Guest post by Freek Duppen
As the knowledge partner of the World Innovation Forum, Capgemini Consulting has recently completed its global innovation survey on the current state of innovation. The study offers a unique perspective by looking at the differences in behavior of innovation leaders vis-à-vis laggards across five key areas (strategy, capabilities, technology, innovation function, and spending) in order to identify what drives the success of companies that view themselves as successful innovators.
The study is based on an online survey, generating responses from 375 executives (representing the full range of industries, regions, functional specialties, and seniority) and 13 follow-up interviews – to get a better understanding of the context of the findings and to add depth to the result interpretation.
In summary, this study reveals that:
- Given the strategic priority companies allocate to innovation and their corresponding spending plans, the maturity of their formal innovation governance structure lags behind considerably. To overcome many of the innovation bottlenecks encountered, it is time to establish an innovation function that is able to deal with this kind of innovation governance and decision-making.
- Furthermore, there is an enormous unlocked potential for innovation in the involvement of external parties in the innovation process. Innovation leaders may have out-paced their peers by simply being better at involving external parties, leveraging a much broader innovation network and increasing innovation potential.
- The study also shows that more value, in terms of impact on business results, is to be expected from business model innovation, than from any other form of innovation. Targeting new business opportunities in emerging markets is much more likely to be successful when approached outside of the traditional competitive landscape.
Recently one of my business contacts pointed me towards the Best Global Brands report by Interbrand. In the discussion we had on how to enable new business model implementation he posed the statement that any strong business model basically gave away one of the 4Ps out of the classical marketing mix.
Giving it some more thought there are numerous examples of strong brands, set by convincing business models that basically all have a certain WOW factor. Most of the WOW comes from an empathic component within their respective business models.
More and more companies involve their customers in their business model, stepping away from classical transactional mentality moving towards strong customer experiences. Meanwhile the relationship between company and customer is further tightened, making it almost impossible to switch, not based on product specifications, but on the firm’s lovemark.
By opening up business models to consumers of products and services companies are able to provide experiences that can be tailored to one’s unique preferences. The late management guru Prahalad labeled this as N=1 in The New Age of Innovation.
Empathic business models examples
- Product
Nescafé (#25) let’s you create coffee to your own preferences with their new Dolce Gusto system
Nike (#26) provides customers to design a tailor made sneaker based on the offered options - Price
Google (#7) provides you everything you needs for free, you only need to provide google with your personal data for advertisement purposes
IKEA (#28) is able to offer its’ products at an extremely low price; you have to do the assembly yourself - Place
eBay (#46) provides possibilities to globally auction and bid on running auctions detached from place and time
MTV (#54) is offering most of the content also online, so that it can be viewed anytime, anywhere - Promotion
Amazon (#43) recommends products based on other people’s buying behavior
Nokia (#5) has numerous online fan communities that support users in the use of their devices; totally separate from the company
Being successful is about being connected. For this purpose you as a company do not be in close proximity of your customer 24/7, but you need to find a mechanism that they share their hopes and dreams with you.
Based on those you know where to focus and distinguish between the must-haves, and the nice-to-haves. Then find ways to involve your customers in your business model. Maybe they will not even notice, but they will appreciate it. For sure!
For the last couple of months no news program or website is talking about hardly anything else the the global economic crisis and the effects it has on every kind of business within all sectors. Surviving for many companies suddenly became key rather then expanding portfolios.
Traditionally companies need to grow value in order to keep Mr. Shareholder happy. Growth means higher demand for shares and therefore higher rates. Mr. Shareholder sees his total share value growing.
Most companies have basically two ways to achieve value growth:
- Increase market size and share, by innovation or acquisition
- Reduce costs
The last way is normally not that popular during economic upturn, but is immediately on top of mind during economic downturn. Cost reduction programs tends to be rather spreadsheet driven hunting for the large cost chunks rather than assessing cost versus value.
