Monday, February 09, 2015

Innovators are pattern breakers

Over the last five years or so I've been asked many, many times about my opinion about corporate innovation.  Why is there so much demand for corporate innovation, yet so little practical result.  One could stipulate a number of reasons, including:
  • The lack of time or bandwidth
  • The focus on efficiency over experimentation
  • The lack of innovation skills or techniques
  • The inordinate rewards of short term thinking over long term success
  • Fear of the uncertain or unknown
And I'm sure we could continue this list ad infinitum.   These are all reasons why so many corporations can't successfully and continually innovate.  But over time I've come to realize a larger issue is at stake.  It's a problem of pattern recognition.  Most corporations believe that their customers' needs begin and end within the manner in which the corporations or the industry have defined their solutions.  As long as a new product or service can be delivered within those definitions agreed by the industry, then innovation is easier for the corporations to pursue.  But when a need or demand arises that falls outside of, or just adjacent to, the way an industry or corporation defines its solutions, everything falls apart.  Increasingly, innovation will be at the intersection of markets and industries, and corporations need to become far more flexible in how they define the market, the boundaries of their service offerings.

Top Down versus horizontal

Most companies develop a specific representation of a market, industry or segment.  For example, the haircare department at P&G wants to solve problems for people who want to wash or condition their hair.  But to an individual, that activity may be just a step in a complete journey from getting up to getting ready for work.  Should P&G decide to look at all the factors related to haircare in the customer's journey from waking up to leaving for work?  That could potentially broaden the opportunity and introduce new solutions, but they may have nothing to do with shampoo.

How the P&G hair care team looks at what a consumer needs or wants to accomplish in the morning, the "jobs to be done" if you will, starts and ends with their definition of the solution.  They might say "we are in the shampoo business" or "we are in the hair care" business.  But a consumer might say "I have a job to do to get up and get ready for work", one step of which is washing hair.  If an innovation opportunity or need emerges just before someone washes their hair, or just afterwards, does P&G pursue it, or assume that some other vendor who provides services or products that support he morning rituals will step in?  Does the P&G hair care team say "that's outside of our industry definition or sweet spot"?  Do they say "that's someone else's job to fill"?  Because if the gap is left in place long enough, someone else will fill it.

Customer Experience Journey

Here's where a customer experience journey map makes so much sense.  Trying to understand all of the things a customer is trying to do, both with your product or service, or just before or after it, instead of trying to optimize just a single step in the activity.  As long as we take a top down, very segmented view of the customer, we can solve only very small portions of their jobs, all the while missing or ignoring opportunities that are just adjacent to our capabilities or services.

You may say, well, if it's just adjacent to our services, we may not be in the best position or have the best capabilities to provide it.  And you might be right.  But what you are doing is opening the door for very similar competition to take up a very vital activity right next to your products and services.  And if they can solve the adjacent need that you've been ignoring, does it build credibility for them to get to solve the problems you've been focusing on all along - or worse, perhaps try to collapse the needs they are solving with the one you've been solving?  Isn't that what iTunes ultimately did?  Collapse several related solutions and needs into one more integrated solution?

Patterns, Corporate Capabilities and industry boundaries

We pride ourselves on our pattern recognition capabilities, but too often we become very comfortable in our our definitions and patterns.  Far too frequently we at OVO see opportunities that are just outside or just adjacent to solutions and frameworks that a corporation has defined.  They'll say that those needs are outside their competencies or focus areas, and they may be right.  But they leave the door open for other firms or new entrants to solve those problems and gain credibility, when with a little bit of work they could extend their capabilities and solve a greater portion of the customer's journey.

How much does your corporate capability limit your innovation potential?  Are you required to follow the industry in where you define where it begins and ends?  Do you understand the entire journey a customer is going through when they encounter your product or service?  Is there a more complete or integrated solution you can provide to ease the customer journey, even if it's not within your wheelhouse?  We need to define our opportunities within the confines of our capabilities, but always with an eye to understanding the total needs of a customer. When is the last time you developed a customer journey map for your customer's need?
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posted by Jeffrey Phillips at 7:35 AM


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