Monday, June 04, 2007

Book Review: Hidden in Plain Sight

From time to time I receive a request to read and review books or white papers on innovation. Generally speaking this is something I enjoy doing, since it is interesting to see the many different definitions of innovation and the various perspectives on what makes innovation "work".

I've had a chance to review Erich Joachimsthaler's book "Hidden in Plain Sight", which I've found to be an excellent book. To that end, I've decided to dedicate two posts to the review. This post is about the first half of the book, Sections one and two on opportunities to innovate and grow and "Demand-First" innovation. In a subsequent post I'll review the third section of the book on strategies for realizing customer advantage.

First, let me start out by saying that this book is not necessarily a book "about" innovation. This is a book about corporate strategy and what I like to call strategic intent. Hidden in Plain Sight addresses a far-too-common problem - the fact that many firms have become comfortable with their understanding and view of customers from the "inside out". In this manner, many firms have segmented the customer base and determined the specific needs and wants of customers - which is traditional marketing best practice. The problem is that too often this segmentation and understanding of needs is based on the company's perspective of the customers' needs and opportunities, rather than from the perspective of the customers themselves. What happens in these cases is learned myopia and artificial comfort from the fact that we "know" our customers and understand them. Eventually what happens in these cases is that an unexpected competitor disrupts the market because they had a better understanding of the opportunities and challenges the customer faces.

So, what Joachimshtaler proscribes is an "outside in" mentality, combined with a "demand first" innovation model. In the book, he describes how Frito-Lay undertook extensive research to understand how and why people used snack foods - going well beyond traditional quantitative research to understand the reasons behind why people ate what they ate and when they ate. Much of the work Joachimshtaler describes sounds like Voice of the Customer research, although he does not describe it that way. He calls this creating the "demand landscape".

According to Joachimshtaler, Frito Lay was concerned that many of its long held beliefs were being proven incorrect. For example, Frito Lay pioneered the point of purchase rack for its snacks and assumed that most decisions for purchase were based right at the cash register. In watching consumers however, it became clear that was no longer the case. Many individuals ignored the point of purchase racks to select a specific snack. Frito management decided "We had to start thinking more about why consumers consume our products and not longer about how they purchased them". This meant that Frito Lay management had to change their thinking about customers from "point of purchase" to "point of consumption or use" - what Joachimshtaler calls "point of purpose". This last concept is why I label the book as a book about corporate intent rather than a book about innovation. In this context, innovation becomes a method or an approach to providing solutions to the new corporate intent.

The first two sections of the book do a great job laying out Joachimshtaler's concepts about customer advantage and demand-first innovation. In these two steps, the author depicts a major shift in how most firms understand and react to their prospects and customers. In his estimation, most firms are operating under an "inside out" view of customers that is tainted by internal perspectives of customers wants and needs, and by a product centric rather than customer centric approach. Additionally, years of segmentation and other marketing efforts have eliminated a number of potential customers and markets that could be viable. Once the firm decides to understand its customers in a new light, it can begin to shift its product and service development models to understand the customer demand, then create ideas for new products and services based on this new understanding. Again, this advocates using innovation and the tools and techniques for innovation (including ideation, brainstorming, consumer contradictions or seeming irreducible tradeoffs) as an outcome to generate ideas after the company has adopted a new strategic intent. I don't argue with that approach, but this switch to become much more consumer focused will require a dramatic investment in time and energy to refocus the corporate culture and the "old habits". The question the management team must answer at this juncture is: What is causing our lack of growth and differentiation? A poorly defined strategic intent, which means we can innovate but often miss the mark due to an "inside out" approach, or is our strategy ok but we simply don't innovate very well? Joachimshtaler has a very clear approach in the first case.

There is a lot to like in this book - several examples used in the book could be cribbed from customers I've worked with recently. As I've pointed out to many of my clients, innovation needs to be tightly aligned with strategy and strategic intent, or it will not be successful other than as a product extension strategy. Joachimshtaler takes this concept and reverses it, demonstrating that a new strategic intent - customer advantage - will ultimately drive new innovation approaches.

I'll provide a review of the remaining section of the book - Strategies for Realizing Customer Advantage - in a subsequent post.
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posted by Jeffrey Phillips at 12:07 PM

37 Comments:

Anonymous Corey Julihn - CE Studios said...

It is always amazing how an outside perspective can shed new light on things. Not to mention how important it is to get the view from the customer’s perspective! In my experience customers can do half of the innovation work for you.

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Anonymous Anonymous said...

Aren't you in Chicago? If so, join Professor Erich Joachimsthaler, Ph.D. for a session on his latest book
"Hidden in Plain Sight: How to Find and Execute Your Company's Next Big Growth Strategy"


Date: Wednesday, June 27, 2007
Time: 6:00 - 8:30 p.m.
Location: Kellogg School of Management (Chicago Campus)
Wiebolt Hall
340 East Superior Street
2nd Floor Mezzanine
Chicago, IL 60611-3008
RSVP: sjohansson@iese.edu

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