The 5 Opportunities to Discover Your High-Impact Innovation

In this article we will look at the 5 opportunities that can be explored to discover high-impact innovations.

Before starting to explore new opportunities, the first step is to remove a very common obstacle in companies and between individuals: the aspiration to be the best. For example, wanting to be the best in your industry forces you to just look at what you already do in a self-referential way. You will look at your products and services and you will try to improve them more and more, or just a little more than your competitors already have. This is often done in the hope that the market and customers will appreciate that improvement so much that they want pay you for it again.

Continuing to improve existing products, however, does not mean that customer needs are being met or that the market recognises the product as innovative or that there is an important recognition in terms of brand, turnover or market expansion.

Incremental innovation is rarely recognised and rewarded by the market. Solely focusing on your own product does not allow you to anticipate new customer needs: it distances us from market needs and from new offerings that could be made to customers.

Adapting to the range of products/services in your sector does not encourage innovation.

Another constraint that we encounter if we become too self-referential is that we begin to focus only on products in your industry. This attitude leads us to always measure ourselves against the same yardsticks, forcing us to always compete against the same companies and be confined to products (and services) tied to the existing range, to the past and what is already on the market coming from your own company and your competitors.

There is a risk of adapting to a functional or emotional approach that already exists in your sector: we’ll tend to ride on the coat-tails of existing criteria and trends for fear of getting too far ahead of people and failing.

Always looking at the same customer base means striving to please those who are already buying your products, and by doing this you are neglecting potential new opportunities; potential customers who may not be familiar with you, but who use products or services from your competitors or even from companies outside your field that you may also be able to provide.

Let’s see what can be done to genuinely explore beyond your own borders and come up with strategic ideas that can open up new opportunities.

#1 Exploring Alternative Sectors

Exploring alternative areas is the first step to looking for new opportunities. To see an example of how this kind of strategy works, we can look at multiplex cinemas.

In order to innovate their business and regain some of their lost customers, they looked not only at their direct competitors (traditional cinemas whose offering had been overtaken by a greater number movies offered, or by more showtimes), but also in related sectors. It may seem strange to consider restaurants and cinemas as related sectors, but the truth is that both of these places solve a single problem for customer: to offer an opportunity to spend a pleasant evening with friends, while eating or watching a movie.

The “smartest” cinemas have been the ones who have been able to combine the two needs – the possibility to see a movie and eat – and have found formulas to bring food in to the cinema and “steal” small slices of the market from restaurants by bringing people to see a movie in places where you can also have something to eat.

#2 Studying Strategic Groups in the Industry 

High range, mid range and low range are levels always present in any industry.

Studying strategic groups that are in different levels can be an interesting exercise. Even if your business is in the higher end of the range that does not preclude you from learning something from those in the lower ranges. And vice versa.

These exercise is called trading up if someone in the lower range is inspired or copies and proposes methods already put in place by those in the upper range of the same industry; but it is not unthinkable even to trade down if companies in the higher range study successful cases and re-propose solutions adopted by companies in the lower ranges.

A good example to look to understand better is to look at Zara, in the lower range, if you like, in the fashion world. It is the most democratic, low-cost, widespread and profitable chain in the world.

What has Zara copied from the top of the range in the fashion industry? The location of its shops and product design, constantly updated and available at low cost.

Zara, in fact, has a presence in many world capitals (London, Paris, Milan, New York, Tokyo, etc.) with shops in central locations, as is the case with the most world renowned high-end brands. Additionally, while continuing to sell low-end products, they copy high fashion design: high-end ideas, therefore, become affordable at low cost.

#3 Analyse the Buyer's Chain

Don’t stop at the direct buyer: looking at the whole chain of people connected to the product/service can be a great help in having ideas that can produce high-impact innovation. Let’s look at the story of Novo Nordisk, the Danish insulin manufacturer that invented the first insulin injecting pen. In the late 1980s, the typical customers of insulin-producing companies were general practitioners and that was who the product was marketed to.

Looking at the entire chain of buyers led to the brilliant idea: understanding which problem to solve, not for the top-level direct purchaser, the general practitioner, but for the patient himself, the second-tier buyer.

