An interactive Asia B2B marketing and growth strategy blog from www.solidiance.com to discuss ideas, thoughts and spread the "Growth & Innovation Gospel" across Asia
Sure, your company might have invented many, many things in its 100-year history, but innovation is not about being creative, or having lots of ideas. “I would say it’s the transformation of ‘What If’ to ‘What Is’, and in a business context, this means you must attach a ROI value to it. Basically, it’s a transformation of ideas to shareholder value.
Shareholder value? Yes, even innovation should be scrutinized and held accountable to a dollars and cents argument, especially during difficult economic times. After all, this approach will help separate the men from the boys, and find
out if your company is truly making giant strides in innovation or just incremental steps.
Google is one obvious example of how innovation has, in six or seven years, not twenty, turned the company into a multibillion dollar firm which literally owns the space it’s in. But such quantum leaps in innovation are not restricted to global MNCs, as Singapore brand BreadTalk has demonstrated. By taking the very European concept of eating bread (and in a market where Delifrance had already established itself) the company simply added an Asian element to its offering and is further proof that being innovative has little to do with inventing something new.
“It doesn’t look Asian… and its not in your face like a curry puff, but it tastes Asian. Did they invent anything? No. But did they create value? Did they go from an idea to shareholder value? Yes. In seven years they’ve created a 80 million dollar business… Need more proof ? What about Eu Yan Sang ? The Traditional Chinese Medicine (TCM) group did not invent anything new. TCMs have been around for centuries, but till Eu Yan Sang changed the paradigm, the industry was built around old, dusty scary and un-welcoming dry sea horses powder pots. In less than a decade, Eu Yan Sang has transformed the industry and capture the TCM market like no other company. Its clean, modern welcoming, zen-like stores and its soothing piped music clinics are simple attributes (but not the only ones) enabling Eu Yan Sang to capture new clients, beyond its traditional customer base. It is a successful and thriving business offering attractive shareholder value. Few, if any, will now be able to enter the same TCM market and steal market share away. But once again Eu Yan Sang, did not invent anything- though its R&D department might argue differently! The concept of TCM retail had been around for centuries but the company looked at a problem in a different way and created a golden opportunity for its shareholders.
Eu Yan Sang Balance Commercial
Alright, but there’s still a multi-billion dollar question which we need to answer. Why aren’t all good ideas worth a lot of money? I could have 25 great ideas per day but its just wind…its just air and it goes nowhere. Innovation is taking the idea from ‘What If’ to ‘What Is’. It’s a painful process. Along the way some people just disappear because they can’t
sustain their idea. Innovation is very Darwinian… Only the strongest and the fittest survive.
Innovative companies look at problems in a different way.
Okay, so consumer feedback then, perhaps? I am afraid not. Consumers know little. Human nature mostly churns negative feedback. If you ask someone who has used a product for three years what they think about it, naturally they will say, “I don’t like it, it’s too small, too big, too red, too noisy”. There’s always something wrong… If we were to change a button or a colour a consumer said they didn’t like, would we really change the marketplace? Would we push the paradigm of how we do business? The answer is no, of course not. We’ve done nothing then – what we’ve done is make humble increments and everyone can do that. It improves the consumer experience by a bit but it hasn’t created a whole new market for yourself.
Right. So if being innovative doesn’t mean spending a fortune on R&D then how do we innovate for our consumers? What you have to do, and the Japanese and Koreans do this well, is observe consumers and how they behave. Then you will see their real needs as opposed to what they think they need. Use the old business adage: answer to a want and you are a commodity. Answer to a need and you are creating value.
Another mistake companies make is recruiting within the comfort zone. “I am going to recruit someone who is like me because if he’s like me, he will like me, and I will like him. And I will never feel challenged. Hence my job is safe and my job is enjoyable” would subconsciously think most senior executives. In Asia we’re probably even more guilty of doing this, and if you feel comfortable you will never innovate.
Look at some of the big French multinationals, the top three guys are all from the same country, and from the same school. They think alike, vote for the same party, go to the same vacation spot and practice the same sports. Some even look the same! A nation that was once at the forefront of innovation has been castrated of its potential by its own aristocratic establishment. Clans, clubs and semi official societies and the anti Christ of innovation. They exist to perpetuate a semi-fantasy like heritage, blinding members from the fast changing environment and comforting those who turn down diversity. The exact same can be said about Japan. Where is Japan Inc. those days ?
Innovation comes from the positive clash of ideas. No one will say ‘What If’ if we all think the same. In stark contrast to this, leading soft drinks and snack company, PepsiCo announced in September 2006 that Indian-born Indra Nooyi would take over from Chairman and CEO Steve Reinemund to become the first woman to hold the post. Seeing as there aren’t too many ethnic women CEOs in corporate America, the appointment could be viewed as something of a shock but I reckons it was exactly her different background and thinking which made her promotion at an innovative company like PepsiCo a smart move.
Of course, the appointment of a so-called innovative thinker as CEO is just a secondary step for the company to actually head in the direction of innovation. But for a company to walk the walk, you need to have a CEO who’s engaged and communicates within the firm why it has to be innovative, and how it’s going to be innovative. Innovation actually does not come from the CEO. He’s busy on his Blackberry, on a plane and he may indeed have two or three good ideas but if he’s running a multi million-dollar business, the likelihood is that he is currently focusing on keeping the business afloat and probably cutting costs. He is not the ultimate in-house driver of innovation. Innovation will come from your own people, the guys who work late – Mr Joe (no relationship with the 2008 US Elections infamous Joe the Plumber). He will have a great idea one day but if the processes in the firm are not in place to recognize, drive and reward innovation then mature Mr Joe might trash his idea and be a side-man for the rest of his life; or he is young, ambitious and angry and he creates the next Google. A lot of innovation comes from rogue employees. Be aware or beware.
Managing Director Asia Pacific