Posted by Mark Brousseau
The best technology. The best employees. The biggest budget. The strongest R&D department. Check, check, check, and check! If you think these are all the elements you need in order to build a consistently successful company, you’re wrong. Dan Adams says there is one other factor you’ll need to check off that list—an innovation strategy that works.
“The best way to ensure your company will be a success is to deliver more than your share of customer value,” says Adams, author of New Product Blueprinting: The Handbook for B2B Organic Growth. “Specifically, you need to develop differentiated products that provide benefits your customers crave. Products they can’t get anywhere else at a comparable cost. But you shouldn’t be guessing what they want. You should base your product innovation on what they say they want.”
Adams notes that back in 2007, Booz Allen Hamilton released an important study on innovation called “The Customer Connection: The Global Innovation 1000.” The company studied 84 percent of the planet’s corporate R&D spending and identified several distinct innovation strategies.
Most importantly, says Adams, the study highlighted one essential element of successful innovation that too many companies forget. Your employees aren’t the only people you should be engaging to create truly unique and profitable products. You should actually be focusing your efforts on engaging your customers!
The Booz Allen Hamilton study found that when it comes to innovation, customer engagement has a huge payoff. It noted, “Companies that directly engaged their customers had superior results regardless of innovation strategy.”
"And not just a little bit superior, a lot superior,” says Adams. “Those companies that used direct customer engagement while innovating versus indirect customer insight enjoyed great financial gains.”
In fact, the study found that the companies that based their innovation strategies on customer feedback experienced gains in the following key areas:
1) Profit Growth: Operating income growth rate that was three times higher.
2) Shareholder Return: Total shareholder return that was 65 percent higher.
3) Return on Assets: Return on assets that was two times higher.
“What should you do with this information?” asks Adams. “For starters, if you’re in a conversation about your company’s innovation and nobody’s talking about the customer, realize something might be very wrong. To put it in terms of the study, your company might be practicing ‘indirect customer insight’ instead of ‘direct customer engagement.’ This is a kind way of saying, ‘We’ve lost track of who our innovation is supposed to help.’”
If you think your company needs some innovation help, read on for a few words of advice from Adams.
Take it to the next level. For more than five years, Adams has been helping B2B suppliers engage their customers in the innovation process. In that time, he has almost seen it all! And he’s used what he’s seen to distinguish six levels of customer engagement during product development. What’s your level?
Level 1: Our Conference Room: At the lowest level, you decide what customers want around your conference room table. Internal opinions determine the design of your next new product.
Level 2: Ask Our Experts: At the next level, you poll your sales force, tech service department, and other internal experts to determine customer needs. Better—because more voices are heard—but still too “internal.”
Level 3: Customer Survey: Here you use surveys and polls to ask customers what they want. This begins to shake out internal biases…but doesn’t deliver much in the way of deep insight.
Level 4: Qualitative VOC Interviews: You send out interview teams that meet with customers to learn what they want. This is a quantum leap from VOO (voice of ourselves) to VOC (voice of the customer).
Level 5: Quantitative VOC Interviews: The problem with just qualitative VOC is that people hear what they want to hear. Quantitative feedback drives out assumptions, bias, and wishful thinking.
Level 6: B2B VOC Interviews: Unlike end-consumers, B2B customers are knowledgeable, rational, and interested. B2B-optimized interview methodology fully engages them to take advantage of this.
“If you aren’t happy with your level, don’t worry,” says Adams. “Through solid training and committed leadership, I’ve seen businesses leap from Level 1 to 6 in the space of a year.”
Remember who’s showing you the money. A successful company innovates for its customers, not itself. “That’s because nobody inside your company can pay for innovation,” notes Adams. “Only your customers can do that. So the more closely you engage those who pay…the more you learn what they’ll pay for.”
Make sure you’re asking the right questions. Too often, innovation is misunderstood as the process of coming up with the right answers. “The reality is that it is actually about asking the right questions,” explains Adams. “If the bright people in your company are focused on real customer needs, they’ll run circles around the bright people at competitors who are focused elsewhere.”
Learn to pre-sell. “I believe the Booz Allen Hamilton conclusions are especially potent for the B2B supplier serving a concentrated market,” says Adams. “If you interview the ten largest prospects in your target market correctly, you’ll engage them so they’ll be primed to buy when you launch that new product.”
