Dave Pollard's chronicle of civilization's collapse, creative works and essays on our culture.
A trail of crumbs, runes and exclamations along my path in search of a better way to live and make a living, and a better understanding of how the world really works.

July 19, 2005

Why Is Innovation So Hard to Sell?

Filed under: Working Smarter — Dave Pollard @ 16:06
sanddragonWhenever 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:
  1. People don’t like to change. It’s not that hard to sell Change Management, because companies realize this, and when they have to change they recognize they need help to manage and ‘sell’ the change to their own people. But usually that happens when a change has been forced upon them (e.g. in a business merger). Change is reaction. It takes enormous courage to be proactive and decide you’re going to put yourself, and your people, through potentially gut-wrenching change when you may not absolutely have to, or before you absolutely have to. Business process improvement is largely incremental, small, manageable, painless stuff. Business reengineering was sea change, transformational, traumatic. Guess which one of these consulting disciplines is still around?
  2. Everyone thinks they can do it themselves. When a company accepts that innovation is needed (because the stock price has halved or the new offshored competitors are eating its lunch) there is generally a sense of collective embarrassment, and a groupthink quickly sets in that says “we got ourselves into this, we have lots of creative minds here, we can get ourselves out of it”. Often by the time they realize they need help, they need a receiver or bankruptcy trustee rather than an innovation consultant. There’s great skepticism that innovation consulting is a real discipline. An innovation ‘facilitator’ may be acceptable, to provide some structure and process to the company’s efforts to solve its own problems, but what outsider would be arrogant enough to presume they could tell a company how to transform itself into something very new and different? It’s like bringing in someone to teach your kids about sex or to advise you how to get your personal financial affairs in order — eminently logical, but embarrassing to admit you need outside advice to do these things well.
  3. It’s a ‘dragon‘ issue, so it involves a lot of trust. It’s frightening to open your kimono to a stranger. You have to admit that without innovation there is (or will soon be) a huge problem in your organization. There’s no such thing as a dragon, but there it is, wreaking havoc right in our midst. Anyone know a dragon-slayer we can trust not to tell our employees, our customers, our competitors that this fire-breathing monster is in our midst? In some sense it’s an admission of failure, so even calling it something else, or doing it when the dragon is still small, doesn’t entirely eliminate the discomfort.
  4. It requires understanding of how and why the market has moved on without you. Successful businesses have found a need and filled it, and are often intensely customer focused. When you need to innovate, that means those customers you’ve got so close to and so comfortable with are somehow unhappy with you (or alternatively are much happier with your competitor). This is hard to come to grips with, because
    1. it’s probably not your fault — it’s the market and the competitors that have changed, probably in disruptive and unforeseeable ways,
    2. customers also hate change, and it’s painful to discover that they’re getting something from a competitor that’s so much better, cheaper or whatever than what you offer that they’ve made (or are about to make) the switch,
    3. it’s unnerving to realize that customers ultimately have life-and-death power over your business, and often behave unpredictably, and
    4. it’s difficult and to start looking at your customers and market through a strange new perspective — which is where you have to start if you really want to innovate.

customersegmentsThe 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.

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