Digital, mobile and web technology has speeded up the rate of their demands and the rate of response they expect from companies.. Time has never been a friend to the businessman but it is now openly hostile. New products have an increasingly limited window before being replaced or copied, in fact they are often superseded or imitated while they are still in development. Think of the speed of replacement of handsets like the Apple iPhone. Competition is everywhere and accelerating the rate at which people can find and buy pretty much whatever they want whenever they want it.
One problem for many people when they think about innovation is that typically they think about product. However, we know that customers form relationships with brands not products. And we know that the areas of that relationship that are often given least attention but which mean most to the customer are in communications, service, sales and support. According to Peter Fisk of Marketing Genius, whereas the vast majority of innovation efforts by companies have been on product, the biggest returns on innovation have been in business model (eg online shopping) and customer experience.
Another problem with innovation is that many business people are obsessed with ‘the big idea’, they want ‘game changers’ and are constantly pouring through strategy reports to find ways of making ‘paradigm shifts’. But even more important than these big things are the little day-to-day things that make an enormous difference to consumers and employees, that earn their advocacy and loyalty, cost little but reap financial reward and demonstrate your authenticity.
The organizations we feature in BOLD, understand all of this. So what lessons can we learn from their approach to innovation?
Challenge conventional thinking
First and foremost these organizations challenge the beliefs and norms that prevail in the industries they compete in. For example, how does an airline charge significantly less than its competitors and still make money? The answer so far, has been to unbundle the price of the ticket and charge customers accordingly, a model adopted by Southwest Airlines, easyJet, RyanAir and AirAsia.
But whilst passengers might be willing to forgo food and amenities for a short flight it is a different proposition when flying between continents. Passengers want the amenities offered by the regular carriers at a price closer to the low cost operators. AirAsia X is the answer. It is the only long-haul carrier that offers flat-bed seats, seat back entertainment and Asian style service at a cost 60 percent lower than competitors. Azran Osman-Ranin AirAsia X’s CEO said ‘We really just started to question every single thing about the airline model and asking if there was different way of doing it.’
With its promise of ‘Now Everyone Can Fly’ it has extended operations to 20 countries around Asia. It has won numerous awards, most recently being voted best low-cost carrier in the world in both 2009 and 2010.
Constantly innovate in both large and small ways
These organizations are possessed by a relentless commitment to improvement, to seeking a better way. Sometimes it can be game changing as in the case of Virgin Galactic’s SpaceShipTwo, but often it is just the everyday focus on innovation in many small ways throughout the business. Just so long as they make things better for customers. An important aspect of this relentlessness is that these organizations understand that ‘little things have a big impact’. So they are often obsessed by detail and just endlessly curious about even the smallest aspect. Whether it is JCB’s Sir Anthony Bamford adjusting the hub cap on a back-hoe digger, or innocent’s use of language in their packaging. They are all manifestation of the fact that a small action can have a big impact.
The Bold brands all demonstrate the restlessness that leads to moving as quickly as possible. As Nigel Bogle of BBH says, 'you have to be quick to embrace change'. But it is not just an economic imperative that has made them recognize the need to respond or anticipate changing needs and demands. Their sense of purpose also compels them constantly to pursue as speedily as they can the improvements and innovations that will make them the very best at what they do at any given time.
Drive innovation from a deep understanding and insight about what target customers value
They see the involvement of their customers in the development of their products as a key part of marketing them. Virgin Galactic re-designed its space craft following feedback from its early customers. Innocent invites its customers into its offices to suggest ideas and improvements as well as allowing them to recommend and create new recipes.
When Sonu Shivdasani and his wife Eva were planning their luxury hotel brand, Six Senses, they called up tour operator travel agents and asked them what customers complained about. “There were things like the lack of fresh food: everything was imported and tinned’” he said. “So we developed our own organic garden which means we can actually offer our guests much fresher and more nutritious salads than they get in London.’
