February 9, 2012

With a commodity, innovate big or go home!

For every “Apple” type company in America, there are  dozens (hundreds?) of companies that operate in a low-interest, commodity realm.  Many of these organizations will work hard to develop new products, but lack the ability or courage to do so in a bold way.  As a result, they are often frustrated at the lack of tangible results from their innovation efforts.  In their minds, the improvements they have brought to market are exciting and clearly meet the unmet needs of their consumers.  So why the low level of market success?

For many of these categories, the three hours the company spends brainstorming new ideas is more time than their consumers spend thinking about the same category over their entire lifetime.  As a result, the bold new improvement the company provides goes completely unnoticed by the marketplace.  Think about this for a moment.  On a given Saturday you find yourself in the midst of an unexpected home plumbing project (that does happen to people other than me, doesn’t it?).  You realize you need a Monkey Wrench.  You drive to the store, go to the plumbing department and are looking to buy right now.  You see a tag hanging from a given wrench that claims “50% better than our previous design”.  You’ve never owned a Monkey Wrench (I don’t think the things actually wear out, do they?), so you have no preconceived notions of the problems that existed before.  You can’t visually distinguish between this new “better model” and the competitor next to it on the shelf…  You can’t compare the new with the old, so that doesn’t help.   My guess is you probably make your decision based on price.  The Monkey Wrench company looks at their sales over the next two quarters and sees that they have experienced no significant increase in volume, and they decide that their innovation efforts were a wasted investment.

So the question is… Is it wrong to invest in ongoing product improvement?  No.  In most commodity situations that level of investment is required to maintain the shelf space that you currently have at retail.  But recognize it for what it is; maintenance.  If you want to drive growth, you have to innovate in a big enough way to first bring attention to your (oft-neglected) category.  You have to provide a benefit that spans well beyond what the traditional product has offered.  As an example… What if the Monkey Wrench company focused on expanding the usage of this now highly specialized tool?  What if with some reconfiguration and new design, this same product could benefit a consumer across various projects within their home?  If this became the next “must-have” tool, people would talk about it, it would appear in magazines and on cable shows and pretty soon people would come to the retail aisle in search of it.  What would the return on that innovation investment be?

The bottom line is this.  Companies that find themselves in a commodity status cannot afford the luxury of incremental innovation.  If they’re not making a big enough difference to attract attention to their category first and to their product second, their efforts will be wasted.  A design change that seems huge to the product managers in charge, may go completely unnoticed by the paying consumer.  It’s got to impact their lives in a significant way to get their attention.  Innovate big or go home!

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January 26, 2012

Give – Don’t Sell

I’ve been reading several business books lately. Two of my favorites are “The Referral Engine”, by John Jantsch, and “Little Red Book of Selling” by Jeffrey Gitomer. The fascinating thing about both of these books is that they are as applicable to a sole proprietor as they are to a Fortune 100 company. While the titles would lead you to believe they are focused just on sales and growth, they both are pushing toward a new trend of creating value for your customers, even before a sale takes place. Gitomer’s mantra is “People don’t like to be sold to, but they love to buy”. Who do we choose to buy from? People (companies) that we like and trust.

It’s clear that our culture has shifted in the last decade. Facebook and other social media have allowed us to form and nurture relationships that were never before possible. People that used to seem one-dimensional to us (I know him as my dentist, she’s the waitress at our favorite restaurant, he works for our company as a shipping clerk) have become “whole people” once we befriend them and come to know them as family members and community volunteers. While we might not agree with all of their views, we gain respect for their passion.

Its only natural to assume that people will come to expect these same types of relationships with the companies they choose to buy from. What would your company look like if you shifted your emphasis away from direct selling to giving away free value? It’s a horrifying thought on the surface, but how would that change your business model? We’ve all experienced pushing a product or service upon a prospect and watching the negotiation begin. How different would that look if that same prospect came to us to see if we could help them?

My goal for this year is to give away a lot more free stuff; advice, counsel, service, etc. In return, I hope to gain credibility as a trusted expert on consumer empathy and innovation strategy. As a result, my hope is that the phone will ring more often, and I will have to make less uncomfortable sales calls. What does that look like for you? What can you “give away” in order to gain trust and credibility? How can you become the obvious choice when it is time for your customer to make a purchase? The day of shopping for the lowest price is waning. People want to buy from companies they identify with, like and trust. And that takes a whole new mindset.