The problem faced by the end-user, the patient, was that using a hospital style hypodermic syringe prevented patients from using them in certain situations and required a significant level of organisation (use of vials, padding, disinfectant, syringe).

Novo Nordisk invented the first “user-friendly” injectable insulin pen, which avoided any cause for embarrassment for those who used it.

Discreet, safe and practical, the pen was able to administer an insulin dose more quickly and easily than the traditional syringe and vial and, furthermore, the needle was much shorter and slimmer. All this resulted in a positive impact on the quality of life for diabetic individuals.

This allowed an incredible breakthrough in the insulin delivery field.

Today, Novo Nordisk products are among the most popular in the industry and are marketed in more than 180 countries; the company occupies 60% of the market share in Europe, 80% in Japan, and has continued to evolve this concept to such an extent that the latest generation products are among the most user friendly in the industry.

#4 Understand current trends

It seems easy to look at current trends, but all that glitters is not gold.

Current trends can seem apparently to be within everyone’s reach: we believe that if some irreversible change is occurring in the world, then noticing it and understanding it should be easy. Unfortunately this is not always the case.

Just think of Blockbuster Video: In 2008 the company stated that it did not see any competition to be worried about. We can say that they were looking only at their own industry, the one they knew the best, without seeing what was happening in similar markets where another player, Netflix, was riding the by now irreversible digital wave. They had started taking an important share in the market, one that had previously belonged to Blockbuster.

Customers no longer wanted to leave their homes and go out to rent physical copies from the video store, it was now much easier to stay home and enjoy the digital contents that Netflix was starting to distribute. And to think that Netflix’s first activity at the end of the 1990s was not digital distribution, but a home-based DVD rental by mail service!

We can see with this example that it’s clear how not looking at what’s happening in the world can prove fatal to a company like Blockbuster, once a giant in its industry and considered invincible.

Today there are many trends occurring in the world: it is becoming increasingly important to find out which of these will impact our products/services and which will affect our customers, as the rate of change today is much greater than in the past.

Suffice it to say that in 2004 there were 500 million devices connected to the Internet; by 2015 that figure had become 10 billion. By 2020, the number of connected devices is expected to reach 100 billion. One can not ignore this fact when thinking of operational strategies.

But it is true that it is not just a question of technology; different types of trends may affect your industry: technological, consumer and social trends. It is therefore essential to understand what is captivating today’s customers, or tomorrow’s potential customers, and to continue to innovate.

#5 Explore the area of complementary products

To further understand, let’s look at Sacmi’s story, an Italian metal making and mechanical engineering company, the world leader in the field of machines for ceramic and, in particular, for tile making machinery. Chinese competition was devouring the company’s competitiveness, both in China and also outside.

In order to break this vicious circle, one idea that gave rise to a major advantage in terms of competitiveness was to look at consumers’ problems and to attempt to solve them in an  innovative way. So they decided to play the game by focusing on innovation rather than on products, where the market was becoming increasingly competitive as the product became cheaper due to the competition coming from China.

What were the problems faced by Sacmi’s customers and how did they resolve them?

Their customer, the tile manufacturers, needed to be able to change size (small to medium to large, etc.) in order to satisfy the needs of their end customers.

The machines, up until a few years ago, had setup times for a size change of up to 10 hours, depending on the type of tile and the machine itself. They had the ingenious idea of offering a complementary service, which up until then had been left to the tile manufacturer.

The idea was to design a machine that could bring the time taken to change a mould down to just 30 minutes. This opened up the possibility to sell an innovative and complementary service which has seen annual sales increase by several hundred units per year. On high-cost machines this has generated an important profit for the company while also repositioning the company in the industry.

These are some examples of moving from your industry to look around at what’s happening in order to explore new areas: keep your ear to the ground, look around and see at what’s happening in different or neighbouring sectors.

Don’t just focus just on what’s happening today, but look at what’s happening with one eye on the future, to understand who tomorrow’s competitors will be or what critical issues could put your business at risk.


Article by:

LUCIANO ATTOLICO

CEO of Lenovys

He is among the leading experts of Lean Thinking, Lean Lifestyle, Performance Improvement, Lean Lifestyle®   and Impact Innovation in Europe. His professional philosophy has people at its heart, leading them to search for methods that can ensure better results with less effort and greater well-being.

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