Over
the years I have advised many entrepreneurs, worked with a lot of
consultants, and coached executives. All three groups repeatedly make
the same mistake: They try to introduce 'solutions' that are really
interesting, quite feasible, and well within their area of competency,
but which fail to uniquely solve an urgent problem (in the eyes of whoever is paying for it).
It is easy to get entranced by what's possible,
especially when new technology is making things possible now that were
impossible even a decade ago. I know of many entrepreneurs who have
invested everything they have to develop an offering that is
fascinating, but which has no market -- because customers spend almost
all their money on products and services that they think meet urgent needs.
The late-night infomercials are full of such intriguing but unneeded
offerings, as are the catalogues of high-tech gizmos that you often
find in the seat pocket in front of you on airplanes. There's a reason
these gizmos are "not sold in stores" -- because once you see them, you
realize you don't really need them, so you pass them over and go back
to shopping for the needs that caused you to drive to the store in the
first place.
I've written before about the difference between
needs, wants, and nice-to-have's. We usually spend our disposable
income on them in that order -- needs first, then wants, then
nice-to-haves. If the wants (and sometimes even the nice-to-haves) are cheap enough, however (like almost everything in the infomercials, gizmo catalogues and 'dollar' stores) we may buy them before we buy a more expensive
need -- that's especially true, alas, for the poor, who otherwise would
probably never buy wants or nice-to-haves at all. The purpose of
advertising (especially in infomercials and gizmo catalogues) is to
move a nice-to-have in the customer's mind up to a want or even a need,
and that advertising has been finely honed to do that. Generally, after
the fact, we regret such purchases (both because they generally aren't
as good as advertised, and because they precluded us from buying
something we needed).
Unless you're willing to resort to such
advertising hype, and burn a lot of bridges behind you, you need to
focus on offering products and services that meet real needs. And if
you're wise, you'll focus on urgent needs before important ones,
because to most of us, there is always tomorrow to look after that
important need, while the urgent need must be addressed today. No logic
there, just human nature. The discipline of knowledge management, for
example, can provide many resources that are important and
nice-to-have, but the solutions that traditional KM have produced are,
for the most part, neither urgent nor strongly needed: The principal
method by which people share information is the same as it was before
KM came along -- face-to-face conversations and telephone calls. The
late Peter Drucker told us, decades ago, what the urgent need for KM really
was: Improving the productivity of front-line "knowledge-workers" --
those of us who make a living because of what we know better than
anyone else. That urgent need remains largely unmet, which is why, in
my opinion, KM is still alive ten years later despite its disappointing
results, and also why there is such recent interest in Personal
Knowledge Management, which could more effectively address that urgent,
unmet need.
A lot of consultants (including me) make their
living helping their customers become more innovative. 'Being an
innovative company' is another nice-to-have, or perhaps want, usually
mentioned in the corporate mission statement (which means it is important) but rarely connected to significant current-year programs (which means it is not urgent).
The main customers of innovation consultants are businesses that are
obviously in trouble (though, alas, that sense of urgency often comes
too late) and businesses whose executives have the prescience to
realize that they will be in trouble soon unless they become more
innovative now (and such prescience is rare, and takes a great deal of
courage).
There is a propensity of inventors, and corporate
R&D departments, to devise new products and services that are
incremental to those that have already proved themselves in the market.
Most of what the corporate world calls
innovations are in fact sequels, 'new and improved' variations
('upgrades'), knock-offs, redesigns, new flavours, imitations and
spinoffs of existing successful products. They rarely provide
significant value above and beyond the original, but they are usually
cheap and low-risk to make, so they are often profitable. Much of the
struggling, customer-defying entertainment 'industry' is based on
watching for breakaway successes (usually produced by more
entrepreneurial companies) and copying them, and then producing
formulaic sequels of them. Apple Computer prides itself on being
'second movers' in its markets -- they watch for truly innovative
products made by companies that lack the resources to really penetrate
the market, and, before viral marketing can take off, Apple refines,
redesigns and improves on the low-cost, utilitarian, garage-built
original, and gets the entire Apple buzz machine working to scoop the
market from the brave entrepreneur. In much of this troubled world,
being cool has become a need, and in the attention-deficit economy,
simple, elegant functionality is a need. No one meets these two needs
better than Apple. Aspiring innovators have much to learn from their
example.
A common mistake of entrepreneurs researching the
market for an innovative idea is to show so much enthusiasm for the
product while talking to prospective customers that the customers say they want or need it when they really don't. A related mistake is to anticipate the market for an idea before it arrives -- to produce something before the market is ready for it. If you know there will be a need, but aren't big enough to create the need today
through buzz marketing, the best approach is to watch the market
closely and wait until it catches up, before launching your product.
Executives are often rewarded -- by shareholders and directors -- for avoiding risk, and hence for not needing to be innovative. One executive recently told me "Show me a company that claims it has
to be innovative to survive, and I'll show you a company in trouble".
What is urgent to CEOs today is minimizing risk and continuously
slashing costs to sustain the double-digit annual profit growth that
shareholders have come to demand to support today's high P/E ratios.
Their new revenues come from greater global market penetration,
incremental 'sequel' product offerings, planned obsolescence and buying
up competitors -- not from risky, innovative new products.
Probably
the hardest part of the needed-urgent-unique equation is making your
product or service truly unique. Every company claims its products,
processes and services are unique, but that uniqueness is rarely
recognized in the marketplace. The most notable way many large
companies use to try to be unique is through design.
It's not very courageous, but it is a very sensible strategy. Design is
really the only way American car companies, for example, really
differentiate themselves, while the Japanese car-makers have
differentiated themselves from American car-makers (though not from
each other) through better quality. In that industry, it's pretty clear
which differentiation strategy customers prefer.
There are many
ways a company can differentiate itself -- and stand out as unique. It
generally entails either doing something different, or differently,
from competitors. Better design is one way. Adding needed functionality
but avoiding complicating, unneeded functionality (like 90% of the
'nice-to-haves' in most cell phones) is another. Differentiating on
price is a third way, provided you have a cost advantage that will
allow you to win a 'price war'. Differentiating on product or service
quality or speedy service is a fourth. And with all of today's
bewildering new technologies, making your product or service easier to
use or easier to buy is another alternative. I've described other
differentiation strategies in previous articles.
The
decision chart at the top of this page can tell you whether it's time
to charge ahead with your innovative idea, or whether instead you
should wait -- for the market to realize it needs your idea, for that
need to become urgent and not just important, and/or for your own
differentiation strategy to evolve to the point the market sees your
offering as truly unique. |
MADE IN CANADA
trust your
instincts 
