The industry is obsessed with innovation, but too many marketers are focusing only on the innovation of product, says Nikki Davey. Taking a step back to examine the way brands innovate and moving away from only functional delivery, companies may begin to see the bigger picture.
The lifeblood of any company growth is innovation, yet the range and rate of failure today is phenomenal – just 20% of new products survive and only 15% generate top-line growth. With a company’s average life expectancy now just 15 years, the imperative now is for marketers to develop both a pipeline of innovation to drive incremental growth coupled with a disruption strategy. This is the way to deliver true innovation and be competitive sustainably.
The innovation paradox
One of the most common mistakes made by marketers is only focusing on product innovation. Succeeding with innovation means offering consumers more choice, but how do you combat the overwhelming amount of choice that consumers have available to them?
No matter your product, service or platform for sales, it’s critical to move away from talking about their functional delivery and seek out value that connects with your consumer in different ways. Break out of this sea of sameness by evolving your thinking and creating experiences that impact. Also, examine your business model to find one that will maximise your revenues and profit margins.
The product and service triple threat
They must hold meaning for your consumers, your business and your channel partners. Focusing on product alone will limit your growth potential. Kantar TNS’ research into successful products from the last 15 years shows that new innovations will not succeed without all three. But it’s more than looking at what has created success – ensure you’re armed with the triple threat of innovation.
1. Innovate the innovation
It’s time to re-evaluate how we create and ideate altogether. Instead of just another line extension – a new flavour or small new benefit which cannibalise sales from the company’s existing portfolio of brands, often delivering a lower margin than the current portfolio of brands do – put your focus purely on taking your brand into new moments of consumption. This involves innovating off the back of clear moments of tension where consumer needs are not being completely met by existing brands and your existing innovation work is resolving an existing problem, so you don’t deliver just another ‘me-too’ product. Specialised solutions to individual or unique problems are a good way to break through market sameness – create a product that serves a purpose and eases friction in a real-life moment and you’ll have a greater chance of success.
Sanitarium’s Up & Go Liquid Breakfast is the flagship example of capturing and creating for a consumer moment, but Singapore-based Chef-in-Box has taken it to a whole new level. It creates quality individual vending machine meals using only fresh ingredients in a wide variety of cuisines. Its state-of-the-art hot food vending machines alone offer 32 meal choices – imagine the possibilities of these in hospitals, school canteens and office buildings? This takes the popular chef-at-home prepared meal delivery to places where good quality and nutritious meals are really needed.
2. Innovate the experience
Experience innovation brings your product or service to life through elevating the user experience, however you don’t have to be a sexy-tech or cool-destination brand to do this. As an avid traveller, I love the Singapore Airlines app that allows me to preselect movies and create favourites lists before my departure. Personalising my ice-cream at Magnum’s Pleasure pop-ups was also a memorable engagement experience.
Take your cues from those brands that have reinvented their product experience without a product in sight – there are always ways to innovate without touching the product with fresh experiences that address fears, entertain or simply give consumers a new reason to play, sample and share.
India’s multi-award-winning Asian Paints created its Colour Ideas Store – a 2,700 square foot experiential space dedicated to the customer experience of personalising the colour of their homes – there is no retail at all (the paint stores are adjacent). It is vibrant, engaging and so beautiful. From colourful cloudbursts when stepping on floor-pads to colour cards collecting ideas through RFID technology, people receive a colour magazine capturing their experience. The tech engagement drives great dialogue – Asian Paints experienced a 35% sales increase as a result.
3. Innovate the business
First things first – business innovation has nothing to do with product pricing. Price dropping may ensure that you maintain volume, but your revenue will go down over time. Business innovation is about creating new value through new channels and ensuring existing products and/or partnerships reach more consumers and reduce risk. Consider the long-standing partnership of McDonald’s and Coke. They didn’t set out to innovate products, but through their distribution partnership, they innovated how they deliver to customers’ needs.
However when it comes to innovating your business model, look to technology and disruption where there is no impact of fixed costs – you’re literally just expanding. From cab rides to takeaway deliveries, Uber has launched an app for the ladies (and men) of London to have their salon come to them within 30 minutes of their smartphone request. In a partnership with Dubai-based specialist beauty tech firm bgX, around 15 salons including Toni and Guy are helping the time-poor look their best before they step out the door.
Innovating this way is totally scalable, promising a whole new business model for all brands. For example, Coca-Cola has partnered with Cargo – a company that provides in-car goods and services for the growing ride-share economy. Uber and Lyft customers buy Coke’s Smartwater, snacks or even a phone charger by simply tapping on an online menu.
Partnerships are innovation working for your customer
As marketers, it’s time to think more multi-dimensionally about innovation. If you need supporting evidence to take this approach forward, look to your suppliers and partners to provide the insights needed across all innovation categories.
Big brands typically can’t make big changes, but incremental change is within reach. Through incubating discrete areas of the business to build momentum, it is possible to bolster a rationale internally for more holistic change. In any event, the new innovation reality remains the same. While innovating product with purpose will never go away, innovation across product, business and experience in an agile environment now equates to survival.
Nikki Davey is director of innovation and product development at Kantar TNS.
Originally published by Marketing mag on 21st May 2018