8

10x10

Innovation:
Wrapped, Packed
and Stacked
— Dean Crutchfield
Principal of Marketing

Surviving the Flood

Markets are drowning as a result of commoditization,
reliance on cost containment, glib value propositions,
and price competition. How can businesses differentiate
themselves while creating valuable products, services,
and experiences for their customers? Planning for
growth and innovation requires a robust and ambitious
business model.

Method

method.com
 Innovation: Wrapped, Packed and Stacked — Dean Crutchfield, Principal of Marketing

“If people aren’t telling you

that your idea is crazy, then it
is likely not a very big idea.”
— Francis Ford Coppola

Plan Ahead
A pugnacious CEO once told me that there are three ways to lose money: gambling,
divorce, and innovation. With annual US research and development spending amongst
Booz & Company’s Global Innovation 1000 at over $500 billion, companies are paying
heavily for the ambition to create. But how do you plan for new growth and innovate in
those markets where too many businesses are armed against commoditization with
glib value propositions and over-reliance on cost containment, promotions, product
extensions, and price competition?

According to a global study by IBM, today’s CIO spends

01
an average of 55% of his or her time on activities that
spur innovation, and the key component underpinning all
successful innovations is the business model. For a business
Know
model to be of value, it must have three core elements: a Thyself
unique central idea that defines who you are, a grasp of future
market trends, and profitability from either lower cost base The first step of this process is a brutal assessment of what
or an offering that cannot be easily copied. An example is business you are in, how the business is differentiated, and if
Gilt Groupe, whose business model covers all three, and and why it is trapped in price competition hell. It is then a
has allowed them to continue to innovate across several question of knowing the appropriate innovation strategy for an
categories. One of the hottest startups in New York, they ambitious, audacious, and imaginative response. Booz & Co.
expect to generate up to $500 million in revenue this year, have succinctly identified three types of businesses that are
up from $170 million in 2009. strategically placed for innovation:

Implementing a differentiated business model can Need Seekers research customers to explore new
successfully unite silos across the enterprise, turn around products and services based on insights, such as
opportunities faster, get customers to stay longer and pay a Microsoft with Windows 7;
premium, resolve internal crises quicker, and better leverage Market Readers, like Groupon’s daily deals, focus on value
the allocation of resources. Nice to have, but where do you through incremental change with proven market trends;
start? The solution is a combination of insights from Booz &
Company, Michael Porter, and Philip Kotler that blend into a Technology Drivers, such as Facebook, who is constantly
six-step process that can guide organizations to conquer the rolling out new releases, seek to solve the unarticulated
challenge of building a business model geared for innovation needs of customers via new technology.
and business transformation. Identifying which approach is relevant for the business model has
huge implications for the outcome of the innovation process and
the allocation of resources.

Method, Inc. 10x10

Innovation: Wrapped, Packed and Stacked — Dean Crutchfield, Principal of Marketing

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02 What Was,
Was
The second step is to create a simple idea with sophisticated business: how will you innovate and evolve the brand? An excellent
delivery by looking at the business from the outside-in, not the framework for analysis can be found in Michael Porter’s five forces:
inside-out. Often, existing customers are not visionaries and the degree of rivalry in the category, threat of new entrants, the
cannot imagine beyond their existing experiences, so it is chance of substitution, buyer power, and supplier power. In basic
essential to realize that innovation needs to be market-driven, terms, the framework requires that an organization evaluate their
not solely customer-driven. Apple has built an empire from strategic position relative to the forces. By understanding influences
anticipating market needs. Steve Jobs wants customers to have such as competitive threat and supplier bargaining power, a business
memorable experiences when they try something new on an can generate an edge in the category.
Apple device: “You try to do something you hadn’t done before,
Behemoths like McDonald’s, PepsiCo, and Amazon are thriving
and it works, and you think, ‘Hey they thought of that, too.’”
global businesses because they fully understand the dynamics of
Consequently, it is essential to become the ruthless enemy of Porter’s five forces and have successfully adapted their business
ambiguity and ask entirely different sets of questions about the models to influence the category in their favor.

Method, Inc. 10x10

Innovation: Wrapped, Packed and Stacked — Dean Crutchfield, Principal of Marketing

03 Aim Past
the Target
The third step of creating a new business model is to redefine the
04 Lead, Follow or Get the
Hell Out of the Way
The fourth step requires formulating a strong leadership team
business you are in and ascertain whether the aims are to attract with a shared vision that will be at the center, balancing contention
more users and/or devise new uses for the product, service, with compromise while simultaneously maintaining focus on the
or experience that will be innovated. Critical for a successful brand and business goals. Contrary to popular belief, business
business model is an analysis of Philip Kotler’s 6 Ps:   innovation is not about isolation and competition; it is more often
about cooperation and collaboration inside the business. This is
People – who is your target customer and why are they
best achieved by treating the leadership team as venture capitalists
buying your product?
that have a stake in the program’s success. Success, however,
Product – what is it and why is it unique in the category? should never be just about reaching targets: without non-financial
Price – what must be set to cover fixed and variable costs goals, the ship is rudderless. 
with a just profit? Therefore the leadership team needs to define the overarching
Place – where have you chosen to do (e)business and why? ambition for the business that can help steer the future and act
as a compressed management tool when making decisions.
Promotion – how do customers buy similar products and
how should you sell? Richard Branson, Chairman of Virgin Group, confirms that ambitions
must come before financial goals: “I can honestly say that I have
Performance – what are the key metrics that success never gone into any business purely to make money. If that is the
will be judged? sole motive, then I believe you are better off doing nothing.”
Companies like Penske have built efficient, hyper-competitive
businesses by consistently honing their business model to the
ever-changing dynamics of the market place using the 6 Ps.
Roger Penske, Founder and Chairman of Penske Corporation
starts with People: “Want more customer focus or more sales?
Ask every manager at every level to call on at least ten customers

Contrary to popular
per week. It is also a great way to stay atop of trends. Twenty
percent of my time is spent actively calling customers.”

belief, business
A robust plan must also layer in government regulations and
laws currently in the market space – an essential component
often overlooked. “When evaluating countries for investment or
opportunities, look first at a country’s geopolitical stability and
its laws protecting property rights: these issues tend to provide innovation is not
about isolation and
a better long-term view on market risk and opportunity than
economic indices,” says Dr. Alan Greenspan, former Chairman
of the U.S. Federal Reserve.

competition; it is
more often about
cooperation and
collaboration inside
the business.

