Copyright Glynis Ross-Munro
To what extent does your business think innovatively, then execute and deliver real value? The key to success in the current economy is not about selling the same item or service for a few cents less than your competitor, it’s about changing the game. And then changing it some more. Whenever you want to. Because you can.
Imagine: On vacation, you log on to a website, and check on your pet. There are vidcams in the pet boarding facility, so you can watch your pet eating, sleeping, being groomed or exercising. You happily pay a premium fee to a business that provides both pet lodging and peace of mind. This business has delivered value through strategic thought, innovation and specialty skills.
Consider five more examples, each using strategic thought and insight into the way that customers perceive value:
1) Paperstone, a green manufacturer of kitchen countertops that look like granite, has changed the kitchen game by proving that sustainability, beauty and functionality can go together. Their products are harder than stone but are made from recycled paper and resin. A home can have green appeal, an “in” look and an inexpensive, practical kitchen solution. They also make furniture, paneling etc. What’s not to like?
2) In the 1960s, Helen, Ga, was a run-down ugly town in a pretty setting. The nearby forests were recovering from being logged-out, and the remains of a long-ago gold rush made it an eyesore. With the help of a local artist who had lived in
Southern Germany, the townsfolk rebranded it as a Bavarian Alpine Village, and created a year-round roster of activities. Today Helen is the third most popular tourist destination in Georgia.
3) Zappos is one of the top-rated customer service firms in the world. They turned the call center game around by thinking about the best way their internal customer (the call operator) and their external customer (the on-line buyer) could work together to create value. They simply ask their people to solve the customer’s problem any way the two of them want. They don’t time the calls. They don’t monitor the calls. The representatives don’t have scripts. Their people are happy, their clients are happy. And they make a ton of money.
4) Visit Café Press or Ponoko. Each of these companies gives their customers the freedom to make things. Whether you wish to choose an existing design or upload your own, you can create a t-shirt, hat, birdcage, lamp, table etc, in the color, fabric or material of your choice. You can have it shipped to your door for a startlingly reasonable price.
5) Are you worried that you have sleep apnea? Many sleep labs will drop off a test kit at your own home, for free, to see if you are at risk. This median step bridges the reluctance you probably feel about spending a night at a sleep lab, and also comforts your doctor about the possibility of ordering unnecessary, expensive tests. Once you know you have apnea, however, you will get to that sleep lab quickly, fearing heart damage, brain cell loss etc.
Traditionally, business has looked to deliver value in three ways. Companies have thrived through:
1) Offering the best prices. Any price-based business is an example of the first category. Bricks and mortar (Wal-Mart) or on-line, fast-food or overnight delivery, if the core criterion is price, this is the business model.
2) Carving out niche markets for rare, specialty or unusually high-quality products or services. A business in the second category often has unusual skills, technologies or competencies. This includes niche markets or markets with high barriers for new competitors. An example might be a business making the looms that weave the carpets seen in hotels, where the design fits the room irrespective of size or shape.
3) Offering outstanding service and relationships, and working hard to become reliable and trust-worthy business partners. Nearly every company aspires to the third category, wanting to be trusted, liked, easy to work with, to be the supplier of choice, with great customer service and reliable quality.
As the economic landscape has shifted (into the technological age, not simply into recession) many companies are scrambling after all three of the value propositions. They are cutting prices, working on service and customer relationships and seeking the differentiation of something truly unusual by examining their skills, connections, patents, infrastructure, supply chains, contracts, certifications, relationships or other advantages that create entry barriers for competitors.
The work of lowering prices has led to tightening of businesses processes. Some organizations have done this more thoughtfully than others. One interesting case is Wal-Mart, an organization that has proved that analysis of every aspect of one’s business processes can deliver many savings, and that these can be passed on to customers. They are also an example of how this needs collaborative and strategic thought: in our transparent world, their corporate brand quickly deteriorated when they were perceived as cutting costs at the expense of medical benefits for staff, while companies like Starbucks provided medical insurance even for part-time staff. The Wal-Mart brand recovered when the market became more aware of their green and cost effective initiatives, and their work with local vendors and sustainability instead.
Value and innovation:
This changing economy forces us back to reanalyzing traditional models. Studies show that wealth and prosperity develop around knowledge, education, thought, the lodging of patents, and publishing of papers on new ideas. Our economy rewards thinking, and innovation because they create value.
In this economy, competing simply on price is often a poor business model. It works like this: you sell roughly the same product or services as your competitor, while charging a few cents less. Costs remain much the same, because you can only tighten the screws on your suppliers to a certain extent before they make no profit. Anyone can Google the lowest price, and eventually price wars lead to a lose-lose result for everyone.
Value is another story. When one thinks about the customer’s definition of value, any business can innovate to become as useful to its customers as that rare company making the looms for hotel carpets. The market may catch up with you in about 12 to 18 months, if you do not have unusual skills or technology, but when the rest of the market adopts your innovation, it is simply an opportunity to work out a new definition of value that differentiates you again in the eyes of your customers.
Our own company, Competency & Performance Solutions, is a training and consulting business. We find that customers value two things.
- Firstly, many groups and corporations want to think in innovative, entrepreneurial ways, and benefit from an external thinking specialist who can make this happen.
- Secondly, people need new skills, knowledge and new approaches and attitudes, but they can’t afford training that keeps people away from their work for long periods. They need learning to be customized: working time is so valuable that it is highly cost-effective to have a specialist pick out the key issues from otherwise-overwhelming amounts of information. Few companies can afford high-priced consultancies to design one-off training programs that meet all these criteria: the need is for excellent programs that can be customized within days by local providers.
CPS synthesizes and structures core, relevant learning material, and shapes it into interactive, accelerated learning experiences that include the interpersonal aspects of learning (so that people “feel trained” and invested in). The focus is on highly collaborative learning, so that people share ideas, innovate and commit as they learn, and build teamwork, higher-order thinking processes and involvement.
CPS therefore demonstrates two entrepreneurial trends:
1) Consulting as “thinking partners”, facilitating thinking, researching and actually doing a lot of thinking, communicating ideas, connecting thinkers (from our networks as well as our clients’ networks) and moving projects along: This is an example of using unusual skill combinations that are seldom duplicated, but must be maintained by constant study, research and relationship building.
2) Developing interactive, accelerated learning designs: This is an example of a technique that the market can copy, but where there are relatively high barriers to entry because these types of instructional design skills are unusual and the high-level information synthesis skills are very rare.
In summary, the obvious questions are “Who is your customer?” “Who are you” “What can you do (if you put your mind to it)” and “What does your customer value?” The history of business suggests that there are few limits to innovation, and we are nowhere close to finding all the ways in which we can deliver value.
Then the question is “Do you wanna?” Change is not comfortable and innovation feels like rewiring your own brain and the brains of those around you. People may be excited in the short term, but they tend to return to their previous comfort zone or equilibrium. Innovation is hard work (but can be fun). Creating wealth is almost always hard work (but can be fun).
As you review your business value proposition, you may find that you can get along without innovation in the new economy. You may find that you are uncomfortable with an innovative orientation. You may find that you can outsource innovation. You may find that you are a great innovator. Just be sure that you know what you are choosing, why, and what the consequences are for your business.
