why innovation shouldn't be this hard

In my engagement with CEO groups and leadership teams I’ve found there to be few CEOs for whom innovation is not a priority. Yet despite business smarts, good intentions and a committed team behind them, leaders often find themselves wrestling to find and execute the right ideas for growth.

Many leaders speak of placing enormous pressure upon both themselves and their teams as they pursue an innovation agenda. Many share a story of relentlessly pursuing innovation only to find the strategic conversations becoming bogged down and the ideas becoming increasingly complex. Subsequently teams feel overwhelmed by the task and the process breaks down. Disheartened teams turn their focus back to operations – where organisational knowledge and competence historically lies.

So why is innovation so hard? And why do so many committed leaders and teams find themselves running out of steam and abandoning their innovation efforts?.

One day, whilst discussing this problem with a client I noticed as he talked about his team’s innovation agenda he directed his gestures and eyes to the far corner of the room – as if pointing to a far horizon. It finally dawned on us – perhaps the reason innovation was so difficult was because we were focusing on far horizons: too far away from our business.

I think we too often speak of innovation in abstract terms believing that innovation is about searching for completely new ideas. As a result a team may come to perceive innovation as an Odyssean journey to far distant shores.

I have come to learn that far from being located on distant shores, innovative ideas and great discoveries – the ones that transform your business and create growth – are generally right in front of you.

Reframe what you know

Innovation is sparked not by new knowledge but by reframing what you already know. Often there is little need – at least initially - to go in search of new data. Instead innovation is about observing with open eyes and mind what is currently going on in your business, your industry, for your customers and the world at large and then reframing that data to gain new insights.

Reframing is not unlike a stereogram, where you look directly at a picture and shift your focus until the 3D picture is revealed. The picture itself doesn’t change, but what you see within it does.

So how do you reframe? You do so by looking beyond the assumptions and biases about your business, your customers and the industry in which you compete. We unaware of our assumptions and biases because they are firmly grounded in past experience and adopted as fact. As such identifying your personal and corporate assumptions requires practice and focus. I think this is where innovation frameworks and tools can prove valuable. Frameworks and tools won’t of themselves create innovation; but they will guide strategic conversations helping you and your team to look beyond your shared assumptions to see new pictures in the ‘data’.

Using tools to reframe

A really effective and simple innovation tool that I often use (and that you can easily do yourself) is to ask teams to list all their assumptions about an aspect of your business (eg: a specific product or service that you offer). List all the assumptions you can think of: the product/service features; how it’s priced; channels to market, etc.

Now, it’s not quite as easy as it seems because our deepest assumptions can be hard to detect. For example hotel owners will often not realise that a key assumption they hold is that a hotel requires a building (Airbnb has successfully debunked that assumption).

I’ve found that once teams develop a skill for detecting their assumptions, they can then move on to reframing their products and business models by eliminating, scaling or re-imagining those assumptions. I’ve been amazed to see where teams can land after they’ve worked on a simple tool like this for an hour.

So next time you or your team find that the innovation process is getting too hard, my suggestion is to gather the team and start by listing all the beliefs and assumptions you have about your business, your industry and your customers. And then start a reframing process to see if new insights and ideas come to the surface. Stick with long enough and they are sure to do so.

Innovation, as you will find is not that far away. In fact it’s right here in front of you. You don’t need to go anywhere. Just get your thoughts together, along with paper, markers, post-it notes and a few willing colleagues and you’re set.

And leave the Odyssean journey to Ulysses

 

 

why you shouldn't love your customer

Last week I attended a digital innovation conference. It brought together a series of thought leaders, digital agencies, successful companies and start-ups. It was a fantastic event with one exception: an oft-flouted phrase that really disturbed me.

A couple of presenters spoke in impassioned tones about ‘loving your customer’ – stomping home the message with ‘Love your customer’ emblazoned on slides above their heads. As one agency head said: “You gotta love your customer and ask them what they want”. I grimaced.

I felt myself catapulted back to the memory of a blind date in my youth. The young man once snagging a first date couldn’t help but profess his love there and then over the phone: before he had even met me. Needless to say I was a little shocked and should have stopped it there. But given I’d already committed I went on the date. Over a couple of exhaustingly long hours the young lad waxed lyrical about his achievements and personal qualities whilst he fawned over me and groped for approval. Needless to say it was the only, albeit numbingly memorable, date. I was insulted and infuriated.

Why? Because I knew this kid didn’t ‘love’ me, or even ‘like’ me. His protestations of interest had absolutely nothing to do with me. It was all about him. He was seeking approval and hoping that by intimating love, I might take note, invest in him and give him what he wanted (an unquenchable desire for attention). Without realising it he was screaming with insincerity and inauthenticity. I was left insulted and angry. He was left alone.

And it’s just the same for business. You simply cannot just decide to love your customer and then try to prove your love and expect results. Great relationships (romantic and economic) do not start with loving someone. They start with knowing someone.

Seek not to love your customer. Seek to know your customer.

It is only once you truly know your customer that a meaningful and profitable relationship can ensue. So how do you get to know your customer? As with most relationships there are a series of incremental steps that lead to love. And it starts with being open and listening… deeply.

Here’s five simple steps to knowing your customer:

Step One – Ask them about a their interests

It’s the first step to getting to know anyone. Take some time to learn a little about your customer: his/her likes and dislikes. What are his/her interests and tastes? Can you see some synergy between their interests and what you have to offer?