It’s vital to understands how you can connect emotionally with your customers through a ‘wow’ moment that is really relevant to them. JCB built a vehicle to break the land-speed record to demonstrate the technical superiority of their new diesel engines- boys of all ages say ‘Wow!’ when they see it. O2 gives priority access to its customers so that they can get close to their rugby or pop star heroes for that ‘wow’ effect.
It’s also important to understand that what you sell is not necessarily what customers are buying. RayBan thought they were selling eye protection, Chili Beans realized that students were buying a fashion accessory. This insight led them to create a business model that produced sunglasses of good quality, but exceptional variety – 10 new product designs are launched in 250 stores every week! Because of this, a typical customer will own 3 or 4 pairs of Chilli Beans and visit the store weekly to check out the latest models.
Ensure products, services and your people are distinctive and aligned with the brand promise
It is hard to be innovative unless it is built into the very way you operate. Delivering ten new designs every week forces innovation so that the organization is geared up for it. It becomes a way of life.
Sustainable innovation is a core value of JCB. It affects products and people. Matt Mclurgh, JCB’s Marketing Director says: “The main thing is to differentiate the way we offer the product to reflect the innovative pedigree of the company. We are recognised in the industry as being best in events; the whole ‘dancing digger’ routine has its roots in JCB. We’ve got to keep thinking out-of-the-box, not just to demonstrate the innovative features of our machines but to entertain people.”
Jim Davis, the CEO of Umpqua Bank agrees. “Innovation permeates our organization at all levels. To me, that’s the most important driver of our organic growth. The second route to growth, of course, is through acquisitions. The reason that we’ve been so successful with acquisitions is because we’ve created a very unique culture which aligns our people with the Umpqua strategy and brand.
Use innovative technology and processes to support the delivery of a superior customer experience
Umpqua Bank is also quick to embrace new technologies and processes. “We try to create new ways for our customers to enjoy themselves in our stores online, and even in our contact centre with the latest technology” says Jim Davies. Umpqua like the other BOLD brands use social media and their web sites to create customer communities. Burberry uses 3D high-tech broadcasting of their runway shows; and Chilli Beans uses music and events to involve customers in the ‘Chilli Bean’ world. Innovation is driven through continuous customer feedback by involving them in events, technology like the Digital Mirror, and processes that quickly turn ideas into products..
And the technology doesn’t have to be ‘digital’ or ‘high-tech’. Six Senses refuse to buy any imported bottled waters for any of their properties. Instead they are investing in water filtration and mineralization plants at their resorts to bottle and sell their own water. 50% of the proceeds of these sales go to a water charity to provide clean water in places like India.
Ensure your people demonstrate superior customer service skills and capabilities
Hiring young people who are used to being self-sufficient and are unfamiliar with industry practices, breaking down silos, encouraging people to take responsibility; all of these practices serve to increase innovation and reduce costs. The fact is that your culture needs to be very carefully crafted to support your business strategy. When one is a mirror for the other you get a self-reinforcing effect.
Sir John Hegarty, the founding Creative Director of advertising agency BBH says; “When you’re in an environment such as ours, it is fundamentally important that the creatives feel that what they do is the most important thing in the company; that they are being encouraged to do what they want to do. If you don’t have that, you won’t get them pushing themselves to create the kind of work that they want to create. So it is fundamentally important that I encourage an environment of constant innovation, and that they know that when they do creative work, I am going to take it seriously and I am going to sell it as best I can.”
And that quote should remind us of the final point that all these companies realize about innovation. In the end, it is only important if it is going to make a difference. And if it is going to make a difference, it has to be sold to customers or consumers with passion and with the conviction and commitment that it will be delivered. Having great ideas is all well and good but you have to deliver them in the real world. All the BOLD brands know this: innovation is hard but execution is harder.
For more information or to purchase the book go to www.boldthebook.com
© Shaun Smith and Andy Milligan. Bold: How to be brave in business and win. Kogan Page. 2010
You can download the free ‘Bold: How to be brave in business and win’ iPad app from the Apple Store to compare your own organization with the bold brands. To see a video of the app being used go to www.boldthebook.com.
Shaun Smith is founder and partner at smith+co the customer experience specialists. Andy Milligan is an international consultant on brand and business culture.