Customer focused innovation
‘Innovation’ is one of those words that had been misused to the point of being meaningless. But it’s still something we all aspire to as we look to grow our businesses and make them more successful.
Innovation can give you an edge over your competition, even disrupt an entire industry. But what is it exactly?
Digital Strategist Zoe Amar gives an excellent answer: > It’s really down to an organisation or individual noticing how [customer or user] behaviour is shifting and seizing that opportunity.
So, innovation looks at what will be, rather than how it is. Skating to where the puck is going, not to where it has been, in the words of ice hockey legend Wayne Gretzky.
The ‘puck’ is the habits and behaviour of your customers.
In Canada, before snow is cleared away, city planners look at the tracks of people’s footprints and use that information to inform where to build new paths. This is a classic example of customer-centric design.
Businesses find it extremely difficult to keep pace with their customers when it comes to adopting new technologies and habits. If you are able to identify that trajectory and exploit it, you stand an excellent chance of taking the lead, or even changing the game entirely.
Blurring industry boundaries with a digital-first business model
Much has changed over the last 20 years or so, especially the way we do business.
How we purchase things, consume media and communicate has changed beyond recognition, primarily because technology has allowed businesses to combine all three in ways that address customer needs, habits and pain points.
At its most basic level, the human desire for convenience is being satisfied by the killer combination of ubiquitous high speed internet access and consumer adoption of connected devices. Businesses that have taken advantage of this trend in creating a digital strategy have thrived at the expense of competitors who didn’t.
We no longer have to drive to our local Blockbuster to buy or rent a film, or stand by the side of the road to flag down a cab. Online shopping is available whenever we want to buy something, and is now available for businesses of all sizes to exploit. High street retail is declining as a consequence, and many traditional industries are having to rethink their approaches in the face of new competition.
Businesses typically adopt new technologies at a much slower rate than consumers, making them vulnerable to disruption. Often the greatest competitive advantage can be gained by being first to a new market, product or service. This kind of industry disruption, and being the disruptor, is the holy grail of digital strategy.
Ways to introduce digital to disrupt a laggard industry
Supplementing products with services
- Offering an e-commerce solution to make your products more widely available and, possibly, less expensive.
- Adopting new back office systems to make order fulfilment more efficient.
- New manufacturing processes to introduce more SKUs and customisation options.
- Linking suitable products together to create more powerful ecosystems, encouraging further purchase and creating ecosystem lock-in.
- Offering packages, including ecosystems, that are more attractive to the B2B market.
Promoting products and services with content
- Good content is crucial to search engine optimisation (SEO) and paid media, both of which are crucial in driving traffic to your website; which in turn increases awareness of your brand. Good content on your owned media can, in turn, enhance your earned media, which also lifts your SEO performance.
- Adding new digital channels to your marketing mix currently can bring your business to the attention to new audience segments, defined by your buyer personas.
- Consumers are now used to, and expect, having access to much more information about a product before they purchase.
- They also expect better after-sales support with helpful guides and tips about their purchase.
Adding products to services and content
- Digital can be used to ‘productise’ services and content by giving them a form that can be more easily understood and purchased i.e. off-the-shelf products. This can open you up to the B2C market
- If you have a popular business or brand, creating and selling merchandise such a t-shirts and stickers is easy to do yourself.
Creating services to enhance content
- Today’s content management systems (CMS) are capable of sophisticated identity resolution—understanding who is browsing your website based on the content they’re reading—and delivering relevant content (this is where content calendars prove invaluable).
- User data can also be used to automatically generate recommendations for content and products your website visitors might be interested in.
- Content enhanced by additional functionality, such as search and wizards, can be especially useful for your customer and employees (B2E).
A major asset that digital delivers to businesses is data.
Understanding how your customers behave is fundamental to identifying those opportunities for innovation and disruption. If patterns can be found in the underlying data, trends can point out the direction you could be taking, then show you how well you’re progressing towards your goals. Not only can sophisticated software capture this data, they can also help you spot those patterns through machine learning (ML) and artificial intelligence (AI), technologies that are fast moving out of fiction and towards everyday use.
Why digital strategies can fail
Employing a digital strategy is no guarantee of success though. For a start, the terms ‘digital’ and ‘strategy’ are both widely misused, leading to organisations missing the mark simply because they aren’t doing what they set out to do.
But, even given a well-considered digital roadmap , there are pitfalls to avoid.
Failing to clearly connect digital strategy to business strategy
By focusing on the challenges facing your customers there is a degree of inbuilt control over which initiatives make the roadmap. After all, if you’re making your proposition more attractive and easier to use, your business is likely to win,
But if you stray from this focus, you’ll risk spending time and money on irrelevant distractions which will have, at best, little discernible benefit.
This will impact your return on investment (ROI), which you need to keep high if you want to retain the backing of your budget holders. Not thinking big enough at the beginning
Following on from steam, science and silicon, we’re at the beginning of the fourth industrial revolution: artificial intelligence. The software platforms we now have access to are powerful tools to help you understand and serve your customers better.
This is not to say that you can solve all your problems today. By following the mantra ‘think big, start small, scale fast’, you set your ambition beyond what’s possible right now, but gives you a direction that allows you to deliver value quickly and maintain the backing to keep going towards that lofty vision.
Conversely, thinking too small will only lead to marginal gains that will be more difficult to build upon in the future. Examples include merely digitising processes, or playing catch-up to competitors who may already working on their next big thing.
Not fully grasping the possibilities that exist
Linked to not thinking big enough, is not thinking broadly enough about what benefits the wider ecosystem of digital technologies can bring, and how it can change not only how your business operates, but fundamentally change its proposition.
