 Whenever
I speak to some of my new online friends in the innovation consulting
field, we lament the fact that, although everyone seems to agree
innovation is important, few companies seem prepared to bring in
someone professional to help them do it better. I've concluded there
are four reasons for this:
- People don't like to change. It's not that hard to sell Change Management, because companies realize this, and when they have
to change they recognize they need help to manage and 'sell' the change
to their own people. But usually that happens when a change has been forced upon them (e.g. in a business merger). Change is reaction.
It takes enormous courage to be proactive and decide you're going to
put yourself, and your people, through potentially gut-wrenching change
when you may not absolutely have to, or before you absolutely have to. Business process improvement is largely incremental, small, manageable, painless stuff. Business reengineering was sea change, transformational, traumatic. Guess which one of these consulting disciplines is still around?
- Everyone thinks they can do it themselves.
When a company accepts that innovation is needed (because the stock
price has halved or the new offshored competitors are eating its lunch)
there is generally a sense of collective embarrassment, and a
groupthink quickly sets in that says "we got ourselves into this, we
have lots of creative minds here, we can get ourselves out of it".
Often by the time they realize they need help, they need a receiver or
bankruptcy trustee rather than an innovation consultant. There's great
skepticism that innovation consulting is a real discipline. An
innovation 'facilitator' may be acceptable, to provide some structure
and process to the company's efforts to solve its own problems, but
what outsider would be arrogant enough to presume they could tell a
company how to transform itself into something very new and different?
It's like bringing in someone to teach your kids about sex or to advise
you how to get your personal financial affairs in order -- eminently
logical, but embarrassing to admit you need outside advice to do these
things well.
- It's a 'dragon' issue, so it involves a lot of trust.
It's frightening to open your kimono to a stranger. You have to admit
that without innovation there is (or will soon be) a huge problem in
your organization. There's no such thing as a dragon, but there it is,
wreaking havoc right in our midst. Anyone know a dragon-slayer we can
trust not to tell our employees, our customers, our competitors that
this fire-breathing monster is in our midst? In some sense it's an
admission of failure, so even calling it something else, or doing it
when the dragon is still small, doesn't entirely eliminate the
discomfort.
- It requires understanding of how and why the market has moved on without you.
Successful businesses have found a need and filled it, and are often
intensely customer focused. When you need to innovate, that means those
customers you've got so close to and so comfortable with are somehow
unhappy with you (or alternatively are much happier with your
competitor). This is hard to come to grips with, because
- it's probably not your fault -- it's the market and the competitors that have changed, probably in disruptive and unforeseeable ways,
- customers also hate change, and it's painful to discover
that they're getting something from a competitor that's so much better,
cheaper or whatever than what you offer that they've made (or are about
to make) the switch,
- it's unnerving to realize that customers ultimately have
life-and-death power over your business, and often behave
unpredictably, and
- it's difficult and to start looking at your customers and
market through a strange new perspective -- which is where you have to
start if you really want to innovate.
 The
first three reasons are hard for anyone in innovation consulting to
overcome. You just have to wait until the company is ready to buy what
you offer. You're as much at the mercy of your customers
and their readiness for your service as they are. Quite often when I've
debriefed over an unsuccessful innovation consulting sales pitch, the
first realization is that I couldn't have done a better selling job,
the customer just wasn't ready, emotionally,
for what I was offering. When you know you have something of great
value to offer companies, it's easy (and deadly) to get ahead of the
market. All you can do is give them a steady stream of interesting
ideas that credentialize you and show you understand and care about
their business and can be trusted, and wait until they're ready to buy.
The dilemma is that by nature innovation advisers are not an especially
patient lot!
The fourth issue is one where we in the innovation advisory business
could demonstrate some thought leadership and make it a little easier
and more valuable for customers to retain our services. We all tend to
look at customers in two slices or dimensions: (a) the demographic or
affinity group they belong to, and (b) the types of needs and wants
they have. So if we're selling MP3 players, we may be focused on the
14-29 year old demographic (who are fastest to adopt new technology),
and the seekers of high-capacity, portable, personalized music, as
depicted on the first chart at right. And as new features come out we
incorporate them, and we ensure our software is compatible with
different music formats and operating systems.
But suddenly we're being blown out of the water by the Apple iPod. Why?
Is it a better product? No. More reliable? No. More compatible or more
advanced features? Not really. So where have out traitorous customers
gone? And why are all these old fogies buying these things? What, even
the Queen
has one? Damn, they cost 50% more than our unit. What do they have that
we don't? If we don't figure that out, and understand how the market
changed beneath our feet while we were busy focusing on it, we're
goners.
As the second chart shows, the iPod is as much a fashion accessory as
it is a music player. What it has that we don't have is the logo
and design that Apple are famous for. It also appeals to groups that
might have felt self-conscious wearing something associated with
younger users -- like 30-something and older commuters and exercisers.
And what's worse, it has counter-culture appeal. Even though our
product is more counter-cultural than anything a giant like Apple could
produce, perception is reality, and Apple is (for now) the epitome of
counter-culture, one of only two surviving competitors to Microsoft,
the company everyone loves to hate. So the iPod is cannibalizing our
18-29 demographic, the part that also sees itself as counterculture.
And most infuriating of all, some of the style and status seekers are
leaving us to buy a unit like the iPod Mini that actually has a lot less music capacity than our machine, and costs more. Damn these fickle and irrational customers!
What's happened here? We've defined the demographic and affinity segments in terms of what we have to sell, rather than how these affinity groups define themselves. And we've defined their needs in terms of the features
and attributes we can offer, instead of much more broadly in the
emotional terms that the customers define and recognize their needs themselves. This is a fatal error, but one which our intense customer focus almost drives
us to commit. Once we get fixed in our mind what our demographic
targets are and what needs we're filling, we start to define our
customer in the context of what we can sell to them, and we can't shake
that mindset. Meanwhile, the customers are defining themselves
in completely new ways constantly -- as the culture changes, as they
get older, as their needs and wants evolve. While we were focused on
them, the customers have left us behind.
I believe there is a great opportunity for innovation advisers to help
their clients understand where the market is going (and has gone, and
will be going soon) in a radically different way from what marketing
consultants have done. It's another opportunity for cultural
anthropology -- going out into the complex
(not merely complicated) marketplace of ever-changing self-forming and
self-defining communities, constituencies, and affinity groups and
discovering how customers are redefining themselves, and how their
wants and needs are simultaneously and constantly evolving. It is
through looking at the patterns in customers' stories that we can
provide our clients with a startlingly different and enormously useful
picture of the market and its direction -- the most valuable input into
an innovation strategy that anyone can offer.
Who knows, they could be so impressed that they'll overcome their
resistance to change, lack of trust, and skepticism of the value of
external advisers to the point innovation consulting becomes a growth
industry and Western business could once again become the most
innovative in the world. Innovation advisory services could even become
the intersection 3 career many of us are looking for.
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MADE IN CANADA
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