I had a long conversation with Alan Mitchell (top UK marketing writer and author of Right Side Up and The New Bottom Line) about our bringing to the UK of Strategyn’s Outcome Driven Innovation method. The following week, an article written by Alan (with the above title) appears in Marketing Week, 18th May 2006. Here is an excerpt:
The biggest obstacle to innovation is rarely lack of creativity, but sclerotic industry structures and practices that must be bent to launch new products
What is the secret of successful innovation? Well, drawing on long and painful experience of failure as well as success, here are some pretty universal lessons.
First, if you can possibly avoid it, don't launch a product that is not immediately and intuitively grasped by your customers. If it needs a lot of explaining, you risk losing many customers straightaway.
Second, launch your new product under the umbrella of an existing brand, because launching new brands is getting impossibly expensive.
Third, avoid having to rely on new distribution channels. Not only will they be unfamiliar to your customers, they also create all sorts of risk in terms of channel conflict, making new relationships work, and so on.
Fourth, don't be mesmerised by new technologies that seem to promise the earth but that you don't really understand - bugs are killers when it comes to delighting customers.
Finally, remember your context. If your company is currently making £50m a year in profits, make sure your new idea will earn at least £1m incremental profits within, say, three years. Or else it won't move the needle and won't be worth the candle.
To sum up, then: in order to guarantee success, make your new product or service as similar as possible to your existing ones…..
Spotted the catch? Every step in this chain has a strong point to make. Put them all together, however, and you have a sure fire recipe for stifling conservatism. That's the trouble with innovation. Each obstacle represents a risk, and the more obstacles there are, the more risky it becomes. Exponentially so. Yet, at the same time, it's precisely the obstacle clearing that creates customer excitement, builds new brands and propels revenue and profit growth.
Is there a way round this dilemma? Probably not. But there may be ways to blunt the sharpness of its horns.
One big influence on this front is Harvard Business School professor Clayton Christensen, who observed that successful companies miss out on many big innovation opportunities because they focus on their customers. By definition, customers are customers because they like what you are doing. So if you ask customers what they want, they're likely to say "more of the same". That leaves everyone else - people who are not so enamoured of what you are doing - out of the frame. These are the people who propel "disruptive innovators" to fame and fortune.
Methodologies based on Christensen's theories of innovation are being licensed for application around the world (including the UK with the OMC Group signing a deal last week).
Alan is spot on, but unfortunately apart from the last para. Strategyn’s Outcome-Driven Innovation (ODI) method which we have just licensed for the UK predates Christensen’s work. He is a big fan of ODI because it aligns with his thinking about innovation theory and strategy. Clayton also writes about ODI in The Innovators Solution and describes how it can be used to segment opportunities for innovation much more effectively than traditional methods. More on this later…
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