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Market Power Verses Brute Force

Pushing too hard?

Rushing to hit short-term numbers or an over-caffeinated executive can force some costly mistakes.

Failed product launces. A weak but bloated product pipeline. A service in desperate need of reinvention but too entrenched and in love with its own methods to change. A company that charges ahead blindly, carrying dead weight and a dying value proposition to the market. A feature set that doesn’t meet users real needs. Add a bomb from your professional experience here _________________. There are too many mistakes to name.

There are also too many forced agendas, pet projects, products and services zealously guarded by the ego patrols and sycophants. The world is already overstuffed with such glut. Do us all a favor, stop forcing things to happen just because you feel so motivated.

There is a critical difference between force and authentic market power.

Force helped birth the Industrial Revolution, but is a brutish, blunt, and inelegant way to finish anything in business today. Real market power shares the verities of wisdom: self-knowledge, a sense of others, and the ability to read between the lines and see a real need, an actual benefit for your product or service.

Market power creates fans, brand evangelists, and loyalty. Market power always finds traction in the field by connecting with its intended audiences in both fundamentally expected and wildly unexpected ways. This type of power can be measured with sales, brand equity, and breakout potential.

On the other hand, when things are forced, you find yet another company for sale, more products at the closeout store, and disgruntled employees.

Why force anything today when the world has too many choices to begin with? Instead, get real market power by empathizing with customers and crafting something of real and usable value to their lives.

Go away, brute. Your tricks don’t work anymore.

Financial Speedbumps for Innovation

The creative process of birthing breakthrough innovations can provide a substantial top-line boon but it too often suffers a fatal flaw felt in failed product launch after failed product launch.

Welcome to the Innovation Graveyard. Hundreds of millions of dollars get lost here.

Most innovations fail because they don’t get buy-in from the people who take them to market at key points in the process – and in words that motivate them. These marketers and product managers speak the language of money.

Find ways to build bridges with a larger pool of stakeholders to ensure the financial return of a firm’s innovation investment, as well as practical tips and exercises for getting a sense of what innovations will make at each point in the innovation process.

This larger audience includes every product manager, research and development professional, product marketer, and innovation professional, as well as the directors, vice presidents, and C-level leadership who are responsible for the budgets and outcomes of the innovation efforts they sponsor.

They all care because they will be able to bridge the language of design and innovation with the language of business. Furthermore, use concrete tools, exercises and ways to model out and validate the expected financial return of each effort. As concepts move from the abstract to market-ready, we will offer ways to measure both the possible and probable returns.

This validation process is missing in the innovation frameworks today. By adding this set of tools the business side of the house will become enrolled and energized into the innovation process earlier. Their involvement is the key to winning in the market.

Lastly, we recommend employing a few critical Go/No Go decision-making tools, and a few quick instruments for prioritizing large numbers of possible innovations.

In the end, companies can have more assurance with their innovation spending and make decisions based on what innovations have the best chance of making money.

Most of the exercises noted here complement one another and can be used together to craft a full business case and go-to-market strategy at the end of the process.

 

Measure Twice, Cut Once

Ideas are a dime a dozen, indeed; the old cliché holds true. When following a formal Innovation process, it pays to measure the size of the market potential and validate the concept before investing in a build.

To investors and shareholders, an endless proliferation of ideas signals a lack of strategy and desperation. Unmeasured ideas without serious market validation lack merit. After the idea generation or ideation phase is formally closed, it is time to put on the analytical hat.

Too many ideas are worse than the common cold for a fast-growing business. New product and service ideas can paralyze, confuse, or even constrict growth.

Ideas flow too freely to some entrepreneurs and driven executives. In our experience, many of the brainstormers are too busy to discern an idea’s true value. Often, they lack the expertise and patience to nurture an idea into its full market potential.

As the shiny new things, novel ideas can distract a company’s real mission and operational effectiveness – and dilute hard-earned, long-term brand equity if a new product or service gets launched that cheapens the company’s reputation.

