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“You say you want a revolution
Well, you know
We all want to change the world.”
—The Beatles
In 1968 The Beatles challenged a generation with their rallying cry to become revolutionaries.
And change it, we did. The best and brightest created breakthrough technologies to extend human life, increased mobility and connected every corner of the planet.
Some might question whether this progress is all it’s cracked up to be. Technology hasn’t eliminated war, hunger, corruption, and many other kinds of human suffering. But, even if you wanted to escape back to the good old days, you cannot. And for those of us who selected the path of business for careers, we must manage—and grow–in this perfect storm of disruption. The velocity of business change can be mind-numbing as we try to keep our feet firmly planted while effectively competing in a global marketplace.
During the forty plus year period since “Revolution” was released, we have also witnessed the rise of the management consulting and business school guru world. These experts have also told us all that we must adopt revolutionary strategies and tactics to succeed and profitably grow. From Total Quality Management to Six Sigma, the best and brightest our B-schools have churned out assured us that if we radically shifted our thinking, our leadership styles and adopted revolutionary best practices to wring every drop of cost out of our companies that we would cut our way to success. Now, the gurus continue to build a Tower of Business Babble filled with acronyms, metaphors, and black boxes to create new language and layers of complexity around the subject of how to grow a business. (Mainly they seem to have grown their own.)
How many times have you asked yourself, “they don’t really believe all that BS do they?”
After 38 years of day-to-day marketplace experience, I now believe we have been wrong about a lot of this, particularly the idea that we need to launch a revolution to win. What are my qualifications to differ with so many esteemed experts? I am neither a guru nor an academic. I am a businessman who has had the privilege of launching six companies of my own, while advising countless other entrepreneurs along the way. In my career, my clients have been companies of every size, from start-ups to Fortune 500’s. I have also studied and practiced Blue Ocean Strategy since it’s early appearance in the late 1990s. Most importantly, I have interviewed well thousands of real-world customers across twenty plus industries to understand what makes them tick. What do they think is missing in current products, services, and experiences?
Plenty.
Is there room for improvement?
Absolutely.
Based upon my collective experience, I strongly believe that starting a revolution is not required to succeed in today’s business climate. Revolutions are bloody, risky and can be disruptive to the enterprise. There is a much better way. Let me tell you about it.
Your most important job is to create and multiply customers every day. This cannot be subbed out to the marketing department or an ad agency. Profitable growth, one customer at a time, must be championed from the top.
So, why is growth so hard to come by?
Every company really operates in parallel universes: the “what is company” and the “what if company”. Running the “what is” side has never been more complicated and stressful given the market conditions today. The global economy now affects virtually every area of business. All of us realize we put our enterprises at tremendous peril if we ignore this truth. Inevitably, the “what is” company drains our resources, intellectual capacity and saps our strength. Truth is, many of us are just plain tired of “what is.”
On the other hand, the “what if” company represents the future state of the enterprise. This is the proverbial “Blue Ocean”, where innovation thrives creating new products, services and experiences that create measurable market power and boatloads of profit. The “what if” company is energizing, fun and a great place to work. It is also rare. “What if” gets short shrift because most of our efforts are marshaled against “what is”. The result is that the possibilities of a brighter future are left to chance and the vagaries of the market. Or if you have stuck your toe into innovation, you were not prepared for how to balance the what is and what if worlds.
This battle between what is and what if goes on in every organization. In his book, “The Game Changer”, A.G. Lafley, former CEO of Procter, and Gamble, clearly described the situation he inherited in 2000 when he took over the company.
“Stretch, innovation and speed were the orders of the day. Stretch for higher goals. Innovate in all we do. Go fast. Take more risk. All of these are good things in and among themselves. In hindsight, though, we were trying to change too much, too fast. Many of our businesses were in no shape to stretch. Too many new products, businesses and organization initiatives were being pushed into the market before they were ready. Execution suffered, as we too often fired before aiming. We had to come to grips with reality, to see things as they were, not as we wanted them to be.”
There was good reason for P&G’s headfirst plunge into innovation: they must produce the equivalent of a new Fortune 500 company every year…just to stay even.
Think you’ve got problems now? Just imagine if you had to grow at a rate of $4 billion a year. But just because you are big, doesn’t necessarily mean you will succeed.
