In the previous newsletter I argued that companies should focus on being truly distinctive, rather than simply being customer-led. But how do you become ideas-led? What are the factors that will help you succeed? In this week’s article I propose five ways that will help your business become more innovative, more distinctive and more successful.
Change the rules of the game. Most companies go along with the accepted rules of an industry seeking to compete on incremental improvements. Other companies create breakthrough growth by actively changing those rules. Southwest Airlines, for example changed the rules of the aviation industry and paved the way for Easjyet and Ryanair in the UK. They eliminated hub and spoke connections, different seating classes, seat assignments and free in-flight drinks and meals. Instead Southwest focused on aircraft utilisation, frequent point-to-point departures and friendly service with personality. On the back of these new rules Southwest was able to offer ground-breaking price reductions, against which the major carriers just couldn’t compete.
Focus on early-adopters. Too many companies try to get an immediate jackpot selling their innovative product to the mass of mainstream customers. However, it is unlikely that these busy, satisfied customers will take the time to understand your new offer. A better solution is to focus on the customer groups who like change. It is the early adopters who will sell the idea to the majority, not you. You must therefore design an offer that is interesting enough to capture the attention of these customers and enables them to sell it to other customer groups. As Adrian Slywotzky of Mercer Consulting puts it: “Future-defining customers may account for only 2-3% of your total, but they represent a crucial window on the future.”
Create a stream of ideas not a one-off win. Some companies live in fear of cannibalisation. Yet others set out to make their own products obsolete before the competition does it for them. Gillette, for example, has consistently grown by creating a stream of innovations. The Sensor razor created the initial breakthrough, before being superseded by the Mach3, which has, in turn, been overthrown by Fusion. As a senior Gillette executive said, “We have never launched a major new product without having its successor in development. You have to steer the market.”
Understand and overcome internal barriers. Perhaps the biggest barrier to adopting a distinctive strategy is internal. For example, Stanford management professor, Robert Sutton, has described the situation at Lotus (now part of IBM) in the mid-1980’s. Following its early success with Lotus 1-2-3 new senior managers were brought into the company. The problem was that they were big company managers, and innovation stalled. The chairman then did something sneaky. He pulled together the CV’s of the first 40 people to join Lotus, disguised them, and sent them to the recruitment team. Not one of the 40 was offered an interview, signalling that the company was screening out innovative people. Indeed, the only other company hit, Lotus Notes, was developed away from HQ so that “the team could work unfettered by the narrow Lotus culture.”
Feel the fear and do it anyway. One truth of breakthrough ideas is that they will be noticed, and will receive criticism. Many managers, through experience, fear criticism and only pursue ideas where there is already mass customer support. As a business leader, overcoming these fears starts with you. As owner-manager Jonathan Warburton of Warburton’s bakery noted, “One of the great responsibilities of owner-drivers is to stick their necks out and be seen to take risks, because they’re fireproof. What chance is there of the hired help taking risks if the guys at the top won’t stick their necks out?”
The bottom line
Being distinctive and ideas-led does not guarantee success, but it does make it more likely than creating a me-too offer. The five strategies outlined in this article give you practical ways to make this happen. As a next step why not take one of these ideas, test it in an area in your business and see the changes it delivers in your people’s enthusiasm, customer loyalty and financial performance.
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.