I am a global customer centricity champion. My passion is helping organizations to grow faster by putting customers at the heart of their business. One of the most frequent requests I get is to help in improving ideation and innovation.
This is by far the most common area that my clients struggle with. Is it a challenge for you too? If so then read on for some actionable ideas to help.
Many companies create great new products and services – from their perspective – but they fail to take off. They then ask if I can help them to identify to whom they should be selling!
Of course, I do help them, but I also suggest that next time it would be better if they called me before they started innovating! In such a situation, it is almost always due to an outdated innovation process in which the customer has not been involved.
I know it can be difficult to innovate in this new age of technology, but it remains vital for growth. This is why I was invited to China at the end of last year, to run two workshops on improving ideation and innovation. I took the opportunity while there to also speak about innovation at three different universities in Beijing and Shanghai. The Chinese are serious about excelling at innovation, just like they have done in the past for cheap production. The future competition from the East cannot be ignored by the US and Europe any longer!
China is an Innovation Hot-House
China joined the top 25 most innovative countries in the WIPO global innovation index for the first time last year. This is because they no longer rely on cost-effective manufacturing alone. They also applied for more patents than the next two countries, the United States and Japan, combined!
This clearly shows that China is improving ideation as well as their innovation. But they know they must do even more. To become a truly competitive nation, they have to better understand their customers, especially their growing middle and higher-income residents, who continue to prefer primarily imported Western brands.
Let me share with you a few of the ideas that I spoke about during my visit. They may just save you too from more costly failures.
Innovation is Essential
Switzerland continues to lead the world in innovation according to the latest WIPO GII study. It was, therefore, a privilege for me to be invited to help Chinese corporations and academics by proposing new ways for them to innovate.
Most companies innovate from a technical and skills-based foundation. It doesn’t usually work very well, if at all. In fact, according to Nielsen, IRI, Fortune and many others, it is estimated that between 85% and 95% of new consumer products in the US fail. In Europe, it’s just as bad, with only 25% of new consumer products still on the shelf just twelve months after launch! And less than half that number by the end of the second year.
With such disastrous results, you might wonder why companies continue to innovate. Well there are three main reasons why they do:
- It keeps brands fresh. Brands which innovate have something new to share with current and potential clients. In fact, we have come to expect it. What excites today, is normal tomorrow and then just boring after that. We have trained our customers to expect regular updates and constant new offerings. But rather than being excited by them, they are today disappointed if we don’t deliver.
- It encourages switching. If brands and options remain the same, people would only switch if they became dissatisfied and the cost of switching was low. Since product performances are so similar in many categories today, new variants and offers suggest differentiation. The brand appears more vibrant and people like that.
- It revives brands through excitement and buzz. In today’s connected world, this is vital. People learn about brands as much from friends and family as through advertising. And they trust the former more than the latter, even if some of these “friends” are virtual ones online, who they’ve never met face-to-face. According to Nielsen’s report “Global Trust in, Advertising” more than eight-in-10 global respondents (83%) say they trust the recommendations of friends and family, and two-thirds (66%) others’ opinions posted online.
Renovate your Innovation Process
It still surprises me that companies continue to use their same innovation process when their failure rate is so high. It often looks something like the diagram below.
Is this what your process looks like? If so, then you are facing at least two problems:
1. That it is a funnel. This process is linear, with a beginning and an end. It assumes that there is only one “winner” from all the ideation and brainstorming. And it also supposes that only one concept developed from that “winning” idea will succeed.
But what if all your ideas are great? You would be throwing away all but one of them! Or suppose that they are all “losers” and you launch the least “awful” amongst them? There must be a better way, no?
Even IDEO’s iterative process still assumes “winners”, because they quickly move from brainstorming to prototyping and testing with customers. At least they do suggest co-creating with customers which is a positive element of their process. And it is also great fun to do, at least as far as I remember from my own experiences.
The diagram above is the type of NPD process that I encourage my clients to use. It is, of course, adapted to their specific needs, based upon their current process. By doing this, it makes adoption of the new process much easier, by quickly getting everyone to support the needed changes.
The major difference from most current innovation processes is that it is a virtuous circle. It starts and ends with opportunity identification, in other words with the customer and insight. This, of course, means that we must know and understand our customers deeply, which is the next point.
Know you Target Audience Intimately
We all think we know our customers, but this is often not totally true. Not deeply enough anyway. One of the quickest roads to improving ideation and innovation is to know for whom you are innovating.
The first thing I ask my clients to complete is the 4W™ Template of the “who”, “what”, where” and “why” of their target audience. Almost every single time, they struggle with the last “w”.
Even with the template filled, you still have to go even further. Optimal understanding comes from regular connection. Our customers are changing – fast – so we need to keep our finger on the pulse of the market. Yesterday’s information is no use to manage today’s brands or innovate for tomorrow.
During my talk at Shanghai’s ECUST, someone asked how we can be better prepared for the future. I loved the question, as it enabled me to speak about another of my passions, that of scenario planning.
Change happens, and especially rapidly in China. My recommendation to the student, and to every reader, is to not rely on trends alone. They are uncompetitive. To gain an advantage over the competition, you need to develop them into plausible future scenarios.