Step Two – Get to know them better

Once you’ve established some shared interests, get to know them better. What drives your customer? What thoughts and feelings drive their decisions? What’s important to them? Who's important to them? Why do they make the decisions they do?

Step Three – Listen to know them deeply

Learn to listen deeply. Seek to understand and listen without putting your view of the world in front of them too quickly.  As you listen - without judgment - seek to understand them beyond just what they say: look for the hidden, unsaid messages that can reveal their true selves. Deep observation can reveal needs, concerns and pain points that the customer themselves can’t always articulate. These unstated and unmet needs are what feed value creation. It is here that innovation is born.

Step Four – Nurture the relationship over time

Invest in value creation. If you really want to delight your customer, invite them to work with you in the spirit of co-creation. Together you might create something truly unique, that your competitors have never thought of and that many others will also appreciate. This is finally where we see love start to grow. Together you and your customer can create something that is truly valuable.

Step Six – Honour the relationship

No relationship will last unless it’s constantly valued and nurtured.  Once the commitment between you is established, keep close and connected. Stay present with your customer and continue to listen closely.  As time goes by do new needs or expectations arise? Has your customer grown and changed over time? But even the greatest of loves will die without constant and authentic nurturing. It is with constancy and consistency in listening and nurturing the relationship that a truly lasting relationship evolves. This is love.

So instead deciding you want to love your customer, decide instead that you want to know them, listen to them, nurture them. Change your mantra from “Love thy customer” to “Know thy customer” and watch as your relationship blossoms and evolves.

 

how to manage industry disruption

There’s something benumbing about industry disruption.  Many decision makers are witnessing disruptive new entrants in their competitive space and they know it spells trouble. Yet the tendency for many companies facing industry disruption is to do one of two things (can you see yourself in either of these scenarios?):

  1. Ignore the disruption: hoping that it’s a fad or that it’ll take years to really impact on the business (by which time you’ll have a response strategy). This is inertia bias: the attractiveness of doing nothing even in the face of certain destruction.
     
  2. Try to compete with the disruptor: emulating their model and hoping you can take back some of their market share (or at least hold on to your best customers).

 Neither course of action will help you manage disruption. At best it may delay the inevitable (but even that is doubtful). It is almost impossible to go up against a disruptive new entrant and compete (even acquisition of your competitor is no guarantee).

So how do you effectively defend market share and achieve growth in the shadow of disruption?

Firstly it’s important that you look deeply into the disruptor and its model to fully understand the unique value and utility they bring to the market.  You don’t want to look just to a disruptor’s extrinsic value (which is where most competitor analysis stops). You want to understand their intrinsic value. What is about their value proposition that engages customers?  What shifts in customer expectations, needs or attitudes does the new model respond to?

When you can fully appreciate the value customers gain from the disruptor’s offer you can then look to create new and differentiated value rather than trying to compete against an agile and powerful competitor.

A great example of this approach  comes from the hotel industry, which is responding to Airbnb’s disruptive model.  I have seen three very different responses from hotel groups. Look to each of these responses and ask yourself which best describes your company’s response to disruption:

Deny

Some hotel groups have chosen to view Airbnb as nothing other than a new channel to market. I’ve overheard hotel executives stating the model is a fad and that regulators will eventually step in to put a dent in its growth. Given Airbnb has 1.5M listings in 190 countries and is expected to achieve triple figure growth this year (pundits project 80M room nights) we should expect regulators to bend to the marketplace not the other way around. Ignoring Airbnb is a deleterious strategy.    

Emulate

Other hotel groups have looked at the Airbnb model, understood it as a disruptive ‘channel’ and decided to enter into the game. We see a number of hotel groups investing in sites such as onefinestay, lovehomeswap and airbnb itself in order to try and get some skin in the game.  To my mind they’re missing the point. They are looking to the share economy model on the basis of its business model (how it goes to market) rather than its value (why customers participate).  

Create

One of the most exciting responses to Airbnb’s disruption has been from serial innovators Atyzen Group. They created CitizenM: the low cost luxury hotel (a great case study in itself).  Their new venture is a hospitality concept for ‘digital nomads’: Artyzen Habitat. Habitat disrupts the hotel and airbnb model by offering a unique communal living space where travellers (including a growing market of working nomads) are able to connect to the community during their stay and have access to co-working and social spaces. Habitat staff play the role of host (rather than hotel employee), offering a non-obtrusive and personal service. 

Artyzen Group has understood the value intrinsic in the Airbnb model. It’s not about the channel to market; it’s about creating community for travellers. They have looked at airbnb’s disruptive model only in terms of gaining essential new insights. And then they have created their own disruptive innovation. While yet to launch, Artyzen Habitat is creating enormous interest and is certain to have every chance of success.  I myself can’t wait to book a stay at an Artyzen Habitat hotel.

How will you manage disruption?

So what does this story tell us? What is the lesson for incumbents as they witness impending disruption? Firstly – don’t ignore it. Responding to disruption through innovative strategy may have risk, but it’s not nearly as risky as the status quo (where eventual failure is certain).

Secondly, look beyond the disruptor’s business model: it’s only part of the story. Instead seek to understand the unique value that the disruptor offers to customers.

What new value does it offer?

Finally allow these insights to inform you only as far as they allow you to reimagine how new and unique value can be offered to your market (or emerging markets). Look beyond your assumptions and traditional market boundaries to find your own unique offer to the market place: your own disruptive innovation. To manage disruption, become a disruptor.

To learn more about Artyzen Habitat - watch the clip below.