Category Archives: Marketing

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Innovation in Recessions

thick_arrow_up_5575Successful innovation in recessions was examined in a Harvard Business Review article, Roaring Out of Recession, by Ranjay Gulati, Nitin Nohria and Franz Wohlgezogen.  They looked at increases in sales and earnings during a recession, and the strategies that were employed.  The goal was to determine the best strategy during a recession.  The strategies were grouped into four general categories:

 

  1. Prevention-focused,
  2. Promotion-focused,
  3. Pragmatic, and
  4. Progressive organizations.

Prevention-focused organizations focus on cost cutting and avoiding losses–a purely defensive strategy.  Within this category, the authors examined two major subcategories:  employee reduction and organizational efficiency.  These types of organizations are risk-averse, and will “batten down the hatches” when a storm approaches.  As a general strategy, prevention is the worst, however, organizations that pursued organization efficiency (vs. employee reduction) were more successful in this category.

Promotion-focused organizations focus on building assets and marketing–a purely offensive strategy.  The thought is that during a downturn, by investing in your core assets and building your branding, you’ll hold onto your current customers and build new ones.  Compared with organizations that pursue the prevention-focused strategy, they tend to do better.   The authors divided this category into market building and asset building.  In general, building marketing worked more effectively than building assets.

Pragmatic organizations do everything.  The pursue both offensive and defensive strategies, in essence, throwing everything they have at the problem.  This strategy is significantly better than either defense or offense alone, but is still not the most optimal.  In this case, they don’t “fine tune” the amounts of each type of strategy, and waste resources.

Finally, there are the pragmatic organizations.  They too pursue both offensive and defensive strategies, however, they only pursue operational efficiencies (with respect to prevent-based methods), and pursue both marketing and asset/capital investment with respect to promotion-based methods.  With this strategy, the financial outcome compared with the next best method, as measured by sales improvement is nearly 40% greater, and the improvement with respect to earnings is nearly 160% greater.

So, the bottom line is you keep your employees, and make capital investments that improve operational efficiency and marketing development–two areas that are best addressed with innovation.  Your people are your best asset, again.

7 Rules for Improving Innovation: #7 Customer Input

Improving Innovation: Customer Input.

To fuel the innovation engine, companies need to pay extremely close attention to their customers and form strategies based around everything they can possibly learn.

To accomplish this, most organizations spend a chunk on R&D, market research, focus groups and feedback programs, simply to gather insight and suggestions for “potential” innovations.

To survive and remain competitive, regardless of your industry, your company needs to be the first to market with new offerings. That means understanding what your customers are like. Naturally, customers’ needs and wants are ever-changing, but you need to do everything possible and know as much as you can about your users. Earmark the time, money, and people to find out how customers interact with every aspect of your product, service, company, delivery, support, and so on.

And ask their opinions. It sounds rudimentary, but so many companies fail to do it, and make the information they find out actionable. This devotion to the “voice of the customer” could set you apart and become the gamechanger for your business.

www.mindmatters.net

www.StepByStepInnovation.com

 

Customer-Centric Innovation: Challenge Yourself!

There’s no lack of opportunitiesfor businesses to “create” – creating new products or service offerings,creating new marketsto pursue, creating new advertising,and so on. But “creation” doesn’t always mean you’re innovating. The difference between creating and true business innovation is that the latterinvolves taking a serious, hard look at the needs of your customers and doing only that which you know will change the game for them and for your business.

For this reason, you only wantthe innovations that aregoing tobe meaningful to your customers andprofitable to you -two things that are not typically mutually exclusive.Creative endeavors are a crucial piece of this model,butif it doesn’t make a measurable impact on some aspect of your business and drive you to get more customers, then why do it?

Customer-centric innovation begins withexamining every point at which you interact with customers (current, repeat,and prospective) and asking yourself this set of questions:What are the barriers that stand in the way of how this person or businessbecomes our customer,obtains our product, etc.? What can I do to eliminate that barrier and make it easier for them? How can I do this in such a way as to remain true to my business’ core values, and stayfocused on our critical essentials? How can I do this with thefewestcomplications (a.k.a.keep it simple)? How can Ido itbetter thanany of my competitors? When you can answer all of these questions, you’re firing on all 8 innovation cylinders.

These things goMUCHdeeper than “let’s create ournext big product because our customer is asking for it.”Take the time to look at things like: pricing, delivery methods, your suppliers, materials costs, systems in use, inventorization, materials, your investors, your accounting,your sales methods, your marketing team,and everything else you can possibly think of. If it seems like too muchwork, just remember:this iswhat your competitors are already doing. You’ll quicklyfind ways to improve quality in all of theseareas, and these improvementswill aggregate to impact how your customer becomes yourcustomer, and how you keep them as your customer.

Assign people in all of these areasto create “challenges” for their teams on how to improve something in their department. These can be as simple as “How can we improve ourpurchasing practices?”, “Has anyone seen a better system that we can use for billing?” or “How can we save money on shipping?”, “How can we fill orders faster”,and so on.

Allow their teams to answer the challenges with ideas and suggestions. Take time to encourage these folks to vote and comment onideas received. Make sure to follow throughimplementing the best ones, andreward folks for sharingthem. After all, the best solutions and improvements will invariably come from thepeople who deal with the issues you’re trying to solve on a daily basis.

The key is asking the right group with the right expertise to answer your challenge. The possibilities for “challenges” are limitless, just likethe areas for improvement ina company.

Some of the innovations that you find and implement using challenges may impact your customers or improve their experience in ways they will never even know about,and that’s just fine! Let them just be thrilled to be your customer andwonder how you do what you do so well!

Flagpole is an inexpensive, easy-to-deploy application built around the above-described challenge model. You can use it to query your employees, partners, even customers out in the marketplace to find focused, impactful ideas and innovations to implement.

www.mindmatters.net