Yet, there might be authentic monetizing magic in an idea, a seed of real growth. How can you tell? Measure. Validate. Do the hard work of doing your homework.

It is not an idea itself, but the successful execution of a worthy idea that makes a measurable difference. Capturing an idea, vetting its value, and refining it into a leading product or service – that is the process by which an idea becomes worth many dozens of dimes.

Genuine innovation requires a pragmatic process. This is the real work, the boring part. Critical decisions need to be made early on with an unflinching eye. Include stage gates in the process where a concept may be killed if it does not meet muster.

The next time someone tells you that “ideas are cheap,” agree with them, then pull out your spreadsheets, competitive studies, customer feedback reports, and market-validating research for your big idea.

If there is sound proof and a compelling plan, your idea may be market ready. For every idea that may have merit, apply the carpenter’s rule: measure twice, then cut once.

Enroll the Skeptics Early

After working on hundreds of innovation projects, one fact remains. If you cannot get executive sponsorship of the final concepts, they will never launch. We recommend a few steps to get leadership engaged in solving the problem with you as part of the process. Therefore, they will feel invested in the outcome of the innovations in the marketplace.

Set up a meeting to unpack the starting assumptions of the Innovation Project. Make sure you include time to think about unthinkable things. For example, if the company needs a new product, make sure you include time to ideate on different business models. Also, provide the context to free everyone of their current paradigm and boundaries.

We like to use a simple exercise called What Will Get Us Fired, and we encourage wild thinking. Have your team begin by thinking about all types of illicit, weird, and shadowy things they are not allowed to voice normally. Then, make their minds stretch into solutions thinking. Have them pair up, pick the wildest ones, and then flip the concepts on their head, and transform them into a concept the market would accept. Once they witness the process, they will understand that awesome breakthroughs often sit right next to ridiculous.

Then, re-write their role. Instead of setting them up to analyze the results at the end of the process in a PASS/FAIL or YES/NO dynamic, have them check in as part of a team invested in something that will enhance the company’s top line and make it brand a leader. Call them an Action Team or a Realization Team, something inherently collaborative and additive.

Check in at key points. After all of the Empathy and fieldwork is complete, give them a window into the insights. Likewise, after the Define phase is complete, connect the dots for them, let them help wordsmith the reframing of the findings so they have genuine ownership in solving the right problem.

Use their expertise. Let’s say one member is in the legal department, one is in RnD, one is in business development, and another works in regulatory affairs. After the Ideation phase is complete and consumer desirability has been validated for concepts in a series of prototype Co-Creations, then enroll them at their level of expertise by asking them to help figure out how to make these possible solutions technically feasible and market viable. We have witnessed naysayers transformed into complex problem solvers on the widest array of issues: chemistry, technology, claims work, etc.

Many members of this group are pre-amped to say “no, here is why it won’t work,” and this habitual knee-jerk response has caused billions of dollars to be left on Innovation’s cutting room floor. By getting their enrollment early, and by making them part of the process and solution, they work toward, rather than against, new products and solutions.

Measuring Innovation with Money

Innovation is such a heady, ill-defined concept. Innovation is one of those words – like strategy or creativity – that means either nothing or something different to anyone who hears it. But when handled correctly, genuine innovations are the lifeblood of any company’s continued health and success.

How do genuine innovations get measured?

Money.

Revenue and profit. Cold, hard cash. Top-line growth. Money.

Many innovation methods have stopgap checkpoints for seeing the financial potential. Our favorite is loosely based on a seven-question grid created by the authors of the Business Model Canvas. We will share its basic insights herein, as the Southern Growth Studio uses it as a starting point for judging the monetary potential of breakthrough innovations (not cost-saving or incremental innovations; however, those are measured by different metrics).

When vetting a breakthrough innovation ensure it meets at least one of these criteria. The more the better.

Switching Costs – does your innovation make it difficult to switch to a competitor? In a plain-speaking analogy, are you easy to wed and hard to divorce?

Recurring revenue – how does cash flow? Hopefully on an ongoing basis from each customer.

