Three ways to … achieve growth through innovation
Charlie Dawson, partner at The Foundation, looks at what innovation really means, and offers three steps to doing it well.
1. Know what you mean by ‘innovation’
A useful definition of innovation is finding new and better ways to win.
Winning matters because it forces thinking about how to measure success, and if you have a clear way of keeping score then you can try things out, get feedback from the real world, and keep on getting better. This idea of innovation as a journey rather than a flash of brilliance is useful. It shifts focus from idea as genius, to an answer emerging through gradual realisation.
Winning is also useful because it is relative and an outcome of customer choice at scale against competitors and alternatives. No room for excuses. (Note, market share is not enough because it ignores alternatives.)
2. Don’t forget to be better first
Better comes before new. This matters because so many people assume innovation is about new in isolation.
It is easy to forget what your customers truly value. You define your world by what you produce – ready meals, cars, books – and forget that what customers need is a bit more fundamental – an easy meal, personal transport from A to B, portable entertainment.
Jeff Bezos concentrates his innovation efforts on making products cheaper and delivery faster. He reasons that these needs won’t change – who wants a more expensive, slower DVD? (Did we really want a DVD at all?)
In marketing we overcomplicate, and especially get distracted by being different when what the customer wants is simply better.
3. Watch and imitate
New comes last. New matters because it implies significantly better, in a way that is materially advanced from what went before. It means adding enough value to be noticed by customers, and enough depth to be difficult to copy.
One good way to do this is to find examples of organisations tackling similar challenges in different sectors. Listen to their stories, ideally from someone involved, and then imagine them running your business. Whole new approaches will emerge, and you will believe in them too.
Volkswagen tackled an intractable problem around servicing pricing through Rolls Royce Aero Engines’ ‘power by the hour’ approach, introducing a three-year fixed price offer. O2 found Tesco’s virtuous circle of low cost, low price, higher volume, lower cost, enough to prompt offering free O2 to O2 calls on their market-leading network.
When thinking about growth beyond the short term, innovation is crucial.
To do it well, ask yourself three questions:
- How do I know if we’re winning against competitors and alternatives?
- What do our customers really value, as opposed to what we produce?
- From where, beyond the familiar, can I take inspiration to find better ways of creating that value?