“So the bottom line is if you want to boost your innovation, you should start by directly engaging your customers,” says Adams. “And do this in a way that allows you to understand their world, focus on their important, unsatisfied needs, and entice them to keep working with you.
"This innovation strategy is great because you are removing the guessing game aspect of new product development,” he concludes. “You won’t have to worry about whether or not your customers will like your new products because you’ll already know you are delivering exactly what they want.”
What do you think?
Showing posts with label innovation. Show all posts
Showing posts with label innovation. Show all posts
Wednesday, June 22, 2011
Sunday, September 26, 2010
10 Steps to Innovation
Posted by Mark Brousseau
In these days of economic dislocation, the concepts of government, business and technical innovation are more important than ever. When it comes to entering, creating, or dominating markets, disruptive innovation is the most powerful tool available. Unfortunately, most companies find disruptive innovation difficult to achieve and virtually impossible to replicate.
In Innovate the Future, renowned innovator and executive David Croslin provides the structure and framework to analyze one's own innovation dilemma, and to beat competitors in generating new ideas and delivering those ideas to market first.
Drawing on his experience leading innovation in organizations ranging from start-ups to the Fortune 20, Croslin explains the top ten steps for optimizing the entire innovation lifecycle:
1.Isolate Drivers of User Value - Function, look, adaptability, price - or all of the above. Focus on triggering a decision to buy versus passive interest.
2.Define Good Enough - A product with more positives than negatives will sell. Focus on this goal before refining for enhanced features and niche crowds.
3.Understand Your Delivery Chain - Separate innovative, value-additive suppliers from passive ones. Focus on suppliers who make your products better.
4.Isolate Delivery Chain Pain Points - Underperforming suppliers may not improve. Find an alternative.
5.Align Viewpoints Within Your Organization - Evaluate team for ability/inclination to increase product potential. Pinpoint inhibitors, plan to minimize their impact.
6.Kill Assumptions - Base evaluation of success or failure upon known facts, not subjective interpretation.
7.Isolate Intellectual Property - Break products into components, so intellectual property behind each can be recombined into new products.
8.Identify New Markets for IP - Coke is not marketed strictly as soda - think Coke Slurpees for 7-Eleven and A&W Root Beer candy for Brach's.
9.Don't Confuse Invention for Innovation - A highly inventive product won't necessarily move markets. A highly innovative one will. Know your market.
10."Cool" Is Not Key - Cost, availability, consistency and ability to integrate within consumers' lives matter much more.
What strategies have worked in your organization?
In these days of economic dislocation, the concepts of government, business and technical innovation are more important than ever. When it comes to entering, creating, or dominating markets, disruptive innovation is the most powerful tool available. Unfortunately, most companies find disruptive innovation difficult to achieve and virtually impossible to replicate.
In Innovate the Future, renowned innovator and executive David Croslin provides the structure and framework to analyze one's own innovation dilemma, and to beat competitors in generating new ideas and delivering those ideas to market first.
Drawing on his experience leading innovation in organizations ranging from start-ups to the Fortune 20, Croslin explains the top ten steps for optimizing the entire innovation lifecycle:
1.Isolate Drivers of User Value - Function, look, adaptability, price - or all of the above. Focus on triggering a decision to buy versus passive interest.
2.Define Good Enough - A product with more positives than negatives will sell. Focus on this goal before refining for enhanced features and niche crowds.
3.Understand Your Delivery Chain - Separate innovative, value-additive suppliers from passive ones. Focus on suppliers who make your products better.
4.Isolate Delivery Chain Pain Points - Underperforming suppliers may not improve. Find an alternative.
5.Align Viewpoints Within Your Organization - Evaluate team for ability/inclination to increase product potential. Pinpoint inhibitors, plan to minimize their impact.
6.Kill Assumptions - Base evaluation of success or failure upon known facts, not subjective interpretation.
7.Isolate Intellectual Property - Break products into components, so intellectual property behind each can be recombined into new products.
8.Identify New Markets for IP - Coke is not marketed strictly as soda - think Coke Slurpees for 7-Eleven and A&W Root Beer candy for Brach's.
9.Don't Confuse Invention for Innovation - A highly inventive product won't necessarily move markets. A highly innovative one will. Know your market.
10."Cool" Is Not Key - Cost, availability, consistency and ability to integrate within consumers' lives matter much more.
What strategies have worked in your organization?
Monday, September 13, 2010
How Do Apple, Ford, and Microsoft Survive In The New Economy While Others Crash?
