Outnovate - When innovation is no longer enough
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David Idagu argues that companies should go beyond innovation and "OUTnovate" by thinking beyond what customers and data say they want. He says most companies focus too much on incremental improvements and added value rather than taking risks to create new benchmarks and total value for customers. As an example, Coca-Cola stopped competing only with Pepsi and instead aimed to compete with water, creating a new standard of value. Idagu claims the only way for companies to beat competition is to stop trying to directly one-up competitors and instead reconstruct market boundaries to provide overall greater value.
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Outnovate - When innovation is no longer enough
- 1. 2013 Nigeria Social Enterprise Reports/ Awards @IdaguDavid OUTnovate when innovation is No longer enough David Idagu argues for ‘OUTnovation’ which he describes as going or thinking beyond innovation. But what does this really mean? He argues that ‚most companies have become slaves to demographics, market research and focus groups‛ and thereby limit the impact of their operations by paying too much attention to figures and data collected. eing ‚consumer driven‛ and creating ‚added value‛ have become fashionable terms used by businesses worldwide. The interest in these concepts is demonstrated in the amount of attention and premium that is being placed on the subject of ‚understanding the customers‛. Marketing and communication efforts are tilting more each day in favour of what consumers and stakeholders want and what their expectations are from a product, service or even CSR programmes. Surveys, consumer behavior and opinion analyses and being intimate with and understanding the consumer are now seen as the secret to success. There is a limit to what these can achieve. Most companies have become slaves to demographics, market research and focus groups; hence they produce and offer services based on what the figures tell them. The unquestioning respect for what the consumer and stakeholders have to say therefore becomes an excuse for continued conservatism and provision of innovative ‚added value‛ which impedes their ability to achieve a quantum leap in their value creation agenda. eyond innovation In view of the new reality of an increasingly more charged, complex, dynamic and challenging business landscape and more picky consumers and stakeholders, companies must reinvent their ‚strategy wheel‛ to remain relevant in the value creation chain. The natural impulse for business is to think of innovation in terms of creating ‚added value‛ for it stakeholders, in order to stay afloat and survive competition. The effect of this is that they focus on products or services that offer only incremental value, which more often than not, mimic what their competitors are providing to the same target market. This non- differentiation is reflected in their marketing and advert contents, promotional strategies and even the type of CSR programmes that are implemented. A cursory look at some of the key industries within the Nigerian market space will validate this assertion. otal value Value creation goes beyond providing quality and high standard products and services. It has to go beyond value tied to the core product and enhanced added values that form the augmented part of the product. Competition between organizations seems to no longer exist at the level of products that come out of their factories, but more in terms of what ‚what they add‛ to their factory outputs. These added components include packaging, delivery arrangements, customer advice, financing, payment options and other perks. As much as business strategists and communicators may be quick to settle for the above value model, organizations need to do B B T Page 1
- 2. 2013 Nigeria Social Enterprise Reports/ Awards @IdaguDavid more than just create ‚added value‛ for their stakeholders. Organizations with the "added- value‛ orientation will remain engrossed in the ‚strategy rat-race‛, providing value which their competitors will offer in a short while. The Nigerian telecommunication industry for instance is a typical case study; with their so called ‚value added‛ products a copy-cat of themselves, thereby confusing consumers. The banking and indeed the FMCGs are not exempted either. For instances, Coca-cola comes up with a ‚coke plus meal is good‛ campaign and ‚Lucozade boost‛ follow suit, mimicking the same campaign. MTN starts a music reality TV show and all other network providers jump on the wagon. Perhaps the most significant barrier to making a quantum leap in the value creation chain is an obsession for providing ‚sustainable‛ advantage. When an organization has built a clientele, when it has created a competitive edge that translate into market share, its natural reflex is preservation. It looks to safe guard its market share and hopes that the brand’s competitiveness does not erode. At this stage it encourages the erosion of its innovative capacity. However, in a market where ‚hyper- competition‛ is the new reality, businesses are forced to either change their fundamental strategy of creating just ‚added values‛, which places them one step ahead or drown in the pursuit of developing series of temporary advantages that cannot deliver them from the impending loss of market position to the companies that dared to take the risk of breaking away from the conventions, those that decided to ‚outnovate‛. UTnovate In my opinion, companies should disregard the mindset of continuous improvements, where strategies and value offers are aimed at doing a bit more or a bit better than what competition is doing. Being better is no longer enough! The focus of creating value shouldn’t be determined by what competitors are doing and how to create ‚something‛ that will outsmart them or at least meet the proverbial industry standard. This can be tiring and may eventually wear businesses out! The only way to beat competition is to stop trying to beat the competition! UTnovation is about looking beyond competing factors within an industry and reconstructing market boundaries, breaking away from focusing on accepted functional and emotional market orientations as well as buyer groups in a bid to create value. OUTnovation is not just another combination of syntax + sweet sounding words, but rather a paradigm shift from the way business strategy is executed. The value curve of Coca-cola for instance, took a radical turn when they stopped focusing on Pepsi Co. as their key competitor. They decided to create a new benchmark, competing with water rather than another cola drink. Their seeming unrealistic ambitions not only changed the total value consumers enjoyed, but also O O The only way to beat competition is to stop trying to beat the competition! Page 2
- 3. 2013 Nigeria Social Enterprise Reports/ Awards @IdaguDavid benefited all their stakeholders and more importantly, reflected in their global (social) responsibility programmes. This paradigm shift gave rise to the popular “Coke + Meal together” Campaign that have delivered more sales value to the company than any other strategy would have while chasing Pepsi Co. ummary At some point in the value curve, high quality products and services was the definition of value and then it moved to providing augmented and additional services to enhance usage of the products and services. The train is moving, and consumers deserve more. What will differentiate a successful John from an average James is not in the added value provided, but the total value. Businesses should not be boxed into a pursuit of sustainable advantages but rather take a leap away from the Strategy-rat-race. This can be risky though, but not taking this leap is even more risky. Final words: The rules of the game are waiting to be set! OUTnovate! Idagu David is an entrepreneur, a Public Relations Trainer and creative head of QV3 ideation, a content marketing and marketing communication consultancy collaborating with brands and SMEs, helping them craft and tell their brand story. His new book The 6th Sense Paradigm is in the offing. He tweets with @IdaguDavid. S Page 3