July 2011 saw the very last launch and landing of the NASA Space Shuttle.
So is this the end of an era for space travel or the beginning of private enterprise creating innovative customer experiences?
“History has shown that many of the innovations that we have come to take for granted were a result of entrepreneurs, pioneers and early adopters willing to invest their own money, and sometimes lives,
in a big idea.”
Richard Branson, Founder of Virgin Galactic.
Let’s face it, most companies wouldn’t innovate if they didn’t have to. It’s not that people hate change – although some do, of course – it’s just that innovation is often so risky, so expensive and fraught with failure. There’s a well known phrase: ‘If it ain’t broke, don’t fix it’, which probably sums up many people’s views about innovation.
But the fact is that innovation is necessary. In fact, now it is mandatory. Increasingly, customers are demanding more from their brands. What was innovative yesterday is commonplace and expected today. This inflationary effect keeps raising the bar and fuelling the need for new, different and better approaches to business.
Digital, mobile and web technology has increased the rate of consumer demands and the speed of response they expect from companies. Time has never been a friend to the businessman but it is now openly hostile. New products have an increasingly limited window before being replaced or copied, in fact they are often superseded or imitated while they are still in development. Think of the speed of replacement of handsets like the Apple iPhone. Competition is everywhere and accelerating the rate at which people can find and buy pretty much whatever they want, whenever they want it.
One problem for many organisations, when they think about innovation, is that typically they focus on the product. However, we know that customers form relationships with brands, not products. And we know that the areas of that relationship that are often given least attention but which mean most to the customer are in communications, service, sales and support.
According to Peter Fisk of Marketing Genius, whereas the vast majority of innovation efforts by companies have been linked to product, the biggest returns on investment have actually been in new business models (e.g. online shopping) and in the customer experience.
Another problem with innovation is that many business people are obsessed with ‘the big idea’, they want ‘game changers’ and are constantly poring over customer data to try to come up with the ‘killer app’. But even more important than these big things are the little day-to-day things that make an enormous difference to consumers and employees, that earn their advocacy and loyalty, cost little but reap financial reward and demonstrate your commitment to creating value for customers. Tesco’s ‘Every little helps’ promise has driven innovation in large and small ways for many years and made this brand the largest grocer in the world.
The organizations we feature in our book, ‘BOLD – how to be brave in business and win’, understand all of this. So what lessons can we learn from their approach to innovation?
Challenge conventional thinking
First and foremost, these organisations challenge the beliefs and norms that prevail in the industries they compete in. For example, how does an airline charge significantly less than its competitors and still make money? The answer so far, has been to unbundle the price of the ticket and charge customers accordingly; a model adopted by Southwest Airlines, easyJet and Ryanair.
But whilst passengers might be willing to forgo food and amenities for a short flight, it is a different proposition when flying between continents. Passengers want the amenities offered by the regular carriers at a price closer to the low cost operators. AirAsia X is the answer. It is the only long-haul carrier that offers flat-bed seats, seatback entertainment and excellent Asian style service at a cost 60 percent lower than competitors. Azran Osman-Rani, AirAsia X’s CEO, said “We really just started to question every single thing about the airline model and asking if there was different way of doing it.” The innovation came not from a new product but a new business model.
With its promise of ‘Now Everyone Can Fly’, it has extended operations to 20 countries around Asia. It has won numerous awards, most recently voted best low-cost carrier in the world in both 2009 and 2010.
Constantly innovate in both large and small ways
These organizations are possessed by a relentless commitment to improvement, to seeking a better way. Sometimes it can be game changing as in the case of Virgin Galactic’s spaceship VSS Enterprise, but often it is just the everyday focus on innovation in many small ways throughout the business. Just so long as they make things better for customers.
An important aspect of this relentlessness is that these organisations understand that ‘little things have a big impact’. So they are often obsessed by detail and just endlessly curious about even the smallest aspect. Whether it is digger manufacturer JCB’s Chairman Sir Anthony Bamford personally adjusting the hub cap on a back-hoe digger because he noticed it wasn’t quite right, or smoothie manufacturer innocent’s use of language in their packaging. They are all manifestations of the fact that a small action can have a big impact.
Drive innovation from a deep understanding and insight about what target customers value
When Sonu Shivdasani and his wife Eva were planning their luxury hotel brand, Six Senses in the Maldives, they called up tour operator travel agents and asked them what customers complained about. “There were things like the lack of fresh food: everything was imported and tinned” he said. “So we developed our own organic garden which means we can actually offer our guests much fresher and more nutritious salads than they get in London.”
It’s also important to understand that what you sell is not necessarily what customers are buying. RayBan thought they were selling eye protection; Chilli Beans, the Brazilian retailer realised that customers were buying a fashion accessory. This insight led them to create a business model that produced sunglasses of good quality, but exceptional variety – 10 new product designs are launched in 250 stores every week! Because of this, a typical customer will own 3 or 4 pairs of Chilli Beans and visit the store weekly to check out the latest models.
Ensure products, services and your people are distinctive and aligned with the brand promise
Umpqua Bank is a community bank based in the mid-west of the States. It has created a reputation and enthusiastic following for its innovative approach to banking. By calling its branches ‘stores’, recruiting its people from retailers and using innovative marketing techniques that it calls ‘handshake marketing’, the bank seeks to deliver on its promise of being the world’s best community bank. One example of this approach to ‘handshake marketing’ was its use of an Umpqua branded ice cream van which drove around the streets of San Francisco to create brand awareness in this new and important market.
Ray Davis, the CEO of Umpqua Bank says: “Innovation permeates our organisation at all levels. To me, that’s the most important driver of our organic growth. The second route to growth, of course, is through acquisitions. The reason that we’ve been so successful with acquisitions is because we’ve created a very unique culture which aligns our people with the Umpqua strategy and brand”.
Use innovative technology and processes to support the delivery of a superior customer experience
Umpqua, like the other BOLD brands, use social media and their websites to create customer communities. Burberry uses 3D high-tech broadcasting of their runway shows, and Chilli Beans uses music and events to involve customers in the ‘Chilli Bean’ world. O2 drives innovation through continuous customer feedback by involving them in events and their participation in customer communities like giffgaff, its ‘people powered network’.
But the technology doesn’t have to be ‘digital’ or ‘high-tech’ to support an innovative idea. Six Senses refuse to fly in any branded bottled waters to any of their properties. Instead they are investing in their own water filtration and mineralization plants at their resorts to bottle and sell their own water. 50% of the proceeds of these sales go to a water charity to provide clean water in places like India.
Ensure your people demonstrate superior customer service skills and capabilities
Sir John Hegarty, the founding Creative Director of advertising agency BBH, says: “When you’re in an environment such as ours, it is fundamentally important that the creatives feel that what they do is the most important thing in the company; that they are being encouraged to do what they want to do. If you don’t have that, you won’t get them pushing themselves to create the kind of work that they want to create. So it is fundamentally important that I encourage an environment of constant innovation, and that they know that when they do creative work, I am going to take it seriously and I am going to sell it as best I can.”
And that quote should remind us of the final point that all these companies realise about innovation. In the end, it is only important if it is going to make a difference. And if it is going to make a difference, it has to be sold to customers or consumers with passion and with the conviction and commitment that it will be delivered. Having great ideas is all well and good but you have to deliver them in the real world. All the BOLD brands know this: innovation is hard but execution is harder.