Posted by Mark Brousseau
Six out of ten new businesses fail. Unemployment isn’t getting any better. The housing market is set for another bump in the road next quarter. And as if the cake needed icing, the FDIC is reporting that about half of America’s banks -- including the four largest -- are on the bubble, and may fail by the end of the year.
As serious people at serious companies are looking for answers to the dilemma, one expert wants them to focus on a principle that is often overlooked in hard times: innovation.
“The equation is simple: innovate or perish,” says Robert Brands, a veteran corporate executive. “At every major crossroads in the history of American business, innovation has been the driving force behind the companies that made it through the bad times. After all, as we all look for the hot new product or the ‘killer app’ in our respective industries and professions, we tend to overlook the fact that someone has to create or invent it first.”
Brands believes that innovation is the governing philosophy behind companies that succeed.
“Whether it is a multinational corporation or an entrepreneurial startup, innovation can help a business launch, recover or overcome even the greatest of competitive pressures,” he adds. “If you are a manufacturer, distributor, service provider, supplier, retailer or even a not-for-profit, the pressures of the new economy are worse than anything the business world has seen for decades. So, how do you get through it? Look at the companies that are prospering, despite the economy. Apple, Ford, Microsoft and others didn’t stand pat as the economy crashed. They reinvented themselves and their product and service lines. After falling behind to Japanese competition amid the GM bailouts, Ford went back to the drawing board on their line of cars and emerged stronger than before, having one of their best quarters ever. It wasn’t layoffs or the mitigation of risk that accomplished that. It was innovation, creating something new to satisfy its customer base.”
Brands wants people to expand their notion of innovation.
“When people think of innovation, many of them think of simple brainstorming for ideas,” he adds. “This is a fallacy. Brainstorming is just one small element of a much larger process. Innovation is NOT a tactic. It is a process, and if businesspeople follow the right steps, they can achieve innovation regularly -- not just when someone slips on the soap in the shower and the next killer app just comes to them as they put ice on the bruise on their head.”
Brands recommends some rules to govern that process.
“For instance, everyone wants to achieve that ‘a-ha’ moment, when they think they’ve struck upon an idea that could be big for their company,” he says. “Part of it centers on recognizing a need in the market place, but then combining all the elements and resources within your company to see if you have the ability to leverage existing research, development, contacts and distribution to fill that need. For instance, the iPod was an innovation that came about from Apple’s examination of the consumer’s desire to buy single songs instead of whole CDs, and the record industry’s inability to leverage the Internet as a viable delivery medium. Now, in reality, the process was far more complex than that simple sentence, but the essence of the process is there. The key to making innovation a profit center is to be able to sustain it through the entire life cycle of a business."
Brands concludes that, "innovation should not be a one-shot deal.”
Six out of ten new businesses fail. Unemployment isn’t getting any better. The housing market is set for another bump in the road next quarter. And as if the cake needed icing, the FDIC is reporting that about half of America’s banks -- including the four largest -- are on the bubble, and may fail by the end of the year.
As serious people at serious companies are looking for answers to the dilemma, one expert wants them to focus on a principle that is often overlooked in hard times: innovation.
“The equation is simple: innovate or perish,” says Robert Brands, a veteran corporate executive. “At every major crossroads in the history of American business, innovation has been the driving force behind the companies that made it through the bad times. After all, as we all look for the hot new product or the ‘killer app’ in our respective industries and professions, we tend to overlook the fact that someone has to create or invent it first.”
Brands believes that innovation is the governing philosophy behind companies that succeed.
“Whether it is a multinational corporation or an entrepreneurial startup, innovation can help a business launch, recover or overcome even the greatest of competitive pressures,” he adds. “If you are a manufacturer, distributor, service provider, supplier, retailer or even a not-for-profit, the pressures of the new economy are worse than anything the business world has seen for decades. So, how do you get through it? Look at the companies that are prospering, despite the economy. Apple, Ford, Microsoft and others didn’t stand pat as the economy crashed. They reinvented themselves and their product and service lines. After falling behind to Japanese competition amid the GM bailouts, Ford went back to the drawing board on their line of cars and emerged stronger than before, having one of their best quarters ever. It wasn’t layoffs or the mitigation of risk that accomplished that. It was innovation, creating something new to satisfy its customer base.”
Brands wants people to expand their notion of innovation.
