of years I have taken up vegetable gardening as a hobby. I’ve now progressed to the point that I start my own seeds in the house, and raise them until I can transplant them in the garden once the risk of frost has passed. Over the weekend as I was tending to these young tender plants, the realization of how this illustrates the fuzzy front end of innovation came to me.
Innovation requires high potential ideas (the seeds) and an organization that can nurture and support them as they develop (the soil). Obviously, both are required; seeds in a packet are just untapped potential, the greatest soil without seeds is just inviting weeds. While I could elaborate on this point further, let’s assume both of these items are in place and you have ideas that have sprouted. What are the risks you face now?
In gardening, there are three key risks that young plants must be protected from: Weather, Weeds and Pests. I think this analogy supports each of these same risks. Think of it as the following…
Weather – It’s not the day to day sun and/or rain that you worry about, it’s the sudden changes that cause problems. Unexpected frost, flooding, strong winds are all examples in nature of conditions that can wipe out young plants. In the corporate world its also the unexpected that causes significant risk. Sudden changes in priorities, funding, staffing will wipe out high potential ideas as quickly as a frost will kill a plant. It is critical to protect your ideas from such conditions, where possible by isolating them from the unexpected situation.
Weeds – Any gardener knows that weeds left unchecked will take over a garden and rob the desirable plants of the nutrients that are required for them to grow. Likewise, in a corporate setting weeds are the distractions that arise from the culture and slowly choke out a powerful idea by diverting the necessary resources to other areas. This doesn’t happen overnight, but rather gradually over time. A wise gardener will remove the weeds as they surface rather than letting them form a stronghold. A wise innovation manager will do the same thing.
Pests – These come in many forms, but always come from outside the garden. Their goal is to consume the plant for their own purposes, then leave when it is no longer of interest. In the corporate world, these could be people that are outside the project team, that want to put their “stamp” on an idea so they can selfishly take credit later. They are far less concerned about the health of the idea than being able to point to something they added. This could be an individual or an entire department. In either case, it is critical to be on the lookout for Pests, and repel them as efficiently as possible.
There are numerous additional analogies I could draw from this, from keeping the soil in prime condition, to harvesting at the right time. But for now, I’ll leave it as it is. In the meantime, my tomato plants have taken on a whole new meaning!