Lafley teaches us an invaluable lesson when he explains that job #1 was putting the customer at the center of “everything we do”.
In a Harris study of over 300 companies, 95% said innovation is “extremely or very important” for driving business growth, profitability, attracting and keeping talent and brand prestige. Yet nearly half (47%) said that their firm had “no team, process or system for vetting new ideas in order to decide which ones to invest in”. 53% said their company does not “focus on innovation”. In another recent study by PWC (Price Waterhouse Coopers), CEO’s of over 1,000 global firms said “understanding the customer” was their number one concern.
What’s really going on here?
A revolution is not required. Common sense and listening to the customer are required.
Why does innovation have to seem so revolutionary? It’s because, in the overall scheme of things, it’s rare. In the innovation workshops I lead, I always ask the participants for the names of companies they believe are truly innovative. The usual suspect list is always made up of Apple, Google, Southwest Airlines, Starbucks and usually a local or regional firm they are familiar with. Most never mention their own company. And hardly anyone ever mentions a car manufacturer, bank, insurance company, restaurant, packaged good or retailer. Isn’t it interesting that these categories are the most widely marketed, spending billions of advertising dollars to drive brand awareness and sales? I love marketing and have helped clients market billions of dollars of their products and services. But, in today’s hyper-competitive world, the marketing piece of the equation doesn’t seem to work very well by itself, particularly in highly commoditized categories. You must inject a big dose of innovation in the mix to truly differentiate the offering.
Innovation should be the norm, not the exception. It should be employed in every nook and cranny across every enterprise to grow, improve performance, increase profitability, retain people, build brand wealth and transition from commodity to a break-through products and services.
When I ask people why they believe there are so few innovators the answer is usually that true innovators are revolutionaries, mad geniuses, and lone wolves with an intuitive sense of knowing what the customers really want. If the Steve Jobs and Herb Kelleher’s really fit that description, it is true that these guys are tough to find, hire or retain. So, the obvious conclusion is that the rest of us mere mortals must start a revolution.
I think you will agree most revolutions are highly risky adventures into the unknown and in the worst cases, career suicide. The odds against winning are high because the house (the marketplace) sets the rules (short-term results). I’m not going to sugarcoat it: innovation does have inherent risks. This essay is about minimizing risk in innovation, not eliminating it.
The standard for your company can’t be Apple. There’s only one Apple well on its way to becoming the first trillion-dollar market cap company. Maybe, someday, you will be there, but as a risk-adverse, anti-revolutionary rule number 1 is to live in the real world. And here’s the good news: you don’t have to waste a minute of your time wanting to be Apple because there are plenty of profitable growth opportunities ripe for the picking (not to use another Apple metaphor).
In my case, as a businessperson, I do not want to add additional risk to my life, I want to reduce it. And because I have walked in your shoes, my goal is to help you reduce your risk, too.
“You say you got a real solution
Well, you know
We’d all love to see the plan.”
John Lennon wasn’t a Harvard B-School guru or noted author of business strategy books but even he knew nothing happens without the right plan. Innovation works the same way. The good news is that the plan is simple: build a culture of innovation and reap profitable, sustainable growth.
What exactly is innovation and how is it different than “invention”? Invention is all about creating something new. That’s revolutionary. Innovation is a process that renews or improves something that exists and not, as is commonly assumed, the introduction of something better.
There are a thousand books about the lofty idea of innovation but few about how-to do innovation. This is where the rubber meets the road.
If you can listen more than you talk, you can innovate.
Most of grew up watching heroes. Whether it was a hard-working single mom, sports hero, or a movie icon, I believe most businessperson aspires to be heroic and make a difference in this world while building wealth for stakeholders and employees. But, let’s be honest, business school rarely prepared us for marketplace reality. As we began to climb the rungs of a business career, we focused almost entirely on the “what is”, not the “what if”. But, as I have talked to hundreds of business professionals over the last few years, it has become clear to me that the real problem is not lack of desire to innovate, it’s the lack of process. People hear terms like “Blue Ocean Strategy” or “design thinking” and it seems too creative or right brain. It’s too far out and kind of fuzzy. It seems like an effort in futility. Why not just “stick to what we know best”? After all, I am being judged by based on short-term quarterly objectives. Why do I want to invest money in something that might not pay off for years?
