For most people, innovation is manifestly associated with technology. That is because innovation is often confused with inventions. Clearly, the two are correlated, but they are not the same. An invention is about applying snazzy technology for doing things differently. Innovation is about creating value by doing things differently. It may be enabled by technology, but also by more mundane adaptation of a business process (think of business model, service, channel or supply chain innovations). The key ingredient is offering superior value proposition to the customer.
That means that no company, no matter how traditional their market, or how ancient their customs, is immune to innovation. For what customers would forgo higher value products or services, once offered the choice?
Of course value in itself is a fluid quantity. There are several aspects to this. The first is that the customers would only react positively to superior products when they are able to distinguish the difference. For example, television screens have reached a plateau where improved resolution is beyond the ability of people to notice (never mind care). That need not spell doom. Car manufacturers have excelled for decades in selling, at very high premiums, products which superiority is beyond reach, under most circumstances. Germany apart, speed limits everywhere are well below the top speed of even entry level cars. So why would consumers pay excessively for top-of-the-range cars that, effectively, do not outperform the average car? The answer is that the real benefit that most customers covet is not the higher speed, as such, but the status derived from affording such a car. Which leads to the second aspect. Value has many attributes. And the third, that the determining attribute might not be immediately obvious. (The car example is brought because it is so familiar – not because it is surprising in any way). And finally, as the car example demonstrates, value does not have to mean cheapest.
It is very rare that a single product can satisfy many value attributes at the same time – since these often compete. For example, privacy, one such attribute, is at odds with at least two others, namely, risk avoidance and empowerment. Security agencies, who have long lamented the security implications of encryption technologies, exemplify the first. Encryption technologies protect the private communications of law abiding and criminally leaning individuals alike. Anyone buoyed by the endless offerings of Google and Facebook, is bound to feel the second. The price paid for the ability to search and publish information freely is relinquishing one’s privacy. For many people it is a price worth paying. For others it is not.
In a similar manner, customization is largely incompatible with simplicity, as many Microsoft office suite users can attest. Providing endless options in menu bars, or an array of buttons, satisfy some while confusing others. But there are exceptions. The best example is the Apple iPhone. Although much of the technology introduced with the iPhone had been around when it was introduced, the genius of the iPhone (and any derived and copycat product) was the way it managed to combine contrasting attributes. The iPhone user interface design is a paragon of simplicity. It is so intuitive that toddlers and grandparents alike can master it. But at the same time, the Apple app store, introduced with the iPhone, enabled users to download the apps they liked and thus customize their phone to suit their needs. This enabled the iPhone scoring high on simplicity and customization at the same time.
By in large, the attributes consumers care for most are strongly linked with their personality traits. At the rebel within we prepared a chart linking some personality traits with value attributes. The chart displays the most critical value attribute for each personality trait. Some value attributes are common to several traits, and some are typical to one trait alone. It should be noted that the chart only highlights the main connection with personality. (It is obvious, for example, that all personality traits will be delighted by considerable cost effectiveness, even though it is not the most important consideration for many of them.)
The more value attributes the innovative product or service contains, the more likely it would appeal to a larger population, as can be deduced from several recent successes. AirBnB scores well on independence, customization, social benefit and cost savings, attracting disparate groups. Similarly Uber scores well on independence, convenience, time and cost savings.
Understanding the value for customers, and tweaking the product to eke out as many value attributes as possible is in itself useful. Clearly, evidence trumps theory. Trusting analysis on its own will most certainly not suffice. Companies should apply the lean methods to measure and learn from the market and improve the products further. But this analysis provides a framework for ideating and understanding the results of market testing. Particularly during the scale up phase. The Lean startup methodology highlights the importance of attracting early adopters first. Yet, it is possible that this is achieved by meeting the needs of a single personality trait (People with strong ‘openness’ traits are usually most likely candidates) while ignoring the needs of other customers. In such a case the product is bound to remain a niche player.
Innovation is a complex process, and there is no ‘one fit all’ solution. The analysis presented here should be used in conjunction with other tools (lean startup, business model canvas) to reach the best results. For more information, please contact the author, or check our website at www.the-rebel-within.com.
Fri, 25 November