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Monthly Archives: July 2016

What Kind of Innovation?

What kind of innovation is right for your company?

To answer this question, you must first determine your goals for innovation. Do you expect innovation to bring you new products and services, more effective marketing, lower-cost operations, happier employees, or some other goal? An R&D lab will produce different innovations from a Kaizen program in the factory. Make sure your innovation effort aligns with your goals.

Next, consider the resources you are willing to commit. If you spend only enough to host an annual innovation awards competition and banquet, you may receive amazing ideas from your employees—or you may not. If you hire a full-time innovation team and invest in journeys of discovery, you should expect a steady stream of profit-improving innovations. Scale your investment according to your priorities, and measure your return on investment.

Third, consider your market. Mature industries often thrive on incremental innovation and operational innovation. Disruptive innovation happens rarely, but when it does, it can destroy the incumbents. Evolving, growing industries, on the other hand, are frequently disrupted by innovations of various types, including product, service, business model, partnership and customer experience. Players in IT, mobile telephony and similar businesses will succeed when their innovation programs are dynamic and versatile.

There is one kind of innovation that I recommend for all companies regardless of their size or their industry. That is customer-centered innovation. When the customer is the central focus, then every innovation, whether it concerns operations, sourcing, HR, marketing, finance or IT, should create value by improving someone’s life. Value creation is the hallmark of all successful innovation.

Related reading: Types of Innovation and How to Utilize Them

 
 

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Don’t Overlook Easy Profits

If your customer-centric walk does not match your customer-centric talk, then you are losing sales and profits to your competitors. BCG has documented the negative effects of corporate “introversion” in the linked article. Here are some ideas on how to capture more sales and profits.

Beware of corporate inertia. A body in motion tends to remain in motion until acted upon by an outside force. Likewise, corporations move in the same direction and repeat the same actions until they stop working. Often, they recognize change too late to save the company. Make sure you have a way to detect and cope with change as early as possible.

Reward customer focus. I teach that customers are the only critics who matter. Too many managers are focused only on activities that add no value for customers. Change your job descriptions and KRAs so that every employee keeps the customer in mind. Reward those who do things to improve the lives of customers.

Expand the development and use of customer insights. Introverted companies use customer insights to improve selling and product development. Extroverted companies use customer insights to drive strategy. GM, Ford and Chrysler applied outdated insights, and they continued building beautiful, gas-guzzling comfort machines long after American drivers’ tastes had changed. Toyota, Honda and Nissan learned that Americans had come to value economy and durability more than style, and they defeated the “Big 3” on their home turf.

Become customer-centric in your actions – not just your talk – and you will maximize your sales and profits while preserving your competitive advantage.

Related reading: The Introverted Corporation

 
 

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