The original Narcissus.
THE PANGS OF IRRELEVANCE:
Have you ever looked around and felt the pangs of irrelevance? Are the substitutes to your offering far more interesting than you or your competitors?
Does it seem harder to get the same number of customers as in the past, even though you are spending more than ever?
Do the meetings you sit in seem to be focused on extending what is, while any “what if” or “we could try this” get cut off by a “doesn’t fit in our model” or “we tried that already”?
When you listen to upper management, do they only seem to think in probabilities while appearing to have lost the ability or interest to think about the possibilities?
SUPPLY SIDE INNOVATION:
These are some of the signs of supply side thinking where most thinking and action is based solely on the point of view of the company and what it thinks it needs to survive. Another way to say this, is all companies seem to do is talk about themselves, look at themselves and think about what they need. If they were people (which according to US law, they are), then they are the annoying people we’ve all dealt with at some point, the ones you really don’t want to be by or hang out with because their sole concern is themselves, oblivious to the needs or wants of others.
Employees in companies can easily get caught up in what they make and what they do to make it, so much so that they forget the people who should be at the center of their universe: the customer and the potential customer.
I think this happens because companies live in their own cultures. When you are inside of this culture, all the internal stakeholders have a voice but the mass of potential customers does not. In some corporate cultures, the relationship can become antagonistic at least from the company side: why don’t they buy our stuff, why don’t they like us… or the worst, “the customer is just stupid”. As if a pouty teenager, corporations say “ those customers, they so don’t get me”.
It would seem at this point, companies would be driven to talk to their customers and potential customers and ask them some questions! I have watched repeatedly whole projects, a year of work, be done where no consumer was ever interviewed or consulted. When asked why consumer needs were not the starting point of a project, the response is always – “we don’t have time to understand needs”. Not only is this narcissistic but it is a waste of time and money. Since they are focused on themselves, companies over and over again go ahead and create an offering based on a collection of assumptions and biases about consumers based on random personal experiences and disembodied quantitative data. Sometimes they then take this offering and go to Market Research and ask for testing. This should be called market justification not research. It is the best a narcissist can do is offer their own self reflection in their product and service offering… after all, as a company, this is what they have to offer. Sound at all familiar?
So the process looks something like this:
· Companies look at business viability from their current model:
· They look for probable extensions of their business that will still allow their current business formula to go mostly unchanged, meaning core competencies get used efficiently, and the variables that in the past have brought them success stay as they are.
· From there, they look to technology usually as a way to maximize current model whether that be at the top-line by bringing in more revenue or for the bottom-line by being more efficient.
· The last piece is market justification with consumers to see if what they have created based on internal business needs actually may work in the marketplace. Typically this will first be qualified with focus groups and eventually a Bases test to understand the probabilities of success.
Companies Ask: How can we improve the model to be more profitable, more efficient and take less time – not for the customer, but for the company. Business Viability then Technological Efficiency followed by Market Justification.
BALANCED BREAKTHROUGH MODEL:
I should probably step back and introduce The Balanced Breakthrough model (something I came across at the Institute of Design). In short the model says, really good offerings get created when you consider:
- · What people desire
- · What is technologically feasible
- · What is viable in business.
Having a balanced offering doesn’t necessarily mean that you have equal parts of these. Rather, it’s that each of these is considered in full as an offering is created, and the right level of each is chosen given the marketplace.
Are you considering all 3 buckets as you build your new concept, your strategy?
DEMAND SIDE INNOVATION:
Demand Side Innovation is exactly that – it starts with understanding and uncovering the needs and desires that will drive demand for a new offering. Demand Side Innovation looks for inefficiencies in the marketplace while Supply Side Innovation looks for inefficiencies in its current business model. Inefficiencies in the marketplace are opportunities where there is too much friction and hassle in trying to accomplish something. Demand Side Innovators look for barriers and hurdles that the consumer must face to accomplish their goals and find ways to eliminate them – whether that be time, money or energy.
Technology is there to assist in creating a platform for the consumer to solve their problems. It is not about what a technology can do (there are technology aficionados too, like narcissists, they get stuck on how cool something is regardless of how it may serve a consumer), it’s about what it can do to solve a consumer problem. Personal experience tells me that corporate IT departments do not design their technological platforms around the consumer, but around the business. (I actually take it a step further and say IT departments tend to design for themselves and not for the employees who will use it – but that’s another story.) Technology from a consumer perspective should be present to help connect previously unconnected data in ways that the consumer experience becomes simpler, faster, cheaper, more convenient, more personalized, etc. The offerings that are succeeding today are whole ecosystems of products, services combined in a seamless way. Apple and Amazon are the obvious examples, but less sexy companies from Walgreens to Tetrapack are all creating amazing platforms for their customers to interact within.
The viability of the business model often immerges from the other two. How the business model is constructed, matters. Business models harness the value being created by solving consumer problems. The model must capture a percentage of that value and do it in a way that is unique and hard to copy. Business models don’t just happen, they evolve. They evolve around trying to solve for customer needs. Start-ups understand this intuitively, but corporations are typically blinded by the success of their current model to try to evolve new ones – Clayton Christensen has done an excellent job of explaining why.
One thing we’ve been talking about as a group has to do with what gets scaled. Companies tend to focus on scaling the viability of the business, not the desirability of the business. This focus on making the business work at the expense of the original value proposition is in my opinion one of the key vagaries of growing a concept into a business. You can’t just focus on desirability, you must be viable but not at the expense of the value proposition. No wonder it is hard to get new ideas off the ground, whether you are a start-up or internal entrepreneur, the trade-offs are intense! As you might expect from a narcissistic corporate perspective, for new concepts, it’s all about what you are doing for me, the company, not the customer potential. And as we know new concepts are not well optimized, because they are, well…. new!