An anti-crisis recipe? Making high-value innovation

The Web is now populated with anti-crisis recipes of various kinds. It is not uncommon to come across articles written by people suggesting to fight the economic crisis by moving part of one’s business abroad or to start selling products and services outside Italy (given the shrinking sales volumes in the home country).

There are those who suggest cutting unnecessary costs and services in their business and those who recommend reorganization to better meet the challenges of the future, sometimes failing to fully understand how.

Among the various anti-crisis recipes, something always emerges that refers to people’s ability to innovate.

In this article I want to provide some useful insights for those who have decided to declare war on the economic crisis by using the weapons ofinnovation and launching new products and services on the market.

First, a premise: Your current and future clients care very little about how our companies are organized, how good we are at cutting costs, how present we are in different parts of the world, how many problems we have or face. They also care very little about how good we have been to them to date.

What elements are most important to your customers?

Your customers, whatever industry we are in and whatever size your business is, care about a few simple things. Indeed, we must remember that those who buy, even in b2b, are flesh and blood people.

Here is a list of the elements that are really meaningful to customers:

• How much your product or service is worth, from their point of view;
• What significance it holds for them and their organization;
• What impact it has in their private and professional lives;
• How much it costs and whether or not this cost is considered worthwhile compared to the value they place on it;
• Is your product or service offered judged to be better than that offered by your competitors?
• Is your product or service available when the customer needs it?

I will probably have missed some other significant elements, but certainly those mentioned above have been experienced and closely observed by all of us in the past, both in buying and selling situations.

And so, crisis or no crisis, if you want your company to enjoy good health in a world where the supply of products is increasing dramatically, often causing drastic price collapses, you must compulsorily reflect on how effective you can be in introducing innovative, high-value products and services to the market and, above all, before your competitors.
This is the central theme covered in one of my books, “Lean Innovation. Strategies for Valuing People, Products, and Processes,” to which I refer those who wish to explore the topic further.

How do you become effective in the innovation process in the company?

To be effective in the innovation process you must first learn to think like an innovator. Below are some tips that will help you do so:

1. Innovating is continuous work. Never rest on old laurels
   Always remember that your competitors are always at work, day and night, anywhere in the world. When you least expect it, they will introduce something to the market that wasn’t there before and that can put you in a bind, even in those areas where you thought you were invincible or safe (think, for example, of the major upheavals undergone by companies that are unchallenged leaders in their industries, such as Nokia, Volvo and Motorola).
   As documented in my book Toyota Way. The 14 principles for the rebirth of the Italian industrial system. , in Italy, the figures on companies going out of business take on disturbing dimensions; there is talk of 40 bankruptcy filings per day over the past 4 years.
   In the first 9 months of 2014, an unflattering record of an average of 61 companies took their books to court each day to close their doors was reached. In the coming years this phenomenon, together with the competitive war between companies in the market, can only increase due to the ever-shrinking life cycles of products, the increasing speed with which technologies evolve, and the greater ease of access to sources and resources by all competitors; these elements will make the concept of “survival” and “supremacy” in the market much more fluid and dynamic.
   
2. Create an organizational structure focused on innovation
   Orienting an entire company to innovation is more than having specific teams perform a few research projects. As Bob McDonald puts it , ““we know from lived experience that through promotions and advertising we can win in the quarter, through innovation we can win for decades.” Speaking is the CEO of Procter & Gamble, a company that invests nearly $2 billion a year in R&D; about 50 percent more than its nearest competitor and more than the sum of all its competitors.
   Even entities significantly smaller than P&G can benefit from an innovation orientation by striving to translate it into appropriate organizational arrangements.
   
   In practice you need to make sure that you take care of innovation in the entire value chain, specifically:
   – innovation of the products and services offered;
   – innovation of the perception of the value of products and services (marketing and sales);
   – innovation of internal processes;
   – innovation of people;
   – innovation of the business model;
   
3. Think and act like a Market Leader
   Always. Whether in case you belong to the lucky band of those who lead the dances in their industry, or in case you chase someone who in your industry is definitely stronger than you, numerically speaking.
   The matter is very simple: if someone is buying something from you, for him you are the market leader, because he is buying from you and not from others (at least for the moment). Therefore, it is only right that you thoroughly understand what factors led to the purchase and how you can successfully extend and renew the magic of choice that leads you to be unique to someone else.
   When we accept the “responsibility” of acting as a market leader, it becomes natural to act as market leaders do. For example, using the strength of competitors to grow and not to demoralize.
   For example, when faced with a competitor who has smarter ideas than we do, the leader reacts by trying to give his or her best in turn, coming up with proposals that raise the bar even higher.
   Look at the war to the last innovation between Apple and Samsung, with even legal aftermaths in various patent conflict situations. As in sports, good competitors are crucial in making us better. But this happens only when we acquire the leader’s mentality.
   
4. Always ask yourself powerful questions
   Those who innovate are simply looking for answers to some key questions related to the areas in which they intend to innovate. If, for example, I want to figure out how to innovate my business model, the right questions for an innovation readiness might be:
   – Are there possible strategic allies with whom I can create an integrated offering that is the result of their respective areas of strength?
   – What are the critical success factors of my company with growth possibilities for a greater competitive advantage over the competition?
   – What are the things that are currently being done in the company, but that do not bring much impact to the market, and therefore that I could either significantly reduce or eliminate altogether, freeing up valuable resources?
   
5. Become effective in what makes you unique, efficient in everything else
   For years I have been repeating a concept that is vital to me , in all my workshops, seminars, training courses, consulting projects, lectures at universities and at various Post-University Master’s programs:“Doing something well that is not important, does not make it important. Neither for you, nor for your customers.”
   We need to be able to identify what makes us unique in the eyes of the customer, what has the most impact for our company and ourselves, and devote time and energy to analyzing these important factors.
   Many people and companies, unfortunately, do not make much distinction between the actions and products they deal with on a daily basis. In relation to the innovation process, it is crucial to get clarity on which area of your company represents a critical success factor, your unique selling proposition, and invest your resources on that.
   
   For everything else, we have to try to have maximum efficiency with the least possible waste of resources. Think of Apple or Ferrari: what have they focused on in making innovation? On everything or on something in particular? Don’t settle for mediocre results. Too frequently we settle for mediocre results, achieved with a lot of effort. In Italy, the current situation does not help us: labor, taxation and energy costs are among the highest in Europe, and this brings out further evidence: our nation is “forced” to eliminate much more waste than others. We are called upon to create appeal for our products and services much more than in other countries. How to accomplish this? Not by trying, in my opinion, to correct our areas of weakness at all costs, but by building on our areas of strength: creativity, flexibility, energy and dedication, passion, falling in love with our brands, companies and products, ability to adapt any model and any situation, strength of desperation: now or never!
   
   Many Italian cases demonstrate this. The many testimonies included in my books, the historical Italian cases and experiences of global excellence, including Olivetti, Ferrari, Lamborghini, Technogym, Diesel and many others, which silently carry on their daily battles, are an excellent example. Our ability to innovate is undeniable.

I wish every organization to be able to bring out the best in themselves and release this capacity.