Consider: - Facebook is the world’s biggest content provider without creating any of its own content. - Uber has disrupted the car-hire industry without owning any cars. - AirBnB is a major player in the hotel industry without owning any hotels.
As you look to technology to blur industry boundaries, and expand the scope of your vision, you can find ways to broaden your offering and your addressable market in cost-effective and impactful ways.
Otherwise you limit yourself to traditional products, channels and audience, and competing in your current, crowded landscape.
Being culturally or operationally unprepared for change
As consultant Peter Drucker once said: > Culture eats strategy for breakfast.
Ambition can be quickly thwarted if the ability and appetite isn’t there within the organisation. Delivering a digital strategy should be a stretch goal, and requires a corresponding commitment from all involved, especially the leadership.
This means: - Being allocated the necessary budget. - Buy-in for the process and deliverables from stakeholders. - The right team structure and skill set to successfully deliver the strategy. - Support for the process and changes to working practices from the wider organisation. - Gaining the trust of the wider organisation as changes are made to working practices and roles.
These pillars support the success of your digital strategy because, without the necessary money, support, skills and drive, your plans will wither on the vine.
Failing fast and forwards
Adding to the concept of starting small, is that of failing fast. There are many ways to understand a problem and think of ways to solve it, but there is no substitute for trying something and seeing if it works.
This requires an acceptance that the risk of failure exists, or is high, and is part of the culture shift many organisations need to make. After all, failure is seen as… a failure.
Of his many attempts to invent the modern lightbulb, Thomas Edison famously said:
I have not failed. I’ve just found 10,000 ways that won’t work.
Edison’s attitude that, even in supposed failure, there are things to learn is an important ingredient for success, especially when it comes to human interaction.
We may be able to understand the past behaviour of people in specific situations, but it is incredibly difficult to predict how they will react to something new or different. We can use all our collective knowledge and experience to design and build something we think will work, but there is no substitute for seeing it in action.
This is why starting small and failing fast is so important.
Rather than investing a significant portion of your budget building a finalised product before seeing how people react to it, piloting something small to test a hypothesis mitigates the risk of failure by being low cost and quick.
Furthermore, if the experiment has the right measures in place, you will gather valuable data and insight to inform the next iteration. Done well, no failure will be in vain, and you’ll always be able to build on what you’ve already done, instead of tearing down and starting again.
This is failing forwards.
Betting big to maximise returns
This flip side to starting small and scaling fast is to go all-in.
While this is obviously a risky strategy, the chance of catching your competition off-guard is greater, as are the potential rewards. This is where you can become a disruptor.
We know that first movers get the advantage—playing catch-up is a very difficult game. Even if you’ve joined the race very quickly, the early pace-setter has momentum that can be difficult to match, let alone surpass.
In business, first movers get the brand awareness and kudos for mixing things up, which makes it more difficult for the laggards to win mindshare, not to mention market share. Ask Lyft.
But fast doesn’t mean reckless. The risks of ramping up quickly can be mitigated through
- Market research
- Lean UX
- Intensive use of data
- Frequent testing
- Parallel streams of work
…each maintaining the approach of failing fast and forwards, using technology to enable data-informed progress at each step. Overcoming inertia within the business
Executing a digital strategy requires money, resources and time which, in turn, requires buy-in from business leaders.
This can be a tough sell, depending on how well they understand the need for, and benefits of, making digital a more integral part of how you do business, and how much money you need.
Also the larger and more old-school the enterprise, the more difficult it can be to achieve the necessary cultural and organisational change. How can a customer-centric approach help?
Numerous resources exist giving data-led insight into consumer patterns and trends that can help provide evidence about the role digital plays in peoples’ lives and how it will affect how they do business.
This can not only help inform the direction you need to take, but also serve as a warning of what is likely to happen, whether your business reacts to it or not.
Often, inertia can be due to a lack of even a basic understanding of what digital is, its uses, and examples where it has brought tangible customer and, by extension, business benefit.
In-person seminars and online webinars can be used to educate decision makers about all aspects of digital, starting with the basics if necessary.
The key is to make the challenges clear—not to scaremonger, but to put into perspective the way digital is changing the landscape around us. Current state of business
What is your current target market? How do you market to them? What are their purchasing habits? How do you measure success? How do these things stack up against industry and consumer trends and forecasts? How do they stack up against your competition?
Standing back and reviewing where you are in relation to your own goals, and the performance of the rest of your industry can be an eye-opener. Sometimes change happens without you realising it, and can provide a well-needed wake-up call.
Set up a Skunkworks
If you haven’t already, piloting an idea Skunkworks-style, can provide additional impetus to your argument. In the same vein as failing fast and forwards, you can find ways to pilot ideas and use the outcomes to demonstrate the value of digital. As long as you select an idea that
- is aligned to your digital strategy
- drives benefits for one or more or your target audiences
- has measurable benefit
you’ll be able to show how effective it can be, not just tell.
Sharing your successes across the organisation
Once you have overcome that initial inertia, you need to capitalise on it by turning it into real momentum. A simple way to do this is to make that success visible to the entire organisation, not just stakeholders.
There are three main reasons:
- To raise awareness of your initiative.
- To celebrate the ways your customers (and colleagues) are benefitting from your initiative in real ways.
- To foster a culture of innovation that sparks inspiration.
Practical ways to promote your progress and successes, such as war rooms, newsletters and dashboards can be highly effective, but nothing works as well as advocacy.
Having people visibly and vocally supporting the program can be a powerful way to foster wider backing throughout the organisation—not as paid shills, but as integral members of the team who are part of the process and witnessing the results first hand.