How to find opportunities to innovate?
When I pose to someone I have not collaborated with before the possibility to innovate, the answer is more likely to be: where do I innovate? which innovation could my company do?
Opportunities to innovate
I believe there are three simple ways to locate new opportunities for innovation. We are going to call these import, problems and trends.
Import is what many companies have made through the ages, transferring business models, products or successful services from other countries or regions to their own.
For instance, the well-known airline Ryanair didn’t invented the low-cost flights, what it did — together with other airlines such as Easyjet- was to transfer, since the 80s, the successful model of American Southwest Airlines, which was already working from the late 60s.
Moreover, Mercadona, the Spanish supermarket chain, adapted quite faithfully to the Spanish market the model of the American Wal-Mart (20 times bigger than Mercadona regarding revenues volume). Its famous slogans “ALP-Always Low Prices” or “There is only one boss — the customer” have been translated word for word from the American Company.
In fact, if we are being purists, this is not innovating because nothing new is being done in that industry — globally regarded-; it is just transferring the innovation to the same industry but different place.
This doesn’t mean it has no credit, as there is a high risk therefore it can perfectly fail.
For this kind of innovation in quotation marks (there will be those who consider innovation as such, although I prefer to be more demanding when defining the term as it pushes us to go further), a great knowledge of the local public is necessary in order to embrace the innovation, as it has to be as clear as possible that the “imported”-product, service, business or process- will work locally.
How can we identify this kind of opportunities? It seems quite obvious that what this path demands is to be restless and curious: travel, know how the industry works in different markets, read about what happens on these, attend international exhibitions and events, be always on the move with eyes wide open to glimpse possibilities.
Problems are what I call the “pull way” because the market pulls us, as it is somehow asking for innovation.
It entails recognizing the main customers’ problems or dissatisfactions in a determined business. This is the way many well-known companies work nowadays.
Uber, famous for placing the static taxi business on the warpath, suggests a solution that saves costs with an easier payment and trading process: it offers very low rates, card payment, sharing the taxi fare among passengers, etc. All this is accomplished by contracting the service using a smartphone app where the private drivers use their own vehicles.
Airbnb, that anticipates many mind-pulls in the industry of hospitality, and whose business model, in a few words, consists of connecting people with a need of travel with people willing to rent their guest rooms, or entire houses, during the same timeframe in the precise areas.
Which problems does Airbnb solve? Mainly, it solves the high prices of hotel rooms in major tourist or professional destinations.
The crowdfunding Kickstarter platform leaves aside the traditional financing of entrepreneurs’ projects through banks, presenting the project in a short video on this platform and asking for donations, or offering early bird prices for first shipments.
In order to identify this kind of opportunities, I consider extremely useful a tool like the “Utility Map”, originally developed by Kim and Mauborgne, also authors of the bestselling business book Blue Ocean Strategy.
The work that needs to be done in this innovation path is to locate where the “unhappy faces” of the customers of the business are. Not just with our own company, but also with other competitors in the business.
We refer to dissatisfactions and problems that our customers can experience in the successive phases of the relationship with suppliers, from their search to the elimination of the product (please look at the chart above), and that are linked to different generic ways to add value: from product features to safety issues, speed or simplicity.
For example, the product can be considered not very user-friendly or not easy to find. Or also there can be no warranty of a good maintenance…
This path works very well — it is probably the safest of these three — because it is always easier to adopt — for the users — a problem-solving innovation rather than one that develops aspects that already have good results (“solves something already solved”)
Because we, as humans, resist change unless it is justified: and this happens more easily if we are not happy with our current situation.
Needless to say, in order to use this path ideally we need to know very well the target audience of our business: if we are not able to identify their “unhappy faces”, it is because we don’t know them yet. Even if we already selling them our product.
Trends are what I call the “push way”: in this case it is us who are pushing an innovation to the market. Because we think this is endorsed by the main behavioral patterns of the consumers, therefore, there is a good chance for success.
The work consists in keeping up with the latest consumer trends and with the examples or innovative applications of these that can be seen in different sectors and industries in any part of the world.
We will continue with this path of discovering opportunities by selecting cases of innovation in other sectors that have been successful among our target customers or a similar group of customers. This is essential because if the target customers are not similar, we won’t be able to use that case as reference.
The next step is to take this concrete innovation cases and abstract the key elements that give value to the user.
Once these elements are identified, we will take a lateral imaginary step and try to apply these value elements to our industry in a creative way (“how would our service be if..?”, “how would our product look like if we…?”)
And observe what happens then. Many times the lateral step can take us to something apparently useless. But forcing the relations and using the creativity — in a subsequent step — almost we can always get something interesting.
For example, let’s take Apple’s iPhone. We can see that the main input elements regarding the smartphone offer were, initially, usability, brand image and design.
These value elements have been collected by a company that manufactures products, not very desirable at first, such as thermostats and smoke detectors, and they have applied them — a lateral step -, with high success, to their product line and to the marketing communications. This company was acquired by Google in January 2014 for more than 2,5 billions € in cash.
The company is called Nest Labs and turned around a pretty dull industry developing sexy products, also very easy to use, that people want to have in their homes and show to their friends.
To be able to keep up with the consumer trends there are different options of quality in the market that are periodically updated.
You can no longer say no
We have seen three different ways that can be applied to any industry. Also yours.
None of these can guarantee success but it will probably increase the hit rate of your innovation projects.
Why? Because they are based in different key aspects needed for an innovation to succeed:
- It was already a success in a different geographic market.
- It is focused on real and current problems and dissatisfactions of the customers.
- It is inspired on current trends among consumers, of markets that are becoming more globalized and, therefore, more similar each day.
You can no longer say you don’t know where to start innovating. Now you know three different ways to find opportunities. The next step is applying your creativity (the whole company’s) to finding solutions for the challenges that arise from these opportunities you identified.
Personally, I think that, in the task of innovating, one of the hard parts is finding good, really good opportunities. Because, in the end, creativity is like a muscle that, like the biceps, we all have, although it can be more or less atrophied, more or less developed. It is a matter of working out.
Disclaimer: This post was published in Spanish on the blog “Innovación con los 5 sentidos” by Javier Sastre on the following link.