Earn before you spend – can you get an order without being too capital intensive? Think about Dell in its heyday, how the company changed the game by not assembling computers until orders were placed.

Game-changing cost structure – can you change the whole way an industry operates? Can you be a Netflix against Blockbuster? Change the game.

Getting others to do the work – can you enroll others to help you add value? What is Facebook without all of the many, willing users who create all the content?

Scalability – is there ample room to multiply growth in the market without too many costs added?

Protecting from competition – is your concept defensible in one way or another?

After doing the necessary field, empathy, definition, and ideation work, get your innovation team to vet their breakthrough concepts against these seven questions. If they pass at least one, green light the prototype and test, test, and refine.

Did we mention that money will follow?

The Back End of Innovation

Many CEOs say that they have more growth ideas than they know what to do with. It seems like there is a universal love affair with generating ideas but less enthusiasm when it comes to figuring out which ideas are the most commercially viable and how to actually implement.

This imbalance causes a backlog of ideas, begging the question: Do too many ideas stall out innovation?

This quandary is rooted in what is known as the “Frontend of Innovation,” which is the idea generation part of the process, and the “Backend of Innovation,” which is the strategy and implementation of these ideas.

Companies with an established innovation program have these two elements in balance. Innovation stalls out when there is a bandwidth issue – either there are no analysts on staff to evaluate each opportunity or there are too few of them and, like the patent officers at the USPTO, they never see the light of day.

As much as we love the creative idea generation process, we are also keenly aware that ideas are a dime a dozen. Extensive market validation is needed to prioritize, incubate, and develop the concepts with the most legs. Just like with a startup, market validation means proving (or disproving) feasibility, demand, and profitability.

Singular devotees of the Frontend of Innovation hate talking about this reality, it makes their skin crawl. This is because putting these limitations in people’s minds during ideation limits the creative output and perhaps blocks a breakthrough. We agree, but with generative ideation and limited validation it is easy to see how the backlog ensues. Without a quantitative way to gauge ideas, they can all appear equally appealing.

So now, we will give the Backend of Innovation a rare moment in the spotlight. It doesn’t get a lot of airtime because it is the less glamorous workhorse of the innovation process, but without it, innovation suffocates from idea overcrowding. Much like the tired funnel diagram, the Backend sets up a process and framework to assess ideas and eliminate the weakest from the development pipeline.

Market size, consumer insights, competitive pressure, business model, and return on investment are just the beginning of the factors that should be assessed before moving the concept forward to pilot.

Figure out what other factors are critical go/no-go stage gates for your organization to narrow the funnel. The basic questions are: How big is the market? What is the competitive pressure and does this represent a better alternative? Does the end user want and accept this solution? What is the business model, and what are the operational factors involved?

Strive for the intersection of generative and lucrative. As with many things in life, the key is balance and moderation.

Add Financial Elements Early in the Innovation Process

Innovation is a saturated field, but one with a hole in it. Many companies can generate thousands of potentially valuable ideas, but have no acceptable cultural method for placing a value on them.

Many of these same companies can do Wicked Thinking, block out Business Model Canvases, and follow a Design Thinking Sprint, but they lack credible and concrete thinking about the financial side of their innovation concepts as the front-end process is progressing.

Too many in the innovation field do not translate their findings into their company’s existing vernacular. As a result, they don’t get buy-in from the people who take them to market and they wither on the vine.

Good marketers and product managers speak the language of money. Therefore, even if you’ve followed a strict human-centric method of innovation, speaking about the end-game will help socialize the efforts.

Invite the business side of the house into the project cycle earlier to gain their buy-in. By looking at each major step in the process through a financial lens, you will win their trust. Here are a few methods.

After you have completed the Empathy and Define stages, invite them into a Business Model exercise, so they get a sense of the pragmatism of the process. To boot, they also earn a real sense of the problem for which you are solving.

After the Ideation phase is complete and you present the concepts, add some thinking about how the concept will be monetized and why it is important for the brand.

During co-creation present each concept with features, benefits, and also test pricing.