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January 6, 2012

Empathetic Consumer Understanding

I think that effective new product innovation is a result of empathizing with the customer.  Traditional market research merely allows you to sympathize with them, and that often falls short.  Let me explain.   There is a key difference in these two words.  When you sympathize with a person, you observe them as a third party and feel sorry that they are experiencing some degree of pain.  However, when you empathize, you put yourself in their shoes to the point that you can actually feel their pain yourself.

Here’s an example.  When you get survey feedback or review a focus group report you see prioritized data on what consumers think and feel.  Sympathetic design would have you start at the top of the list and develop solutions for the top pains that have been identified.  If something is “hard to hold”, then make it easier to hold.  If it’s “too heavy”, then make it lighter weight.  It seems very straight forward.  Let’s contrast this with empathetic design.  Instead of reading reports, you spend time face to face with your customer watching them interact with your product.  You may still hear them say it’s “hard to hold”, but upon closer observation you come to realize that they’re not holding it as it was designed to be held.  While the proper usage seems obvious to you (as the maker of the product), it is clearly not intuitive to the end user.  The manner in which they hold it also makes the product feel much heavier than it ever should have.  Instead of redesigning the product to make it “easier” and “lighter”, you focus on the overall design of the product to make it more obvious in terms of it’s intended usage.  Suddenly the weight becomes a non-issue and the improved design can greatly increase consumer satisfaction.

Here’s another real-life example.  We once worked with a client to develop a new line of outdoor, patio heaters.  Over the course of the project, we learned (empathetically) that consumers often purchased these products for entertaining purposes, more than for personal comfort.  In fact, during the validation phase, we observed that people considered our prototypes as serving the role of “outdoor decor” or “furniture” as much as the role of heater.  There was a high degree of excitement toward the product and early versions won several design awards.  The problem came when the company took the product to retail.  Instead of using an empathetic argument when negotiating pricing, they fell back into their traditional sympathetic mindset (features and cost).  The retail buyer said that the cost for these products was too high for a patio heater (and all existing market data would agree with this).  In order to secure placement, the company cost reduced the product to hit the retail demands.  The resulting product had a much “cheaper” feel to it which immediately took it out of the decor and furniture mode from the consumers’ perspective.  A year later and this award-winning product was off the market.  What had been envisioned was never actually realized.

Could an empathetic approach have saved this product?  Even if you have an empathetic view of the consumer, how could you help others in the distribution chain share this vision?

I’d love to hear your thoughts on this one.

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November 8, 2011

Innovation Fallacies

It’s commonly believed that the most innovative companies are those that have the best original ideas.  I don’t believe that.  If there was some way to formally test this, I would.  I imagine it would look something like this.  Choose ten well-established companies and give each of them an idea that would change their industry.  Put no strings on this idea, no obligations no risk of lawsuit (okay we’re suspending believability at this point, but stay with me).  Literally give each of them the holy grail of new ideas.  What do you think would happen?

My guess is this:

  • Four of the companies would table the idea, labeling it as a long-term objective that they could pursue once their near term (hopelessly incremental) ideas have been implemented.  The idea would never surface again
  • Three of the companies would indefinitely bat the idea around because they can’t decide which department should champion the idea
  • Two would reject the idea outright because they would not have the current distribution network to get the product to market
  • The final company would pursue the idea, but abandon it once they hit the first internal obstacle during the development process
Hmmm, have I really become so jaded as to think that no company can bring an innovative new company to market?  No.  But I do believe that less than 10% of corporations would really give the idea it’s due.   It’s not the competition that’s making life tough, it’s the inability to move forward in a bold way, even when a game-changing opportunity presents itself.  Take a close, honest look at your organization.  Could you bring this idea to market?  What barriers exist that would cause you to overlook the opportunity?  Who is the idea killer on your staff?
Before you begin your next innovation project, I’d suggest asking yourself these questions and addressing them in a proactive manner.  It will increase the return on your innovation investment exponentially!

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November 1, 2011

It’s tough selling benefits not features

We all know that it is important to sell our products or services based on the benefits they provide, not on the features they contain.  But why is that so hard to do?  We just had an internal meeting this morning on some of the services our company offers.  One of the key phases of our process is Ideation, a time that we spend with our clients digesting what’s been learned from their consumer and generating ideas for new products and services that can meet their (newly discovered) unmet needs.  We’re always trying to make this process more valuable to the client, so after each project we brainstorm ways (internally) to improve for the next time.