Understanding this situation, we have helped many companies bridge this gap between the left and right brains by focusing on processes designed to create innovation, even in the most “un-innovative” types of businesses.
At the heart of all of this is that none of us ever can understand enough about our customers. That’s because all markets are dynamic, not static. Learning from our customers is an ongoing experience. In my career, I have heard many executives explain how much they know about their customers because they did some focus groups a “few years ago”. Or their supplier sent over a copy of a survey they did.
In today’s world, that’s not going to cut it. Old news is no news.
If you don’t believe that customers are in charge, you are making a big mistake. Today the consumer can choose who, when, what, how and where to do business. You are merely one option in lives filled with too many choices, distractions, and debts. They can live without you.
But you cannot live without them. Once your team understands who’s really in charge, innovation becomes much easier. This shift in thinking changes your perspective from a “right side up” to an “upside down” enterprise. Here are the important questions you must ask:
In a “Right Side Up” Enterprise
In a “Upside Down” Enterprise
My conference room is covered in white boards, and I have probably used up several hundred markers over the years. But the most stimulating brainstorms and best-laid plans mean absolutely nothing. Whiteboards are great for questions, but you will never find a real solution on one.
Perhaps you’ve company regularly brainstorms and develops lists of killer innovations that could put you light years ahead of your competition. But when everyone leaves for lunch, proud of his or her contributions, you stare at the list realizing that these great ideas will cost money you don’t have in the budget. And even if you can afford to move forward with one or two of the best ideas, how to figure out which one to pursue?
Great ideas get stranded on desert islands all the time. If you have ever tried to sell innovation inside your firm, you have probably encountered what I like to call 3D Resistance: some combination of people above, below and across the organization will shoot the idea down before it even stands up.
Even if you employ a formal stage gate model, you can waste an enormous amount of time and money. You need a set of tools that “bolt-on” to the front end of stage gate to guide the entire effort from the customer’s POV (shapes the idea) or kills an idea before excessive capital or time is expended.
No one is good enough to design products, services, and experiences in a vacuum. You must be willing to open yourself up by carefully listening to the most important customer. You need irrefutable proof to move innovation through the pipeline or deliberately kill it.
As innovation becomes better understood and more widely adopted by organizations, clients are feeling more pressure to keep up within their existing markets (the red ocean) and search for what’s next (the blue ocean). We have learned that there are better blue oceans within the red ocean marketplace you operate in.
It’s a more fruitful use of your time, talent, and resources.
Can we ask customers what they want? We can but it is usually a pointless exercise. How do they know what they want? Henry Ford famously said, “If I had asked my customers what they wanted they would have said a faster horse.”
If you formulate the right questions, ask the correct potential customers then just shut up and listen. They will guide you how to help them. Ask the really hard questions and be willing to accept the hard truth about your offerings. Performance-driven businesses recognize the need to ask these questions in the first place. Find the real threats to your business and where the best opportunities.
What we are looking for is meeting unmet customer needs. Often, they cannot articulate exactly what that is. We must figure it out through a focused series of contextual interviews to understand what jobs they are trying to get done. We must discover their pain points and try to create a bridge to their gain points. That’s what we call value innovation.
Innovation is fine tuning something that already exists. In most cases, this is not a radical redo. In fact, you probably have fantastic Blue Ocean opportunities right where you stand. You can name a few great breakthrough companies that have transformed the game forever. But, in today’s breakneck competitive world, those are harder to come by…and faster to catch up.
You cannot cost reduce yourself to success. Six Sigma, lean and agile have their place but are not by definition growth creation or innovation. You want to shape your marketplace, but looking inward at the expense of exploring new customer opportunities is limiting and can ultimately be deadly.
We cannot show you how to eliminate risk. No one can. We can lead you or teach you to employ proven processes. No one has enough training or education to single handedly solve your problems. In fact, the longer we do this, the more we realize that Einstein was right when he said, “the only source of knowledge is experience”.
He also pointed out that “if we knew what we were doing it wouldn’t be called research.”
I encourage you to rethink, reinvent, renovate, remodel, refine. Do it with purpose, specificity, and process. You can build sustainable, profitable growth and you can remove the word revolution from your vocabulary. That may not change the world, but it will change your business for good.
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