As the Front End process is wrapping up, present each vetted product or service concept with a one-page draft business case and suggested go-to-market brief.

Adding these Back End elements to the Front End process creates a bridge between the Innovation and Business Team. By applying these simple tactics to the process, more innovations actually make it to market.

Allow Innovation Exercises to Expand Business Model

As your innovation efforts begin to move from the ideation to the testing phase, or the co-creation with consumers or customers, outlandish and disruptive concepts present themselves. As messy as children arriving, they show up, saying “feed me, let me scream at the top of my lungs, I’m uncivilized” all without speaking.

Don’t be put off by how wild or unconventional they may be at first. Remember, breakthrough thinking sits right next to insanity, or as we in the trade say, “awesome sits right next to ridiculous.”

Instead of having a knee-jerk overreaction to something novel, practice non-judgment on some of your discernment filters. Even if the concepts do not fit your current business model that doesn’t mean you cannot capitalize on the insight in a number of ways.

Here are three viable models to consider whereby you can realize the value of the more seemingly “out there” innovations that arise as a natural part of the process.

First, if the market seems big enough and you have resources to deploy, start a new branch of your business. This could mean a product company selling as a subscription rather than at retail, or starting an e-commerce only channel for a specific product. Or, it could mean a service business launching a product line. Or, a product company could pilot a store with an eye to growing it into a franchise business.

Second, maybe you can license your brand to a key partner for this particular concept. You’ve already developed the idea and completed market testing on it, and therefore have a realistic grasp on the market desirability and technical feasibility. Make sure this scenario is a win-win—that your partner has something to gain and also already has something key that you do not, whether it be channel distribution or technological expertise. A good licensing partner can make a good concept a great success.

Third, think brand marriage. Find a good relationship with a brand that makes a good marriage. Think of Cole Haan using Nike insoles or Apple using Intel chips. So many examples come to mind where the best of each company becomes part of a whole offering.

The main thesis here is don’t toss away good concepts because they don’t fit your existing business model. If you invest the time and energy, you can reap a bigger harvest than your current paradigm allows. Think broadly.

Alas, Poor Henry and the Problem

According to legend, Henry Ford scoffed at market research and what we now call Consumer Insights, proclaiming, “If I had asked people what they wanted, they would have said faster horses.” While there is a certain degree of wisdom in this statement, it has been misquoted to justify bad, hubris-inspired product failures by too many corporate egos.

Yes, to Ford’s credit, sometimes the visionary impulse of the inventor lives outside of convention. However, Ford made a mistake by thinking of his customers as unimaginative drones and an objectified, uncreative herd.

In reality, this quote is an act of fiction and cannot be traced back to the writings or sayings of Henry Ford. Ford was too smart and too shrewd to ignore customers or to act like a tone-deaf, singularly gifted inventor. He knew his audience – and this insight drove him to find ways to design a process that enabled the vision of an affordable car for the masses. The key to success and good design that wins in the market: knowing your audience.

If you give people a chance – and also employ formal discovery, ideation, and brainstorming processes and methods – they can help your company define the real problems in the market. You have to let consumers or customers (if you are a B2B company) co-create with you to identify the unmet needs and their real desires. After you understand their world and their perspectives, you can validate these findings with a mix of empirical, observational, and even intuitive modes and methods.

The real key to creating a disruptive, breakthrough innovation is discernment. By knowing the context of the people in the market, you know the gaps. In these gaps dwell the seeds of future market leadership.

The issue is one of orientation. If you approach an innovation project or a venture with a rigid, fixed notion of what the market needs, and you have not actually bothered to check with the market, you have paid a great disrespect. You have also created a wall between you and reality. You are creating in a vacuum.

Consumer or customer insights can help your company define the real needs and design a wildly new solution that solves a human problem.

So, if you walk into a new product meeting and the pipeline manager begins by saying “Henry Ford said … ,” just laugh, tell him or her that you find the brazen notion amusing and you appreciate the creative thrust that birthed the product concept; however, we need to test the need and validate that it is a problem the market will pay for.