Together with Daan Giesen I have come to an approach which enables growth by setting a stronger brand experience based on reduction of number of current business models. Organizational functions and capabilities can bebuild around these strong business models, showing opportunities to reduce cost without weakening the organizational capabilities.
Within the coming months more on the Business Model Convergence approach will be shared with you. However, if you cannot wait feel free to use the contact form.
According to thought leaders within INSEAD customers are really in the driver’s seat when it comes to making or breaking a brand. Also different consumer trends indicate the same, such as Trendwatching.com for example. In the past people could be earmarked to fit within a certain stereotype, e.g. punkers during the 80′s. During this period brands were successful because the companies behind them choose those brands to grow successful.
People now shop their own identity together where trends are now merely used as an input. They do not fit within one simple box anymore which makes it more difficult to target segments in a traditional way. Furthermore customers become increasingly demanding every day. Failing to meet their expectations results worst case in them scandalizing your firm in public (example: BusinessWeek). They will share their grieves through the internet with the rest of the world more likely than they will call you.
So it is more difficult now to clearly segment customers and they have become more demanding and less forgiving, what can companies do?
Building a strong brand does not necessarily involves bringing the best proposition, product or service, to customers, it involves bringing your propositions consistently to your customers. How? By making sure that every Business Model Building Block is aligned with a clearly defined overall goal. So it not about bringing a product to the market and enhance it along the way to the extend that people do not recognize the initial proposition anymore. This makes customers feel disconnected. They will loose interest and will start doing business elsewhere.
In order to keep the connection with the client vivid firms should really ask themselves or even better their clients what it is they will bring to the market? Which problems will be solved? What pains will be relieved? Doing so and shaping the Business Model around it provides the basis companies need to be consistent to their clients, which will contribute to building their brands and reputation.
For laughter have a look at the complaint about SEARS below.
[pro-player]http://www.youtube.com/watch?v=974egVLlwQI[/pro-player]
Many of the people following the Business Innovation topic online already know TED. TED (Technology, Entertainment, and Design) is an online platform which is used to spread ideas. Basically talks, such as presentations are made available to the public, for free. The main goals is to inspire others to start thinking differently, as Apple will probably put it.
February 27th in Aspen the 2008 TED Conference was held. Here 21 year old Ben Kaufman was present. Ben is the initiator of kluster, which is an online collaboration and decision making platform. Kluster aims at being a new social network which generaetes new ideas, products, and designs (source: Businessweek). Kaufman heavily relies on what trendwatcher call tapping into the global brain, getting labor for free!
In the past he has already been succesful with the concept. In merely 72 hours he and his team have created the Bevy, of which 40,000 items were sold in 28 countries (again Businessweek). During the process 30,000 people voted for the Bevy, so Kaufman knew demand was there. At the TED Conference he hoped with the help of people like Al Gore, Sir Bob Geldof, to create a new big product, hopefully aimed at solving a large problem such as fighting disease, global warming or poverty and hunger. However the result was “Over There.” A game which aims increasing cultural awareness.
With the sponsoring of the chair of Innovation Management by DSM Prof.dr. Harry Barkema, who was until now Professor of Strategy and International Management at the School of Economics and Business Administration at Tilburg University, the Netherlands transfers to RSM Erasmus University in Rotterdam.
As Executive Director, Barkema will be responsible for the set up and organisation of the Innovation-Cocreation Lab (ICCL). This is the first time a lab of this kind will be created in Europe. The objective of this lab is to develop, in alliance with top companies, top researchers and top institutions, new strategies and organisational designs in order to provide high value product innovation and new business models. This will be achieved through innovative methodologies – the co-creation of knowledge with companies.
The Board of Directors of the ICCL consists of Feike Sijbesma (CEO DSM), Han van Dissel (dean RSM), Kathy Eisenhardt (Stanford) and Jan Willem Oosterwijk (President Executive Board Erasmus University).
