In today’s economic climate companies are looking for cost-effective ways to strategically innovate to drive revenue and increase market share. Often times the approach that companies take with innovation can have a direct impact on the likelihood of success. Is your approach in-house focused, outwardly focused or market focused? Which one is going to put your organization in the best position to succeed?
Companies that take an in-house focused approach typically produce what they want to produce and send it into the market without customer feedback or insight. These companies believe that they have a good idea and are going to market with it. This is what I classify as the “Field of Dreams” approach. Just build it and they will come. Every once in a while this approach has produced success in the marketplace, but more often than not these innovations often fail because of tunnel vision.
What about Ford Motor when Henry Ford stated that the customer could have the Model T in any color as long as it was black. Just because a company believes that they have a great idea it does not mean that consumers will agree or be willing to pay for said product or service.
Another approach that companies take to innovation is outwardly driven. The product or service is based on what the customer says they want. Companies that follow this approach believe that because the customer is telling them about their preferences, that this is where they should spend time and resources to innovate. The challenges with the outward approach lie in the details.
Is this something that actually has universal appeal or specific just to that customer? Does this desired product fit your product mix and future direction of the company, or are you just chasing the money? Speaking of money, are they willing to pay for the innovation and can you selling at a profit? What is the actual demand for this innovative product or service? We have all seen examples of companies that developed technologies because of customer requests, which contributed to the company losing focus and not producing additional sales. How about New Coke? Customer said they loved the taste? The Coca-Cola Corporation never considered that customers would not be willing to purchase the “new” coke instead of the original coke.
The third approach is market focused. This approach requires strong leadership that proactively studies the market conditions, customer insight, technology required, competitive forces and what level of demand present in the marketplace. Companies that take this approach need to understand the following:
* What are your core competencies?
* Does this follow the vision you have for your company and its product mix?
* What challenges in the market are you trying to solve with this new innovation?
* What resources are needed to deliver on the promise?
* Can you deliver this product or service at a price point that customers will pay and one which you can deliver profitably?
* What advantages do you have over the competition in delivering this solution to the market?
Following the right approach can mean the difference between success and failure. If innovation drives corporate growth, the key is following an approach that will put your organization in the best position to succeed. What approach to innovation has your organization tried? Do you have examples from the mortgage industry of in-house, outward and market focused approaches?
Share with us your insight and approach to innovation? What has been a successful approach for your organization? What approaches would you avoid? Lessons learned?
