Monday, February 16, 2015

Spoiler! Consumers don’t give a crap if your company is innovative.

Unless you’re Apple, you’ve just released the 6th generation of iPhone and the masses see that as the latest most innovative product on earth (yeah, Apple can still make believe), consumers don’t care about incremental updates to your “new” product.
You can brag as much as you want about how innovative your company is, how disruptive your market strategy is, how unique your company’s culture is, the reality is (sorry!) that consumers don’t give a crap about all this.

Clone baby, clone

Many so-called “innovations” are driven by executives or engineers who (genuinely?) believe their product is groundbreaking. The reality is, their product is only “innovative” to them, not to the consumer.

Back in the Cold War era where former USSR and the USA piled up new weapons one after another not only to catch up but to out-feature the opponent, present companies follow the same strategy: piling up new features to out-feature the competition. Companies look for ways to do better, cheaper, faster, nicer products, but they all offer cloned products. Executives’ motto now is “stop me before I innovate again”.

Most companies adopt a reactive/ adaptive strategy (“let’s see what our competitor does, we’ll do it cheaper”). A very few of them adopt a proactive strategy. Going back to Apple, it probably fits in both categories.

As most products become commoditized almost instantly as they enter the market (if not even before), companies forget a very important marketing principle: consumers don’t remember specific features, they remember the experience they had. Companies are confusing product upgrade with innovation. As consumers are volatile, go from one brand to another, one new product to the newest one, they forget very quickly about your product unless they get a memorable experience out of it.

Innovate to change the game

In an interview last Fall, Howard Schultz talked about how Starbucks’s business model is about changing behaviors, from selling coffee to redefining social interactions to moving to e-wallet. You don’t innovate to compete; you innovate to change the game.

Consumers have an abundance of choice. With new technologies emerging, interactions between businesses and consumers are evolving. Excessive proliferation of choice creates confusion and uncertainty. Consumers want choice and they want the choice decision to be easy. They are looking for ways to simplify their lives.
Consumers, especially Gen Y, want to be in control of their experience, with the technology being the enabler of that choice, not the dictator.

Companies have to switch their focus from being transaction oriented to being emotion oriented. A product is a transaction, an experience is an emotion. That’s their differentiator.

From transaction to emotion

The right way to think about innovation is this: how are we transforming customers? How are we changing and simplifying their lives?

This is a different way of thinking about your value proposition; it’s about developing human connection with customers. Not simply delivering a product or service “because that is what companies do”. Companies who believe that out-featuring competitors is the path to innovation are kidding themselves. It might work in the short-term, but it will turn against them in no time. Customers, people, users, are experiencing more chaos than ever. Too many choices are creating noise in their lives. This is a huge opportunity for both startups and established companies to make an impact in people’s lives. The sooner you rethink how you look at innovation, the faster you will orient your efforts towards really thinking about how you might change your customers’ lives and behaviors.

The consumer experience with 
a brand is more than just the functional benefits. It is the total brand experience including emotional benefits as well.

Monday, February 2, 2015

To change your organization, change the way you bring change.

Change is constant. If there is one thing that does not change, it is change. Have you ever considered changing partners? Not changing partners in terms of swapping spouses, but changing your partners’ or employees’ mindset and behavior? Have you tried to do that? Not easy, right?

A few weeks ago I spoke in front of a group of local business owners. I first asked how many of them were open to change; they all raised their hands. “How many of you have been through a change initiative at your company in the last 3 years?”. Once again, most of them raised their hands. “How many of you can say it worked?”. Then, only a handful raised their hands.

Change within companies is a bit like sex among teenagers. Everybody talks about it, but only a few actually do it. In fact, change has become a dirty word inside organizations. People are tired of being asked to change or innovate.

Why don’t people like change?

Heidi Grant Halvorson, PhD, says that it's not just that people fear change, though they undoubtedly do. It's also that they genuinely believe (often on an unconscious level) that when you've been doing something a particular way for some time, it must be a good way to do things. And the longer you've been doing it that way, the better it is.

Rosabeth Moss Kanter, in a HBR blog, reveals the 10 most common reasons why people don’t like change, such as:
- Loss of control
- Excess uncertainty
- Dislike of surprises
- Doing something differently creates confusion
- Concerns about competence
- More work 

What you need to change… is your approach to change

The most effective approach to change does not start or end in the C-suite. It happens at the heart of the organization, where mid-level managers and their teams build the momentum to implement and lead change. Executives initiate and support change, the rest of the organization lead change.

Everyone is a change agent. Leadership ought to realize that empowering their teams to lead change, think in different ways, and experiment will help take the business to places it’s never been before. Not only people want to be inspired about change, they also want to be in control of how change can happen. Experimentation should become part of your company’s metrics, not just success. If you base your employees’ performance just on success, they will take the safe route, where risk and trial don’t exist. If you empower them, encourage them to experiment, (and likely to fail – at first), you will lead them to think creatively, solve problems in their own way (not the company way), and ultimately innovate.

Change is a mindset, not an SOP manual. In your organization, Marketing has a different culture and way of working than Accounting, IT, or HR. Teams don’t need a 50-page SOP document to talk about or implement change. In contrary, teams need customized tools to break down barriers, kill rules, challenge assumptions, and reverse the “we’ve always done it this way” mentality. There is no one-size-fits all program on change. This is why it is so critical to delegate change implementation and change management to teams to customize it and make it a reality. The key is to provide directions and create new behaviors, not to dictate teams how to do it.

One step at a time. Because you can’t change a company’s culture in one day, leaders need to implement change in increments. Find small sized projects with a realistic (successful) outcome and instill new ways of thinking and new ways of doing will get people notice that something different is taking place. Employees and managers will be more willing to take a chance and embrace the change if the outcome is tangible. Leaders must encourage employees to participate. As experimentation must be part of the metrics, participation is the same – not forced, but encouraged. “Is there a different way to make this work?”. “What should we do to make it fail?”. “Why would customers not buy our product?”. Reverse thinking is a way to turn upside down the approach to tackle problems. In other words, employees need to unlearn to be innovative. Little by little you will change your company’s DNA and make it a place where change it not only possible, but it is critical to its success. 

What is really important is to build an enterprise where employees: 
- can think asymmetrical in a linear culture
- are not afraid to come up with (bad and good) ideas
- feel comfortable to fail by experimenting
- get rewarded not by their number of successes, but by their number of attempts
- embrace change as an opportunity, not a threat.

Change happens. It doesn't care whether you like it or not. Change doesn't need your permission. Change is the one constant in business. What you decide to do with change is up to you.