Here, your customers can give you visceral context of what the market will or will not accept. Letting them back up into problem solving around the market need will give you many more product concepts.

A few of these ideas may be pure gold.

Next Step, Innovate the Open Young Minds

Our last Let’s Grow column focused on an outgrowth of our efforts with some sharp peers, the Memphis Innovation Bootcamp.

One objective of the Bootcamp is to build a community of innovators. The more we socialize these methods and tools, the larger the social and business problems can be met with creativity, empathy, and the widest range of possible solutions.

Thus far, we have held mini bootcamps with companies, university and college students, and non-profits. The number of innovators is growing; however, the impact—thus far—is limited to product development and a little bit of city planning, thanks to our peers at the Memphis Mayor’s Innovation Delivery Team.

No offense, but it is an almost insurmountable challenge to open the minds of career-track, socially-conditioned professionals to see the city through the lens of pure possibility. To remedy this business-centric application of innovation, we are making strides to take the Bootcamp to high schools, both public and private.

If we can teach Design Thinking to the emerging generation it will achieve many benefits, including: stopping the brain drain from the region, mixing multi-generational teams of volunteers working together to make the region a healthier and more vibrant community, seeing the region with eyes of potential, stimulating a culture renaissance, and, most important, teaching creativity and critical thinking to the generation who will inherit Memphis.

The impact of design thinking in education has two overarching, positive benefits: First, it insists upon a multi-disciplinary approach—design thinking demonstrates that bringing together seemingly disparate perspectives can be key to discovering effective solutions. Therefore, this approach shows students that the most complex problems are best solved using an interdisciplinary approach.

Second, the power of collaborating with others: design thinking emphasizes that through collaboration (rather than cut-throat competition) is critical to the learning and problem solving process—a mindset that will be valuable to their scholarly, professional, and personal lives.

But the real benefit is teaching the power of empathy with others. Design thinking teaches students that the best solutions are empathy-driven and created for real people with real problems. By understanding that an answer to a problem is only as good as the user finds it to be, students understand that solutions that really connect to others are more valuable than solely empirical or logic-based problem solving methodologies taught today.

The world is what we make it. Teaching students empathy, collaboration, and methods for being cunningly creative will empower the city for generations to come and inspire all of us to make it a better place instead of merely accepting the status quo as is.

Innovation, as a discipline, tends to be special assignment work that is reserved for the creative hotshots, iconoclasts, those in hot spots like Palo Alto, or on an esteemed university campus, such as M.I.T. Yet, the lack of a real practice of innovation cripples businesses and communities. The dirty secret is that anyone can do it with a little training.

Another secret is that innovation work and its methods are not competitive; rather, as a model, innovation holds the very keys to a collaborative, sustainable future for companies, non-profits, cities, and individuals. You just have to do it. Not talk about it, read about it, or speculate, but do. Action wins.

To this end, several peers in the community who are passionate about Innovation and its positive impact on business and the social sector started meeting to share their passion. The natural outgrowth was the Memphis Innovation Bootcamp. Organizations on the founding team included Merck, FedEx, University of Memphis, and the Southern Growth Studio.

The Design Thinking methods were adapted from Stanford’s D. School. MIB is a three-day, intensive, hands-on introduction to the latest concepts in design thinking and innovation. We have held two sessions, founded an advisory board, and are building up an infrastructure of innovators who can get behind projects that make the region a better place. MIB is a three-day, intensive, hands-on introduction to the latest concepts in design thinking and innovation.

Mission of MIB

Create a network of innovators who produce human-centered solutions that positively transform lives, communities, and businesses.

Approach

MIB – A 3 day hands-on, real-world, exciting, transformative immersion experience that imparts application-ready design thinking capability.

MIB Connect – MIB connects local businesses, organizations and governments with local and global resources, to establish a network of robust Design Thinking programs.

MIB Engage – MIB staff engages with a select group of local organizations to impact the community and help establish Design Thinking capability.

Think of it as a Memphis Innovation Revolution or innovation for the rest of us.