Method, Inc. 10x10

Innovation: Wrapped, Packed and Stacked — Dean Crutchfield, Principal of Marketing

05 Big Results Require

Big Ambitions
The fifth step frames the financial and strategic objectives of the
06 Don’t Say,
Do
The secret of business innovation is to “think big, act small,
business that separates immediate appetite from real business fail fast and learn rapidly.” It is key not to let pre-determined
requirements. Jim Collins, author of Good to Great and Built to goals undermine future success. As Paul Graham, entrepreneur
Last, asserts that “a conservative, disciplined approach to and Founder of Y Combinator said, you need to “get up and
growth is a critical factor in sustaining a great business model. running (bugs and all), gather feedback, tweak and grow.”
Though it may seem counterintuitive, great companies willingly Therefore, to avoid flailing around like a loose fitting part in a
leave short-term growth on the table if it means abandoning machine, you need to find the magnetic core inside the
proven methods of long-term growth.” business that will draw together the company. “A common
vocabulary is not a common culture” former IBM CEO Lou
According to McKinsey, 84% of executives believe innovation is
Gerstner said of business transformation. “It requires focus,
extremely important for their company’s growth strategy.
leadership, and commitment” to create an authentic
However, the successful implementation of innovative products,
community of motivated thinkers and doers that can open
services, and experiences is a road paved with strain and failure.
new channels for the business and industry.
While building the business, do not let short-term growth
override the long-term vision that provides a strong, steadfast Google encourages big ideas in compact time amongst its
strategy to move forward. Facebook has built an unrivaled engineers, giving them one day a week to work on a side
network of highly engaged users, allowing them to share project. It has been tremendously successful, yielding more
information with their friends. From this powerful network and than half of the company’s new offerings in a typical year! So,
content sharing mastery, Facebook has also been able to create whether it is busting a new category or pushing the boundaries
a standard for single sign-on and open applications. of the establishment, people are organized and compelled by
ideas that have a clear strategy, form, and expression.

The secret
On the Front Foot
With the 21st Century on fast forward, never has there been a
more important time to innovate in the face of new faster global

of business
competition. Entire new industries and many existing ones have
transformed to become creators of valuable ideas and
experiences. Increasingly, civilization is organizing itself to
maximize the generation of new and better ideas, creating the

innovation is
infrastructure, education systems, and innovative organizations
that will solve problems, create value, and change the world.
This six-step process helps businesses differentiate in crowded
markets and positions them for successful implementation of

to think big,
innovation. So let us say yes to delighting customers and
celebrate imagination and indefensible creativity to advance
humanity into a brighter future.

act small,
fail fast and
learn rapidly.

Method, Inc. 10x10

 8
Innovation:
Learning Wrapped,
to Play thePacked
Game and Stacked
By By
Dean
Adam
Crutchfield
Dole, Design Researcher
Principal of Marketing

About
About
thethe
Author
Author
Deanneed
is atext
Principal at Method. His experience
with brands from around the world has led Dean to
develop a strong belief that brand is not marketing;
it is what you stand for. With this belief, he urges the
use of creativity and innovation to push boundaries
and bust categories with brave thinking that
can solve problems, create value, and progress
society. Dean has written published articles for
Advertising Age and Adweek, and he is often
quoted in Business Week, The New York Times,
and The Wall Street Journal.
More to
About 10x10
2010 marks Method’s 10 year anniversary,
Power to the People

and we are only looking forward. Written by

our own industry leaders, we are launching
theAbout
10x1010x10
series, which will focus on game-
changing topics that will fundamentally
2010 marks Method’s 10 year anniver-
impact today’s brands and their search for
sary, and we are only looking forward.
new revenue streams.
Written by our own industry leaders, we
are launching the 10x10 series, which will
focus on game changing topics that will
come
fundamentally impact today’s brands and
1 their search for new revenue streams.
Cable’s Lost Generation

2 Unlocking the Infinite Library

3 Entertain Me Now
1 Cable’s Lost Generation
4 Place, Space and the Mobile Interface
2 Unlocking the Infinite Library
5 Gaming for Behavior Change
next

3 Entertain Me Now
6 Changing Retail Currency
4 Place, Space and the Mobile Interface
7 Service Design
5 Mind the Gap
8 Innovation: Wrapped, Packed and Stacked
6 Parenting 101
9 Power to the People
7 The Consumer as King(pin)
Eighth Issue
This is the

10 Welcome to the Metaverse

8 Wrap It, Pack It, and Stack It

9 Power to the People

10 Welcome to the Metaverse

Method, Inc. 10x10

 10x10

About Method

Method is a brand experience agency with offices

based in San Francisco, New York and London. Our
clients are best described as owners of progressive,
era-defining brands, and include Google, Comcast,
Nordstrom, Sony, Samsung, Nokia, Microsoft, Time
Warner, Intel, and BBC. Collaboratively, we help them
create products, services and businesses that are
smart, beautiful and extendable.

For more information visit www.method.com.

Method
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Contact
Lindsay Liu
Marketing Manager
lindsay@method.com
646.825.5242

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