Why big businesses need to embrace start-up culture
Traditionally, marketers, businesses and agencies have thought of innovation as new product development (NPD). New and positively disruptive product or service launches that generate exponential sales growth by either bringing in new customers or getting a greater share of existing customers’ spend, or better still, both. And, at least in the world of consumer packaged goods, there is growing evidence that product development (60%) has a substantially larger relative effect on sales growth over the long run than discounting (2%) or advertising (6%).
A recent study we commissioned of New Zealand marketers and business leaders found that as a result of increasing customer empowerment and transparency this inventive or new product focus of innovation is broadening. Yes, traditional NPD is important, but increasingly innovation is viewed as a process rather than an output; a mindset of continuously enhancing the customer experience. As Alex Bogusky of Crispin Porter Bogusky fame puts it: “The best brands will be those that will give an accurate and real picture of what they are doing in the interests of the customer, at any given time”. This is why many marketers we spoke to talk about thinking and behaving like a start-up, even if they’re not.
There is a perceived openness about start-ups, an ability to adapt quickly to improve experiences that many established businesses recognise as critical in the world of empowered customers. And questions like ‘how are we enhancing the customer’s experience, how can we make using our product or service better, what is the customer engagement process like and how do we simplify or improve it?’ are occupying marketers’ thinking about innovation.
From pretty marketers to digital geeks
As one leading marketer put it: “Ten years ago you’d have had a whole lot of preppy marketers on your team. Now we’ve got a whole lot of design and digital experience geeks.” They recognise that creating rewarding customer experiences is the secret to successful growth, and it is this focus on the reality of using their product or service that will lead to successful innovation. In this context, innovation requires an honest and holistic view of the purchase and user experience. For services, this goes all the way from research and enquiry through to the first bill or statement they receive, or the first time something goes wrong. For packaged goods this means from the shelf right back to disposing of the packaging in the home. How easy is it to open one-handed or to recycle once used?
There are two obvious challenges about this that marketers are wrestling with.
Firstly, you have to get really close to the reality of your customers’ experience and be brutally honest about it. And secondly, it requires a new marketing and business model; a way of doing business that goes beyond family tree organisation charts and innovation as a department. Innovation needs to be an attitude of cross-functional collaboration and absolute clarity of purpose and values.
From talking to marketers, these challenges are not insignificant. You have to be really frank about the experience of your product or service and while data helps, it’s not necessarily the panacea. And you also have to be willing to push the boundaries to change it, try new things or “seed and develop” as one managing director we spoke to put it. You can’t fall prey to sameness, hyperbole or obfuscation.
Innovation isn't a big white space
From this work it is clear many marketers and business leaders are increasingly recognising innovation isn’t just about big white space breakthroughs. It can be small enhancements that deliver significant customer benefits. However, the ongoing challenge is that small enhancements are often not as sexy as the big inventive breakthrough.
Taking a live example, is Spark’s offering of free Spotify premium for some mobile customers more or less innovative than launching its subscription video on demand service Lightbox? To the customer, both can be equally beneficial, both can potentially enhance the experience of being a customer.
However, traditionally the risk is that Lightbox-like initiatives often get all the attention and resources, while Spotify-like opportunities can get overlooked, because they don’t seem as big. The key thing marketers are increasingly realising though is that you don’t want to overlook one in the pursuit of the other. It’s a significant shift in thinking, a shift to a much more holistic or customer-centric view.
As designers you have to take this outside-view-in every day, mainly because of the permanent nature of design, but also because often the spaces you have to communicate in are relatively small and fixed. As one of the senior marketers we spoke to put it “the design process is all about simplification and clarification, taking away the barriers. Isn’t that what marketing is supposed to do anyway?” Increasingly, taking away the barriers to creating great customer experiences is the focus of innovation inside many businesses. And this is recognised as being just as valuable as inventing new ones, if not more.
We feature below some innovation trends from the Marketers’ World Insights Study, by The Providence Report for Dow Design.
Food is the new gold
There is a global financialisation of food going on, from Berkshire Hathaway investing in Heinz Wattie’s to Silicon Valley venture capitalists making bets on food. Why? Because to feed ourselves in the next 40 years we will need to produce more food than the entire agricultural output of the past 10,000 years combined.
Right Place, Right Time
From our productive land to our rich marine waters, from Fonterra to a new breed of artisanal food start-ups, there’s a consistent feeling that New Zealand is ideally placed for the food revolution. It has never been a better time to be a New Zealand business with the expertise to build great food products.
Think like a start-up
There’s broad recognition that innovation and entrepreneurialism are the worlds you now have to win in. Marketers feel things are changing fast so the ability to react quickly is a distinct competitive advantage. Many are closely studying the start-up community and experimenting with new and different models, such as Mondelez’s Project Sprout. Article about Project Sprout
Marketers are feeling increasing pressure to ensure their customers’ outcomes are consistent and distinctive across all touch points, and that can’t be mere puffery. It’s about making stuff better, which is why they see design playing a greater role.
Design in a digital age
Everything communicates. That’s a problem if you only apply traditional marketing techniques, but it’s a solution if you design for distinctive experiences from the bottom-up. Marketers increasingly see design as playing a role in this; and as Linda Tischler, senior editor at Fast Company points out, “design is as much about coming up with a really sustainable business model as a new red stripe”.