The setting was a large conference room at a Denver airport hotel. The attendees were a battle-hardened mix of senior product managers and engineers, along with a healthy smattering of directors, VPs and C-Level executives who had flown in from all over the globe for the two-day workshop. The range of industries was as broad as the NASDAQ, DOW & S&P500 combined. The workshop was entitled “Mastering Value Innovation” and though I knew beforehand the general concepts that would be presented, nothing would prepare me for what was to happen over the two day workshop.
I (like most of you reading this foreword) have a deep interest and background in innovation, new product development and competitive strategy. Like most of you, I have read Blue Ocean Strategy, and have eagerly devoured most anything written by the innovation pantheon of Kim, Mauborgne, and Christensen. Like most of you, I have either led or been part of significant innovation initiatives in various companies, been to TED or watched TED talks, read Wired, Fast Company, HBR and follow 10-20 blogs daily, and yet in spite of all the reading, the planning, re-organizations etc., I have found myself flummoxed as to how to actually (and consistently) create innovative new products that customers delight in.
Denver changed everything. As we were learning the techniques that make up the Value Innovation Process (such as how to identify your most valuable customer, how to create an effective value curve, or how to do effective contextual interviewing) we were broken up into small groups of about 4-5 people. Each small group was asked to take the same medical product, and by applying the techniques we were learning, transform the product from a commodity to a breakthrough without sharing our work with the other groups. I watched as the 30 or so participants (myself included) in just a few short hours, took a product in a domain that none of us had expertise in (a specific nursing procedure), and created nearly identical solutions that very closely match the real world product breakthrough that a company experienced when applying these principles.
The lesson was clear – break through innovation can be taught, a series of steps can be followed, and a repeatable process can be put in place in any industry. More importantly, the techniques work without having to have the “creative genius” or the “rock star innovator” on the team. We didn’t need to create a spinoff company to disrupt the parent company, we didn’t need to hire expert consultants and we didn’t even need to set up a separate R&D group (though there is nothing wrong with any of these things). What we needed to do was listen to the customer, understand their pain points, and through a well-defined collaborative process, provide a simple solution that would make their life better. What I learned in Denver you can learn and apply by reading this book.
As the world grows flatter it also grows faster. Crowdsourcing has created a participation economy that is unparalleled in history. While it took AOL 9 years to reach a million customers, it took Facebook 9 months, and the game Draw Something 9 days. Whether there is sustainable value in Draw Something (or even Facebook for that matter) over the long haul is perhaps questionable, but in the short term it highlights the challenging business environment that we find ourselves in.
A flatter, more connected world likely means that while your potential addressable market size grows, your revenues don’t. We are facing the commoditization of nearly everything, and with technologies such as 3d printing becoming the newest rage, we could within the next few years easily see an economy where someone designs a simple product in the morning, and its available via 3d printing kiosks around the globe later that same day. Technological advances that had been reserved to some degree to the digital realm are becoming increasingly part of our physical world.
Deeply interconnected economies and an ever accelerating pace of business likely means more economic bubbles on the near horizon albeit with shorter life-spans yet with similar abilities to disrupt well crafted strategies and long term plans.
Customer’s expectations continue to rise, as more and more niche companies are able to provide an ever-growing sea of products tightly tailored to small, custom markets quickly. Many of these smaller providers will go out of business in short order, disrupted by the very same principles they used to create their own market. But in a global economy there will be another start-up right behind them, ready to take their place.
The very principles of business, economics, money and value that have governed the developed world (and developing world to a lesser extent) for millennia, now seem to be shaken to the core. Many companies and many executives are at a loss as to how to proceed.
Some decide to focus on building-in more agility to their processes so they can produce products faster. This is certainly a core competency needed to remain competitive in the new world of business. But simply producing widgets faster (and or cheaper) is likely not going to be a sole sustaining strategy. No amount of Kaizen or army of six-sigma black belts will guarantee the sustainability or long term viability of your company.
Others, in the face of uncertainty, are spending more and more money on their social media strategies and are hiring bloggers, SEO experts, and twitter gurus to flood the digital space with their branding and ad campaigns, hoping that their legions of followers and “likes” will keep them afloat. Others are pouring significant dollars into mobile initiatives or pumping up their technology spending to try and gain a competitive edge via cool apps and integrated access to products and services.
Many are scaling up their R&D groups, hoping to find the killer product, while others are scaling back their spending on R&D to focus on “core competencies”. Many are frustrated that their investments in R&D, or strategy and innovation initiatives seem to be yielding poor results. Chaos, confusion and even desperation reign supreme in many a manager’s office and in many a boardroom around the globe.
Yet even if we can’t predict the future, and may not have keen insight into our competitor’s new “killer strategy” or where the markets will go next month, we can still future-proof our businesses and our economy and have a proven path forward for success. If you take a bigger picture historical view than simply the last few years, what comes clearly to light, even in times of great economic and/or political upheaval, is that customers will seek out and pay for real value, and societies that can provide that value will grow and thrive. This holds true around the world, across cultures, in times of peace, in times of war, in ages past and in our own present day.
Instead of trying to convert consumers to customers through sticky web or mobile portals, or try to increase customer loyalty through a rewards program, most companies would be better served in following the principles of Value Innovation which focus on delivering real value to your most important customer every time. Once these principles are in place, and become part of your company’s DNA, all your other efforts will have a higher rate of return because they will be continually focused on real, sustainable value.
Peter Frey, San Antonio, TX, USAWant to up your innovation game? Want to up your organization’s innovation game? Attending one of our Mastering Value Innovation Workshops is a great place to start. In 2016 we are going to change our approach. We will work with you to develop your own custom workshop that addresses your problems and you define the length and location. More information can be found in the Workshop Brochure.