You must first know why your customers do what they do, buy what they buy and consume what they consume. And then you need to watch and listen to them – often. This will put you in the best possible position for improving ideation and innovation. But there’s still more you can do.
Increase you External Partnerships
As mentioned above, many companies still rely on their own technology and skills to innovate. However, while technology can certainly help deliver improved benefits, it is usually insufficient. In many instances, companies need to collaborate with others who are more specialized in certain areas.
Joint ventures and partnerships are useful for developing new products and services more quickly. You don’t need to build the needed skills internally and you can rely on the immediate support of external experts. Whether you team up with another corporation or a university is up to you, as long as you recognise and get the support you need. If you rely totally on your internal knowledge for improving ideation and innovation, you are unlikely to find those breakthrough ideas most companies are searching for.
There are many examples of large consumer goods companies partnering with external experts. The Laboratoires Innéov was a joint venture in nutritional cosmetics between L’Oréal and Nestlé, although the relationship ended in 2015. Nestle also created Cereal Partners Worldwide as a joint venture with General Mills and Beverage Partners Worldwide with Coca-Cola.
Procter & Gamble and Teva Pharmaceutical Industries announced the creation of a joint venture in consumer healthcare in 2011. The newly named PGT Healthcare partnership with president Tom Finn has since negotiated tens of JV’s, partnerships and strategic alliances.
Expand your Business Model
Another external lever from which more and more companies are benefitting today is a change in their business model. Take the food industry. It is moving more into health and wellness and could become a direct competitor to the pharmaceutical industry as it develops more nutraceuticals.
Pharma, on the other hand, is moving from sickness to wellness, from treatment to prevention.
Or what about Telecoms? They now make almost as much money selling geo-localisation data as they do from providing communication services.
Or how about Google moving into cars, solar panels and most recently travel with its Trips App? Through the analysis of their customers’ searches, Google can identify those of us who are looking to travel, those interested in buying a new car or in using taxi services. Google knows more about us today than we know ourselves! And that is both exciting and frightening.
Work with Emotional Benefits, not just Functional Ones
Companies which succeed at innovation know that it is the emotional benefits of their product or service that matter, often more so than the functional ones.
Apple used to be a great innovator. In the past few years, I feel they have been relying too much on their technical expertise. The recent launch of the iPhone 7 and the new Mac Book Pro were both less successful than their previous launches. While neither are true flops, they failed to ignite excitement in their potential customers.
There have been numerous posts on why Apple is failing at innovating today. One article in the HBR by Steve Blank stated that both Steve Jobs and Bill Gates “… suggested execution executives as their successors. They confused world-class execution with the passion for product and customers, and market insight. Yet history has shown us that these two talents are not the same. For long-term survival in markets that change rapidly, one is far more important than the other.”
Another article in Business Insider by Julie Bort concludes by saying “Microsoft is now officially more innovative than Apple” based upon Tweets of the events. But Microsoft too failed when Bill Gates handed the company leadership over to Steve Ballmer. For 14 years Ballmer successfully ran the business from a financial perspective. He tripled sales and doubled profits. But he didn’t set the company up for long-term survival. In early 2014, Satya Nadella took over and made some radical changes which focused the company on mobile and the cloud (Azure). This freed Microsoft to become more innovative again and the result is already showing.
You can never go wrong if you start from your customers’ perspective and connect emotionally with them.
Develop Insight as a Company; Don’t Leave it to Market Research Alone
Some managers think that insight is just another word for market research. They’re wrong, but perhaps you too see it in this way?
Market research is a great source of information, but for insight, you have to integrate multiple sources of information. It is rare for a single project to provide a deep insight. This comes from truly understanding the customer and that takes time. It also takes a lot of data and information, turned into knowledge and then understanding.
Knowing is also insufficient unless you understand what it all means to the customer. The full development process, such as the example given above, takes time and people, ideally with differing perspectives. It requires a detailed understanding of the target audience, their needs and desires so that you can resonate emotionally with them. (as mentioned previously)
Many organisations work with human truths to help develop such a concept. These are usually based on basic human needs, which cut across cultures. This makes them particularly useful for regional and global brands.
During my different talks on ideation, insight and innovation, I give many examples, but one which my audiences find particularly fascinating is that the same insight can be used in different categories. For example, Unilever’s Omo and Nestle’s Nido use the human truth “All parents want their children to grow up happy and healthy”. The insight they then developed, which is relevant for both washing powder and infant formula is “I want my child to experience everything life has to offer, even if it means getting dirty”.
My recommendation, therefore, if you are struggling to develop insight, is to analyse your competitors or the brands targeting a similar audience. If you can identify on what human truth and insight their message is based, you may be able to use it too.
These are just a few of the many ideas which I share with enthusiastic audiences whenever I speak about ideation, insight and innovation. It is clear that both entrepreneurs and corporate executives in China are keen to improve their innovation. They are also thirsty for support in further improving their ideation. For this reason, I believe they will continue to top the nations in patent applications for many years to come.
It is, therefore, vital that we supposed “developed” nations support our entrepreneurs and creative executives to stay in the race. Unless we do so, we could see China dominate new products and services as they have dominated manufacturing in the past.
What do you think? I would love to hear your thoughts on the race for innovation.
This post was adapted from an article which first appeared on C3Centricity.