“When people think of innovation, many of them think of simple brainstorming for ideas,” he adds. “This is a fallacy. Brainstorming is just one small element of a much larger process. Innovation is NOT a tactic. It is a process, and if businesspeople follow the right steps, they can achieve innovation regularly -- not just when someone slips on the soap in the shower and the next killer app just comes to them as they put ice on the bruise on their head.”
Brands recommends some rules to govern that process.
“For instance, everyone wants to achieve that ‘a-ha’ moment, when they think they’ve struck upon an idea that could be big for their company,” he says. “Part of it centers on recognizing a need in the market place, but then combining all the elements and resources within your company to see if you have the ability to leverage existing research, development, contacts and distribution to fill that need. For instance, the iPod was an innovation that came about from Apple’s examination of the consumer’s desire to buy single songs instead of whole CDs, and the record industry’s inability to leverage the Internet as a viable delivery medium. Now, in reality, the process was far more complex than that simple sentence, but the essence of the process is there. The key to making innovation a profit center is to be able to sustain it through the entire life cycle of a business."
Brands concludes that, "innovation should not be a one-shot deal.”
Wednesday, June 2, 2010
8 business imperatives for driving competitive advantage
Posted by Mark Brousseau
Businesses face eight strategic imperatives that will play determining factors in their short- and long-term success following the economic crisis, according to PricewaterhouseCoopers LLP (PwC).
PwC’s recommendations include:
1. Sustain cost-reduction measures in order to improve margins with a smaller, more productive workforce and use newly freed resources for investments in the company's future.
2. Align risk to performance and create individual accountability measures by integrating risk at a business unit level and creating more personal accountability and reward structures.
3. Prepare for major regulatory changes through a cross-section of issues—international tax frameworks, infrastructure development, healthcare costs and environmental policies.
4. Enhance trust in your business through voluntary disclosures or independent verifications in areas such as supply chain integrity, measurement of carbon emissions and data integrity, to satisfy discerning stakeholders who now demand greater levels of transparency when making decisions about where to invest.
5. Make technology a strategic asset and competitive differentiator by increasing your investment in technology infrastructure and applications.
6. Leverage innovation to underscore differentiation, especially around hot-button global issues such as sustainability and climate change.
7. Move forward with deferred transactions and deals to help grow, protect value, and capture benefits of scale, productivity and efficiency.
8. Invest in leadership, talent development and deployment of for your employees, starting with the C-Suite.
"Executives must renew their focus on the most important issues to accelerate growth - both top and bottom line," says Bob Moritz, US chairman and senior partner, PricewaterhouseCoopers. "We believe that organizations that better engage key stakeholders while also making strategic IT, innovation, M&A and people investments will unleash potential growth that will create long-term competitive advantages."
These strategies have become particularly important as U.S. CEOs continue to respond to the significant shifts underpinning America's economic recovery. When asked about threats to business growth as their companies emerge from the recession, U.S. CEOs express the greatest concern about the prospect of overregulation, followed by shifts in consumer behaviors.
Interestingly, these concerns weigh more heavily in the US than elsewhere: 71 percent of U.S. CEOs are either somewhat or extremely concerned about overregulation compared to 60 percent of global CEOs; 62 percent of U.S. CEOs worry about changing consumer behaviors compared to 48 percent of global CEOs. Meanwhile, concerns about talent shortages have temporarily receded in the US, with CEOs focusing on organizational redesign and employee engagement and morale programs.
Businesses face eight strategic imperatives that will play determining factors in their short- and long-term success following the economic crisis, according to PricewaterhouseCoopers LLP (PwC).
PwC’s recommendations include:
1. Sustain cost-reduction measures in order to improve margins with a smaller, more productive workforce and use newly freed resources for investments in the company's future.
2. Align risk to performance and create individual accountability measures by integrating risk at a business unit level and creating more personal accountability and reward structures.
3. Prepare for major regulatory changes through a cross-section of issues—international tax frameworks, infrastructure development, healthcare costs and environmental policies.
4. Enhance trust in your business through voluntary disclosures or independent verifications in areas such as supply chain integrity, measurement of carbon emissions and data integrity, to satisfy discerning stakeholders who now demand greater levels of transparency when making decisions about where to invest.
5. Make technology a strategic asset and competitive differentiator by increasing your investment in technology infrastructure and applications.
6. Leverage innovation to underscore differentiation, especially around hot-button global issues such as sustainability and climate change.