One area that we became aware of in this discussion is that we have been very focused on showing our clients all the work that we’ve done.  It’s not uncommon for us to agree (contractually) to study fifteen people, but actually interview more.   Since we’ve gone above and beyond what was expected, we’ve always been determined to make that known… After all, giving the client more than what they expected is a great thing, right?  As we discussed this, we came to the realization that highlighting the amount of work that we did can actually dilute the message we’re trying to promote.  It’s not that doing extra work is wrong, but the focus has to remain on highlighting the benefit of our learning to our client.  Looking at websites of other professional service firms shows me that we’re not alone.  Everyone wants to share their process and convince you how hard they will work on your behalf.

Isn’t that really the struggle for all companies?  Putting the consumer benefits on a product package does not give ample credit to the marketing and engineering folks that spent countless hours developing specific features.  Our pride gets in the way.  ”If we don’t tell them what we’ve done, how will they ever know?”  Of course the consumer sees this at retail, gets quickly overwhelmed and wonders, “Why do I need this”?  To be really successful, we need to put our pride aside, and focus our products on the benefits that are valued and provided.  If we do this well, the features (and effort) we provide will not go unnoticed.

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September 28, 2011

A toast to innovative rebels

We held our first Indiana Innovation Awards ceremony the other night, where we recognized ten different winners from around the state.  The diversity of the winners was impressive.  We recognized big companies such as Whirlpool Corporation and Delta Faucet, family companies like Jackson Systems,  start up companies like Courseload and My Farms and even an Indianapolis based non-profit; People for Urban Progress.   These organizations all serve different customers across diverse markets.  Their budgets and organizations vary dramatically.  Yet each winning team seemed to have one key element in common.  They’re all rebels.

If you stop and think about it, it makes perfect sense.  A person that is wired to be content with the status quo will probably never be an innovator.  It takes a person willing to swim upstream, to take some political risks, to venture into unexplored territory.  As each team’s story was unveiled it became clear that they were led by rebels.  Many of the teams told us that their project was nearly killed at some point, due to management pressure, lack of funding, or seemingly unsurpassable roadblocks.  Yet their perseverance saw them through to eventual success.

Isn’t it odd that in our culture we try to “correct” this trait out of people?  Starting in elementary school the child that views life differently is “encouraged” to conform.  I will never forget my early days of my corporate career.  I hired in out of college ready to set the world on fire.  For the first six months, I was basically told to sit down and shut up and learn to do my job the way my predecessor (and his before him) had always done it.  One of my earliest reviews actually stated that I did not work well with others and that I struggled to comply with established company procedures.  In my conversations with others, it seems this is not an unusual orientation to a new organization.  Sometimes I’m amazed that enough people stick it out to provide us with any innovation at all.

So with this blog, I give a virtual toast.  ”Here’s to the oddballs, the mis-fits, and the rebels that can’t be satisfied with the way things are.  May you always see life as an opportunity and your job responsibility as that of a change-agent.  It is people like you that make this country great and that ultimately drive our economy.  Cheers!”

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September 12, 2011

Size doesn’t always matter

The winners have been announced for the upcoming Indiana Innovation Awards.   In preparation for the upcoming ceremony on Sept. 26, we have been traveling to the offices of the winning companies to capture video that will be shown during the evening.  The winners range from non-profits to huge corporations to pure start up enterprises.  One fact fascinates me on this.  Regardless of the size of the company, the winning innovation came out of a small group of people that had a dedicated project leader.  Delta Faucet won with their highly successful touch faucet and Whirlpool Corporation won with a highly innovative new Side by Side Refrigerator.  Both of these mega-companies have literally hundreds of employees at their disposal.   However, when we went to do the interviews, it was a handful of people that came forward to be interviewed.  While the approval process and downstream portion of the projects involved a multitude of support functions, the core of each product came from a small entrepreneurial team.  In this regard, the culture and style of these groups was amazingly like their counterparts in the smaller companies (that may only have 4-5 employees).  Both companies alluded to the fact that for portions of their projects they needed to “fly under the radar” to keep the project moving smoothly and efficiently.  In some instances they had to “re-interpret” corporate policies and processes to be effective.  Bottom line, it took an individual willing to take some risks and stick their neck out for something they believe in.  They spoke of being innovative in spite of the large company wrapped around them.

The small firms we talked with spoke of “doing what it took” to be successful.  Be it all night white board sessions, or beer and pizza infused brainstorming efforts, they came up with ideas that were worthy of winning as well.  They spoke longingly of big companies and the resources available to them.  ”If only we had…” was not an uncommon mantra.  In reality, it was once again a leader with a vision that led to their success.

Just an amusing observation.  The big guys carve out groups to act like start ups.  The start ups, long to be big guys.  It seems to me that aptitude, determination and leadership were far more important to successful innovation than the size of the organization from which it came.

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