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"It is impossible for ideas to compete in the marketplace if no forum for
  their presentation is provided or available."           Thomas Mann, 1896

The Business Forum Journal


Innovation, Strategy and the Customer

By  David G. Chaudron, PhD


The flavor of the year seems to taste like innovation, so some comments seem in order.

From one perspective, innovation is having interesting people come up with novel ideas. If that is all what was needed, we would just need to put Angela Merkel, the Chancellor of Germany in the same room with Eddie Murphy, the famous comic, and the world�s problems would be solved. Though entertaining, this meeting might involve much disruption, but little innovation.

In this month�s Harvard Business Review, authors describe a matrix entailing what, and how much internal change is necessary for any given innovation:  On one axis, how much the business model of the company needs to change; On the other, how much technical competencies need to be adapted or added.

Please note that what may be a �(radical) game changer� for one company may only be a routine change for another.

Corporate inertia, biased measurement systems, resistance to new ways of doing things, and a sincere fear of cannibalizing existing sales all push older and larger organizations to make only routine, incremental improvements. Over-eager management, or those CEOs fixated on the �new big thing� can easily overlook the complications of trying something radically different from what they make, or how they make their current products.

The sales of an innovation into the marketplace is a slightly different matter. While a product may be innovative, it does not mean it will sell in the marketplace. For all of us gadget heads out there, just look in your closet at all of those neat things you bought, but never became successful.

For an innovation to be successful with a customer, I am reminded of Everett Roger�s Diffusion of Innovation theory, described below, as modified by myself and others. For a new product or service to be successful in the marketplace, it must have:

Relative advantage: Is it a better product than what customers already use, or want to use? Despite its problems, those who remember jammed paper in fax machines are grateful for email.

Visibility: How well can the followers of trends discover what early adopters are doing? Can we say, �Keeping up with the Kardashians�?

Trialability: How frictionless is the first try at using it? Zappos has a wonderful policy for shoe buyers, offering free returns of the shoes their customers buy.

Simplicity: How easy or obvious is it to use? (It took me four hours to teach my parents how to use a cell phone and make a call.)

Compatibility: How well does the product just �snap in place� what other things I am doing? Many users were surprised by the changes made from Windows XP to Windows 7 and 8. What should have been a seamless upgrade, was not.

Match the degree of customer conformity: Is there a group norm encouraging new and different things? If not, how do you access the influential few, or make it appear that many are already using the product?

Scalability: How elastic is the matching of sudden shifts in supply and demand?

While scalability is always a factor (Remember the old IBM commercial, where a company was watching a counter of its first internet sales? Everyone was happy until the number changed from 6 to 60,000.), it is especially important with the �lone inventor.� The individuals, or small group of people, often have the technical expertise to make revolutionary change, and do not have an old business model to blow up. Perhaps they envision themselves becoming another Bill Gates, riding the wave from startup to billionaire. Or perhaps they may wish for an �acqui-hire�, where a larger corporation buys them out and they get lucrative jobs in the larger company. Unfortunately they may really only be building a �lifestyle� business that provides the founders with a comfortable income, but will not grow substantially larger. Angel and venture capitalists, on the other hand, look for investments that will make outsize returns to make up for their many failures. As a result, they will not likely invest in those companies whose technology or business model will not scale.

Given that all these factors come into play when we talk about successful innovation, it is a wonder that we get new, better stuff at all?

Author Profile - David G. Chaudron

David G. Chaudron PhD., is a Fellow of The Business Forum Institute and the Managing Partner of Organized Change Consultancy, and the developer of the Organized Change Survey System, writes with more than twenty years of experience with a wide variety of organizations including manufacturing, electronics, NGO, petrochemical, biotechnology, government, banking, venture capital and financial service sectors. He works internationally with clients in North America, South America, Europe and the Middle East.  David is the author of many practical articles on strategic planning and organizational change and he has assisted organizations in planning their strategies, changing their organizations, surveying their employees, building their teams, and improving the leadership styles of their executives.

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