7. Move forward with deferred transactions and deals to help grow, protect value, and capture benefits of scale, productivity and efficiency.
8. Invest in leadership, talent development and deployment of for your employees, starting with the C-Suite.
"Executives must renew their focus on the most important issues to accelerate growth - both top and bottom line," says Bob Moritz, US chairman and senior partner, PricewaterhouseCoopers. "We believe that organizations that better engage key stakeholders while also making strategic IT, innovation, M&A and people investments will unleash potential growth that will create long-term competitive advantages."
These strategies have become particularly important as U.S. CEOs continue to respond to the significant shifts underpinning America's economic recovery. When asked about threats to business growth as their companies emerge from the recession, U.S. CEOs express the greatest concern about the prospect of overregulation, followed by shifts in consumer behaviors.
Interestingly, these concerns weigh more heavily in the US than elsewhere: 71 percent of U.S. CEOs are either somewhat or extremely concerned about overregulation compared to 60 percent of global CEOs; 62 percent of U.S. CEOs worry about changing consumer behaviors compared to 48 percent of global CEOs. Meanwhile, concerns about talent shortages have temporarily receded in the US, with CEOs focusing on organizational redesign and employee engagement and morale programs.
Tuesday, November 3, 2009
Customers Drive Product Innovation
Posted by Mark Brousseau
Customers and in-house R&D teams are now the leading source of innovation for U.S. businesses, while globally customers are an organization's best source of innovation, according to new research from Grant Thornton International Ltd. When asked to name the origin of the best innovation ideas, U.S. business owners named customers (37%) and in house R&D teams (37%) as their leading sources of innovations followed by heads of business units (34%) and employees (32%). Globally, 41 percent of businesses say that customers are their leading source for innovation.
"In recent history the tech boom and the creation of internet social networking sites brought innovation and entrepreneurship into every American home," said Harris Smith, Grant Thornton LLP's managing partner for Private Equity and the Audit practice leader of the firm's Southern California offices. "Without entrepreneurs and innovation, America couldn't thrive."
Regionally the report reveals that in Asia Pacific customer focus is a particular source of innovative ideas and products with nearly half of businesses (48%) citing customers as the source of the best innovative ideas, compared with 40 percent in Western Europe and 35 percent in North America.
In addition, more than three in four businesses globally (78%) believe that the U.S. is the easiest country to create innovative products, services and business. The U.S. is the clear leader in this, with the next highest countries being China (22%), India (22%) and the U.K. (21%). Regionally, the U.S. is also seen as the leading country with 77 percent of Asian-Pacific businesses, 84 percent of North American businesses and 71 percent of European businesses saying it is the easiest country to create innovative products, services and business in.
"With the history of innovation in the U.S. spanning from the country's earliest beginnings, it's not hard to understand why businesses around the globe see America as the land of innovation," said Smith.
Customers and in-house R&D teams are now the leading source of innovation for U.S. businesses, while globally customers are an organization's best source of innovation, according to new research from Grant Thornton International Ltd. When asked to name the origin of the best innovation ideas, U.S. business owners named customers (37%) and in house R&D teams (37%) as their leading sources of innovations followed by heads of business units (34%) and employees (32%). Globally, 41 percent of businesses say that customers are their leading source for innovation.
"In recent history the tech boom and the creation of internet social networking sites brought innovation and entrepreneurship into every American home," said Harris Smith, Grant Thornton LLP's managing partner for Private Equity and the Audit practice leader of the firm's Southern California offices. "Without entrepreneurs and innovation, America couldn't thrive."
Regionally the report reveals that in Asia Pacific customer focus is a particular source of innovative ideas and products with nearly half of businesses (48%) citing customers as the source of the best innovative ideas, compared with 40 percent in Western Europe and 35 percent in North America.
In addition, more than three in four businesses globally (78%) believe that the U.S. is the easiest country to create innovative products, services and business. The U.S. is the clear leader in this, with the next highest countries being China (22%), India (22%) and the U.K. (21%). Regionally, the U.S. is also seen as the leading country with 77 percent of Asian-Pacific businesses, 84 percent of North American businesses and 71 percent of European businesses saying it is the easiest country to create innovative products, services and business in.
"With the history of innovation in the U.S. spanning from the country's earliest beginnings, it's not hard to understand why businesses around the globe see America as the land of innovation," said Smith.
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