When someone says the word innovation, what typically comes to mind? Flying cars and hover boards? Well, not all innovation is as huge as the light bulb or internet. Game-Changer by A.G. Lafley and Ram Charan shares some technological disruptors from Procter & Gamble, GE, Lego Group, Marico, Honeywell, DuPont, Cisco, Nokia, 3M, Dupont, etc. But innovation is not limited to developing a new revolutionary technology.
This book beats into every chapter the importance of the consumer from start to finish. Lafley talks about the 360-degree experience of every consumer consisting of the functional, emotional, and experiential with the product. This holistic approach to the consumer experience helps develop a relationship to turns into repeat usage and revenue.
In order to understand what functional, emotional, and experiential experiences with a product the consumer wants, P&G hones in on market segmentation. Identifying the product's customer is key, and "sometimes P&G gets the consumer right, but misses the real need or real want," but is not the end all be all. Similar to every bad sci-fi alien abduction, who are they!? What do they want?! If you never answer these questions, you end up lost in the galaxy... so to speak. In the story of the tampon brand Always, P&G came to the realization that what Mexican women wanted from a tampon ran counter to the Always brand. Instead of destroying the brands characteristics or simply pushing it down retailers’ throats, P&G went back to the drawing board and created a new brand that met this specific markets needs.
This is all well and good... but how does a company get employees to think on this level? Well, the book discusses the myriad of ways companies go about it. Developing leadership and teamwork comes from the right incentives. P&G invests in several hubs that allow teams to break down problems with facilitation. They develop metrics to quantify the process to better autopsy projects. It allows the company to emphasize a structured development process that does not penalize best efforts but utilizes benchmarks during the development and production phases. P&G invests money in these programs because they have seen that failed innovation typically is caused by "ineffective interaction between experts, team members, and team leaders. It can be fixed through well designed social mechanisms and effective leadership".
These social mechanisms and effective leadership allow for failures to occur earlier in the development cycle, thus reducing losses. One way pointed out to quickly cut off projects with no chances of success is, "doing the last experiment first," Reflection is also an important part of the innovation process, during an after-action review/post-mortem. It is a great way to capture some value from a failed and often costly innovation through using the information already learned and applying it to future projects.
The authors warn that effective marketers will "focus on organic growth first, then acquisition for long-term strategic growth". Synergy can be a great thing. However, purchasing a brand/company is cautioned as a silver bullet. It won't turn around a company and certainly won't reduce the issues. Financing concerns put added pressure on acquisitions to produce. If a company forgets who the boss is (the consumer), it could mean years down the rabbit hole... if your cash flow allows. Taking in the expertise and ability to broaden households can become a core strength. "The acquired brands are the beneficiaries of future business model, business process, and new production innovation" that your company can leverage and share with your original portfolio.
One concept I was unaware of before reading this book was the emphasis P&G's CEO had on outside partnerships for innovation. In my business classes, protecting trade secrets were up there with the 10 Commandments, "Thou shall not open your company to theft from corporate spies!" Yet, "P&G will compete with a company on one side of the street, and cooperate with it on the other. In an open innovation system, anything out there is fair game, even if competitors are sitting on it." Fantastically business utopian idealism right there. This doesn't just mean partnering with the enemy, but the company set a goal of “partnering 50% of our innovations with outsiders." Partnering with retailers who sell your products can be a win-win...-win. Helping Target or Lego's merchandisers better market to their customers directly helps P&G's bottom line. Building that relationship may have value during the next margins negotiation, #softpower.
A final nugget of useful information that I choose to highlight, IDEO's office in Palo Alto has these 7 Commandments written in large letters above the conference room:
1. Defer Judgment
2. Encourage Wild Ideas
3. Build on the Ideas of Others
4. Stay Focused on Topic
5. One Conversation at a Time
6. Be Visual
7. Go for Quantity
No comments:
Post a Comment