Five Factors that drive the need for more innovation
I'm going to focus today on five drivers that will require you to do more innovation. You can look at the list and decide how much each one of the drivers individually, or in combination, will affect your business. Then, based on the influence of these five drivers, you may be able to decide not only how much innovation you need, but how soon you need to get started with a more concerted effort. We believe the answer to that question is: yesterday.
There are many forces at work that will drive the need for more innovation. The five I want to describe today are:
- Falling Trade Barriers. Even in a tough worldwide economy, trade barriers are falling, not rising. In the last few months the US has signed new free trade agreements with countries in South America and Asia. As trade barriers fall, new products and services from many more competitors enter the market, to compete with existing products and services. Increased competition, especially from countries where costs are lower or technology emphasis is higher, will either drive down prices or increase customer demand for more features. Both will increase your need for innovation.
- The increasing rate of change. The lives of people in the late 1800s and the early 20th century changed, but changed slowly. Many people never traveled more than 100 miles from their homes. Many never heard a radio, never saw a TV show, and few experienced the luxury of an automobile. In the mid-20th century, many people had access to basic necessities and some luxuries, but their standard of living and access to information pales in comparison to what we expect on a daily basis. The pace of change is ever increasing, and with it expectations of new products, new services and new features. We expect more as customers, demand more, and product lifecycles are ever shorter.
- Customer Expectations Increase. We may not always know exactly what we want, but as consumers we are aware of more competitors, more channels, more offerings than ever before. Some of this is clearly stoked by rising living standards, some by improved marketing. But our expectations about our quality of life, and the products and services we need to "keep up with the Joneses" is ever increasing.
- Increasing access to information. Everyone, everywhere, now has the same ubiquitous access to information everywhere. Look no further than the recent news that Stanford and MIT will place their best classes online. Hundreds of thousands of people are signing up. There's no monopoly on information, or what can be done or discovered with information. That means smart people, everywhere, are going to leverage their access to information to create new products, services and insights. Thus, new and interesting concepts will be available from more sources, at an ever increasing rate. Education is also much more widely distributed, so more people will receive more education and have more access to information, which will mean more and better products and services.
- Decreasing cost of entry. Thanks to the internet, I can purchase goods and services from people on any continent. What would have once been difficult to find or transact is now much simpler, and eventually will be transparent. Any individual or small company can access almost any market, as the internet reduces marketing barriers and global financial programs reduce financial risk and barriers. Anyone can enter and sell in any market.