|Whenever I speak to some of my new online friends in the innovation consulting field, we lament the fact that, although everyone seems to agree innovation is important, few companies seem prepared to bring in someone professional to help them do it better. I’ve concluded there are four reasons for this:
The first three reasons are hard for anyone in innovation consulting to overcome. You just have to wait until the company is ready to buy what you offer. You’re as much at the mercy of your customers and their readiness for your service as they are. Quite often when I’ve debriefed over an unsuccessful innovation consulting sales pitch, the first realization is that I couldn’t have done a better selling job, the customer just wasn’t ready, emotionally, for what I was offering. When you know you have something of great value to offer companies, it’s easy (and deadly) to get ahead of the market. All you can do is give them a steady stream of interesting ideas that credentialize you and show you understand and care about their business and can be trusted, and wait until they’re ready to buy. The dilemma is that by nature innovation advisers are not an especially patient lot!
The fourth issue is one where we in the innovation advisory business could demonstrate some thought leadership and make it a little easier and more valuable for customers to retain our services. We all tend to look at customers in two slices or dimensions: (a) the demographic or affinity group they belong to, and (b) the types of needs and wants they have. So if we’re selling MP3 players, we may be focused on the 14-29 year old demographic (who are fastest to adopt new technology), and the seekers of high-capacity, portable, personalized music, as depicted on the first chart at right. And as new features come out we incorporate them, and we ensure our software is compatible with different music formats and operating systems.
But suddenly we’re being blown out of the water by the Apple iPod. Why? Is it a better product? No. More reliable? No. More compatible or more advanced features? Not really. So where have out traitorous customers gone? And why are all these old fogies buying these things? What, even the Queen has one? Damn, they cost 50% more than our unit. What do they have that we don’t? If we don’t figure that out, and understand how the market changed beneath our feet while we were busy focusing on it, we’re goners.
As the second chart shows, the iPod is as much a fashion accessory as it is a music player. What it has that we don’t have is the logo and design that Apple are famous for. It also appeals to groups that might have felt self-conscious wearing something associated with younger users — like 30-something and older commuters and exercisers. And what’s worse, it has counter-culture appeal. Even though our product is more counter-cultural than anything a giant like Apple could produce, perception is reality, and Apple is (for now) the epitome of counter-culture, one of only two surviving competitors to Microsoft, the company everyone loves to hate. So the iPod is cannibalizing our 18-29 demographic, the part that also sees itself as counterculture. And most infuriating of all, some of the style and status seekers are leaving us to buy a unit like the iPod Mini that actually has a lot less music capacity than our machine, and costs more. Damn these fickle and irrational customers!
What’s happened here? We’ve defined the demographic and affinity segments in terms of what we have to sell, rather than how these affinity groups define themselves. And we’ve defined their needs in terms of the features and attributes we can offer, instead of much more broadly in the emotional terms that the customers define and recognize their needs themselves. This is a fatal error, but one which our intense customer focus almost drives us to commit. Once we get fixed in our mind what our demographic targets are and what needs we’re filling, we start to define our customer in the context of what we can sell to them, and we can’t shake that mindset. Meanwhile, the customers are defining themselves in completely new ways constantly — as the culture changes, as they get older, as their needs and wants evolve. While we were focused on them, the customers have left us behind.
I believe there is a great opportunity for innovation advisers to help their clients understand where the market is going (and has gone, and will be going soon) in a radically different way from what marketing consultants have done. It’s another opportunity for cultural anthropology — going out into the complex (not merely complicated) marketplace of ever-changing self-forming and self-defining communities, constituencies, and affinity groups and discovering how customers are redefining themselves, and how their wants and needs are simultaneously and constantly evolving. It is through looking at the patterns in customers’ stories that we can provide our clients with a startlingly different and enormously useful picture of the market and its direction — the most valuable input into an innovation strategy that anyone can offer.
Who knows, they could be so impressed that they’ll overcome their resistance to change, lack of trust, and skepticism of the value of external advisers to the point innovation consulting becomes a growth industry and Western business could once again become the most innovative in the world. Innovation advisory services could even become the intersection 3 career many of us are looking for.