Innovating for growth

Over the last twenty years, innovation has been in the grip of what we might call ‘methodologism’ – the belief that if we can use the right process, we’ll get great innovation ideas. Marketing has embraced a range of techniques for creativity, as well as co-creation and design thinking approaches to generate innovation. This has generated a lot of new products, and in the process it has had a positive impact on the culture in many client businesses, who have been transformed from suit wearing, cubicle based hierarchies to more open and creative environments.

However, it’s unfortunate that despite this, innovation often fails to drive growth for businesses, whether large or small. Here in the UK and US around 50% of all start ups fail within two years. In the USA this is estimated to be between 48% (US Census) and 90% (Forbes). In the grocery industry, Nielsen report that 76% of innovations do not last the first year. Over the last 20 years I’ve been involved in a wide range of innovation projects to inspire, develop and track the performance of new product launches with both blue chip businesses and challenger brands. These projects have ranged from total flops to £100M successes. From this experience, I believe there are 4 consistent elements in winning innovations, that tend to be absent in those that fail.  

The Four Factors
 
1. PICK YOUR TARGET
Innovation is a turf war. The world contains a relatively finite amount of disposable income. Your gain will be someone else’s loss, and they will do their utmost to prevent you succeeding. So it’s really important to know where to make your stand.  You need to identify a group of consumers that is big enough to support the venture you’re launching, likely to be profitable, and which you can defend from your competitors.

2. ENTER THE MIND OF YOUR CUSTOMER
It is inevitable that innovators know more about the categories they sell than the consumers who buy them. This asymmetry of information means that consumers will understand any given product differently than the business selling them. So the new idea you’re excited about may mean nothing to your customers. Understanding how your customers experience and make sense of the category of products you operate in will be essential if you are to communicate a compelling benefit to the people who might buy your stuff.
 
In addition, you need to understand how the lives of your customers are evolving. Our lives are constantly changing as technology improves, society evolves, and culture marches onwards. Over time, the products and services we use lose relevance. Each change opens up new customer needs, and these needs are invitations for innovators to create disruption. So you need to understand what’s changing for your target consumers to identify emerging insights and semiotic codes that can drive innovation in products and services.

3. CREATE EFFECTIVE BRANDING
The message you transmit with your branding is not necessarily the same one that your customers will receive when they see it. It’s really important to come up with a brand that communicates the benefits of the products in a way that is credible and motivating for your customers. If you are innovating as part of an existing brand, you need to ensure that the things consumers associate with the brand do not contradict the benefits you are trying to convey.

4. KNOW YOUR ENEMY
Being first to market and having the best launch mix is no guarantee of success. If a better funded competitor decides to crush you, they will. So understand the market and its history before you start. If you can identify the level of marketing and promotional support required to succeed you will be able to create a business plan that can succeed in the face of strong competitor reaction.

Over the next few weeks I’ll be blogging about each of these factors to suggest how we can make innovation a more reliable source of business growth.

This piece was by Joe Goyder of The Value Engineers.