Increased connectivity. Empowered buyers and employees. Technology advances. Together, they’re accelerating the pace of business and society.
Meanwhile, we tell ourselves that keeping up is good enough, because setting the pace is too much to ask of arthritic organizations.
This trend of “keeping up” is driving us all toward a new norm. This is where innovation, at best, is incremental. For instance, we typically choose a car based on brand rather than distinguishing functionality. And when an Uber or a Netflix turns up, the game changes to one of reaction.
When you want to innovate, what can your organization do to become a leader in your market, and not a follower? I suggest four steps you can take:
1. Ignore what your competitors are doing.
Instead, ask questions about what would add value.
Consider questions like these:
- Can we eliminate the airport security procedures, or make them fun, without compromising security?
- Can we implement hyperlinking into our physical grocery stores to help shoppers buy the ingredients they need with the least amount of anxiety?
- Can we apply the Uber model to public transportation to enhance the citizen experience?
- Can we move saving the planet from being a corporate social responsibility to being at the core of our vision?
2. Solve the right problem.
The more attention you pay to formulating the questions, the more impactful the solutions. That’s why I argue allocating a significant portion of your research and budget to the questions.
Consider President Abraham Lincoln’s approach: “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
For example, perhaps you want to reinvent the breakfast cereal market. You assume innovation will come from changing the shape, texture, or nutritional content of the cereal. Then, without too much thought, you mistakenly decide that shape is the differentiator. This sets you off on a costly fool’s errand.
3. Focus on the problem you want to address.
In Matthew Syed’s book “Black Box Thinking,” he tells the story of Unilever’s nozzles clogging during soap detergent production. Unilever’s first approach was to throw physicists at the problem. It pooled its expertise in fluid dynamics and other related physics models to design a new nozzle. Despite state-of-the-art thinking, it didn’t work.
So Unilever tried again, but this time it used biologists. Rather than try to solve the problem from first principles, it created a variety of possible “rough-and-ready” nozzle designs and tried them out. The best performer of that group formed the basis for the next wave of designs. It repeated this exercise 44 times to arrive at a solution.
The biologists took an evolutionary approach to arrive at the solution. Viewing the end result, one might conclude that this was an exercise in intelligent design, but in reality it was an exercise in phased adaptation. Nature should thus be our guiding light in respect to innovation.
This story teaches us that differentiating ourselves in the marketplace requires radical innovation. And as we have seen, radical innovation is simply repeated incremental innovation, at pace.
There is also the challenge of spending too much time trying to address the issues your customers face today. A mismatch between your innovation cycles and the market will result in your service enhancement being out of date on the day it launches.
We should aim to have at least a temporary monopoly on the market (and thus enjoy higher margins), while your competitors play catch-up. Being an innovative organization, you’re already on to the next temporary monopoly by the time they come crashing into the party.
4. Anticipate what the market wants tomorrow, not what it needs today.
This is where technology comes into play.
Consider what technologies are emerging over the next year to 18 months. Today, those examples include augmented reality, the Internet of Things, wearables, device-agnostic applications, and artificial intelligence.
Construct a matrix with tech developments along one side and customer improvement hypotheses along the other. How might the use of wearables help service staff personalize the experience? How might augmented reality sway prospective buyers into lifelong clients?
Again, test the emerging tech-fuelled hypotheses. Virgin Atlantic CEO Craig Kreeger, for example, shared how using smartwatches as a mechanism for improving customer intimacy didn’t go as planned.
While the service staff used their smartwatches to elicit important information, the very act of looking at their watches conveyed the message to passengers that the service staff was either bored or checking how long until their shift ended. Much like Google Glass, social side effects trumped the technology benefits.
Seeing what lies ahead is sometimes the easy part. The question is whether your organization can innovate at pace based on what the market is likely to want. For established organizations, this has the feel of a lean start-up, or perhaps even a family of lean start-ups.
Because of this, it’s likely that organizations will someday cease to be run as legal entities and more likely run as a portfolio of bets and experiments. With that in mind, you might ask how many people sitting at your boardroom table are wearing white lab coats.