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Avoiding the waste of innovation

 

Dennis Wong

Managing Director

Kantar Consulting

D.Wong@kantarconsulting.com.au 

 

Avoiding the waste of innovation

‘Innovation’ has long been celebrated as an idealistic catch cry for progressive businesses wanting to signal their focus on growth, but for many, a lack of understanding of what it is, why it’s useful, where to apply it, and how to do it has led to wasted resources and focus. This has been particularly true in recent years for large businesses in developed markets like Australia that are anchored to legacy manufacturing assets and systems, and are unable to respond fast enough and keep up to speed with rapidly changing culture.

 

Many lament the abysmal attempts at innovation, but few take the time to understand why this is the case.

 

WHAT We Innovate

Most businesses ask people with innovation responsibility to focus on the ideation, optimization and commercialization of product / service ideas, but in doing so create a silo which limits the very definition of what innovation itself is.

 

If we subscribe to the adage that innovation’s most powerful role is to solve problems for the consumers, then we must also recognize that innovation has to be bigger than simply just new products and services. This includes brand experience, the creation of digital tools, customer journey engineering, and with increasingly importance, the business models themselves.

 

To realize innovation’s full potential, beyond simply new products and services, businesses must recognize that innovation may emerge from anywhere in the organisation. In doing so, the innovation discussion becomes decentralized, unifies functions with clear priorities and produces a ‘can do’ attitude. Nike is masterful at this. They recognize that selling sneakers is their core business, but spend an equal amount of energy focusing on innovating the ecosystem around their shoes which in turn makes their core more valuable.

 

WHY We Innovate

Too commonly we see innovation looked upon as a savior to deliver the gap in the numbers. It is developed in isolation of brand teams by people who don’t get or care for brands, and is symptomatic of the short-term view driving incentives for many teams and individuals. We find that this attitude towards innovation leads to rushed outcomes, characterized by safe thinking designed to drive incremental results, rather than true change that consumers notice and that builds long term brand equity. If businesses can learn to view innovation as the most powerful way for brands to deliver their purpose and simultaneously engage the right people to drive it, we believe that businesses could create an innovative culture leading to bigger and better thinking, with stronger, more future relevant brands.

 

WHERE To Innovate

It’s ironic that there has never been more innovation happening globally, evidenced by the swarms of small players entering the market and dominating the edges. It highlights that growth is still there, but where the growth awaits and how to access it has shifted.

 

Most large Australian businesses continue to hunt for growth in the same old places, unable to act on the simple insight that the market has fragmented and now rewards players targeting individual niches.

To find new, fertile spaces for innovation businesses must hunt outside their comfort zones by reframing the markets in which they compete. They must find ways to scale opportunities across adjacent niches and be prepared to creatively innovate off their full portfolios.

Sometimes, it takes acquisition…think Unilever’s recent purchases of T2 and Ben and Jerry’s.

 

HOW We Innovate

Most businesses are clear on some sort of innovation strategy but fail in the execution. There are three key issues with how many businesses innovate today.

 

1) Too many businesses seek to innovate from their current core capability, taking a manufacturing led view vs. a brand led view. In doing so they ignore the fact that the factors that led to success in the past are not the same that will lead them to success in the future.

 

It is important for businesses to focus innovation efforts to deliver on future demand. Innovators should start by understanding the macro trends that could affect their business, then audit across the business to see whether they are truly ready for the future. For example, had FMCG businesses realized 10 years ago the impact of the market’s demand for artisan, crafted products in the future, they would have found ways to shift their models away from large factories incentivizing employees based on how many widgets/hour they can ship off the line.

 

2)  Many businesses are guilty for putting the same people, in the same rooms, with the same inputs, and blindly hoping for a breakthrough. Instead the result, predictably, is the same outputs and huge waste. Today, not enough clients are prepared to invest into the front end of the innovation process to get to new thinking; bespoke cultural, occasion-based and behavioral insights that point to the big and small problems needed to be solved.

 

We believe that cultural insight offers the most powerful tool to truly reframe opportunity by showing clients both the problems their brands can solve today, and the problems to solve tomorrow. The late Steve Jobs may have claimed to not use research to develop his products, but he was very clear on the future facing problems to solve that powered his innovation by making technology beautiful and easy to use.

 

3) Most businesses lack patience. It is all too common to see businesses rush the optimization and commercialization phases of the innovation process, to deliver numbers by a certain date. When innovation inevitably fails to return on the hopes of management, the business simply gives up and moves on. Businesses need to find ways to bake in more time into the incubation and recycling of ideas. There’s often gold masked underneath disappointing sales results, and it’s the job of great innovators to fight in order to bring it back to the surface.

 

As developed markets saturate further and easy growth disappears, the importance of innovation will only grow. To succeed in the new market and prevent the waste of innovation, businesses must interrogate the “what”, the “why”, the “where” and most importantly the “how” of their innovation. This is no easy feat. It requires people, systems, and ultimately a culture that is comfortable with discomfort, that is dissatisfied with incrementality, but believing in the power of brands as an engine for sustainable growth.