Innovative company sells simple product for five times normal price
By Ryan Caligiur, theglobeandmail.com
Companies all around the world are facing an epidemic: mass commoditization. Products and services are becoming commodities faster and faster and margins are disappearing just as quickly, putting great pressure on an organization’s bottom line. This trend is not going to slow down; in fact, the speed with which innovations become commodities is going
to get faster as the world gets smarter and more interconnected.
Companies all around the world are facing an epidemic: mass commoditization. Products and services are becoming commodities faster and faster and margins are disappearing just as quickly, putting great pressure on an organization’s bottom line. This trend is not going to slow down; in fact, the speed with which innovations become commodities is going
to get faster as the world gets smarter and more interconnected.
While this is the harsh reality we all
face in the marketplace, the question we need to ask ourselves is this:
How do we stay ahead of the ever evolving market?
The
answer can be found by developing meaningfully unique products and
services. While that sounds good, how exactly does a company go about
doing such a thing?
Before I get into that, let’s look at a small company based in Gaithersburg, Md., SmartBolts.
Now, the marketplace is pleased with paying two dollars for an everyday
bolt, but SmartBolts wanted to find a way to make bolts differently.
How can you turn something as commoditized as a bolt into something
customers will pay five times as much for?
They
created a bolt that contains an indicator that tells the person
fastening the bolt that it’s either tightened completely or needs
tightening, just by looking at it. A SmartBolt indicates whether a
bolted joint is loose or tight with a clear, visible indicator that
gradually darkens from bright red to black as the fastener is tightened.
By using this colour indicator, factories can reduce their maintenance
time by some 80 per cent. Because of this innovation, SmartBolts turned a
$2 product into a $10 product.
So how
do other companies follow in the footsteps of SmartBolts to not only
shock the world, their marketplace and their customers with something
meaningfully unique but also make a nice profit at the same time?
It all starts by first understanding what an innovation is and what it isn’t.
Innovations are meaningfully unique.
I’ve said it multiple times already but it warrants an explanation.
Innovations are meaningfully unique. For something to be called an
innovation it needs to be meaningful in that it has value in the
customer’s eyes and they are willing to not only pay for it, but pay
more for it, and unique, meaning it’s new to the world, different from
the competition, and makes the marketplace say “wow!” Often companies
fail at innovation because they develop something unique but not
meaningful or something meaningful but not unique. Either of those will
more often than not result in a failed product or service. Offerings
that lack a meaningful component will have a difficult time getting
customers to buy in because they don’t care enough to spend money on it.
Offerings that lack the unique component will be seen as a me-too
offering that isn’t worth paying attention to.
It’s important to be meaningfully unique because if you’re not, you better be cheap.
How to create meaningfully unique innovations.
The big question now is how does an organization create true
innovations that are meaningfully unique in nature? The answer can be
found by exploring stimulus, leveraging diversity and driving out fear.
Without
stimulus, teams come up with ideas by using the knowledge they
currently have in their brain. We in the innovation engineering
community like to call that process, commonly known as brainstorming,
brain draining. Instead, we use stimulus to drive new ideas.
Stimulus
feeds the brain. It’s about learning more by exploring different
sources of information such as competitors, customer insights, patents,
subject-matter experts, future trends and unrelated industries. As teams
learn more they feed their brains with disruptive information that sets
off a chain reaction of ideas that they can then turn into new ideas.
Diversity
is about engaging an organization’s people to generate ideas for an
innovation. Former General Electric CEO Jack Welch was bang on when he
said, “We know where most of the creativity, the innovation, the stuff
that drives productivity lies – in the minds of those closest to the
work.” By bringing together a diverse team of six to 10 people from
within the organization that have differing opinions, biases and
expertise and providing them with stimulus, they will create a lot of
different ideas to drive new products and services in an organization.
And
finally, it’s all about driving out fear by teaching the same team how
to communicate ideas in an efficient manner by diving deep into who the
customer is, what is the problem the customer faces, what is the promise
we’re going to make to solve their problem, and what is the proof that
we can deliver on that promise to solve the problem to satisfy the
customer. Because innovation brings about new ideas – and new ideas are
scary – simply learning to communicate more effectively helps drive out a
large portion of that fear. The rest of the fear needs to be driven out
of the innovation process by forcing the team through a weekly cycle
that forces them to learn more every week to continue driving their idea
forward.
After a short period of time
the team will learn enough about their idea to refine it and decide if
it’s something they want to drive forward into development – at which
point they will take the idea through to an alpha, beta, first release
and delivery phase as they take their initial idea through to
commercialization.
This entire process
is exactly how teams create, communicate and commercialize meaningfully
unique ideas. If teams are able to focus on building meaningfully unique
ideas and are able to explore stimulus, leverage diversity and drive
out fear, they too can follow in the footsteps of companies such as
SmartBolts and develop a true innovation that helps them avoid the harsh
reality of mass commoditization.
Ryan Caligiuri is an associate and innovation engineering practitioner with inVision Edge, an innovation and growth company. InVision Edge is also the leader of the Canadian Innovation Engineering Network.
Commentaires
Enregistrer un commentaire