INNOVATION AND VALUE CREATION

INNOVATION AND VALUE CREATION

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If you’re not creating value, you are not innovating.

Lecture held at a Top Team seminar by Dr Declan P. Bannon, Academic Lecturer, Researcher, Board Member, Chartered Marketer and International Visiting Professor. Current positions include Senior Lecturer at British University Vietnam.

An interesting business question – is innovation creating value or is value creation, innovative?

In business, we talk a lot about customer focus, being great providers for our customers and that our whole organisation is about trust, respect, loyalty and value! Large organisations collectively, spend 100s of billions of USD every year, saying the same thing! Quality and service, quality and service, quality and service! When I ask senior marketing managers in industry – why should I buy from you, I get the response – quality and service. Nobody tells me, we provide a medium range quality, at medium price, with medium service, when this is all we require. Why not? This is what most of us want. This is plainly, marketing myopia and demonstrates delusional management thinking.

We all want to drive a Ferrari, live in a castle in Scotland – with pipers, hunting, fishing, shooting and whiskey; served breakfast in bed by the butler and have a yacht in Monte Carlo – Quality and service – at a price!

A price that most of us cannot and do not want to pay. What we real want and pay for is an acceptable level of quality and service based on our expectations – this is a moveable feast i.e. if I am paying for a double room in a hotel for a night with my wife, I require a clean, safe, convenient place to rest my head, clean up and breakfast – a 2/3-star hotel is fine; I’m paying. However, if I’m there on business, the expectations of where I should be staying, my family’s and my business colleagues’ expectations, status within the organisation and clients’ views of quality and service, change dramatically (Ryan Air flight changes to Business Class British Airways; Holiday Inn Express (which I like), changes to Crowne Plaza).
The customer/market speaks. Look at where most sales in competitive, non-commodity markets take place, @ hotels 2-3 star, mid- range cars, mid-range universities (with mid-range academics), mid-range holidays etc. i.e. value for money. What this indicates to me is that this is the main corporate battleground of businesses. This not to say the customer/market knows what it wants. My daughter calls me a BG! Before Google! Try explaining to the Millennials’ what life was like before the mobile phone, internet and Google, how did you survive Dad? Well, the same way our parents and grandparents did before television and telephones at home. A little-known Irish/American businessman, by the name of Henry Ford (1863-1947), once said, if I had asked the customer what they wanted, they would have asked me to create a faster horse.

So how do I compete – quality and service? But what does this mean? This is a perception of customer groups. If all companies are telling me the same thing – quality and service, it means nothing as there is no differentiation.

I cannot as a customer differentiate and make what I hope will be the right decision and we do not like that as customers, is cognitive dissonance.

So, what do I do? TripAdvisor, university league tables, my perception based on what I’m told (WOM), previous experience, functional need, price evaluation (good perceptions can be based on premium priced products and services), website professionalism or lack of professionalism; branding, features and benefits, sales promotions, family pressure (pester power from children/wife wants an expensive hotel for the weekend (because she is worth it) etc… I could go on (and no doubt, I will, I’m an academic/practitioner).

You, as an organisation, must decide to either compete on cost/price (cost focused differentiation) or add value (focused or broad differentiation) – innovate.

Do something that is different and is appreciated, recognised and valued by a target audience. If you do not do that, you are in with the herd of cattle – quality and service, quality and service. What do cattle collect in fields? Heaps of manure and that what is on offer. Personally, I like mature but only for my roses (my Mother swore – not literally, good Irish Catholic, that it was best for her roses and I agree),

How do you innovate? There are lots of different ways to do it. Companies spend fortunes on R&D, however, the easiest way is not product development that takes a long time; it is to look at
current practices i.e. improve what we do now i.e. low hanging fruit that can be easily sorted and thus stop customer dissatisfaction and improve customer satisfaction, short-term thus building relationships and nurturing loyalty, customer satisfaction and repeat transactions.

You want to claim you are better than competitors, prove it! Unique Selling Points (USPs) that is/are valued by customers’ – that is real innovation and value creation.

So how do you do this? When was the last time as a management team, did you go away, give real quality time (sorry, I hate that expression) to what I call easy innovation. As managers, we go to planning meetings; meetings about Strategy (that are usually, not about Strategy but Operations because I rarely meet a CEO who knows or can define Strategy, let alone have goal congruence on Strategy with their Senior Management team), Sales and Marketing, budget and resource allocation and moaning meetings!

We do not go to innovation and creation value for customer meetings.

Five Point Plan for Short-term Value Creation.

# Do the research – find out what p-sses customers off! Minimise these aspects quickly, customers spread bad news quickly!

# Find out their expectations in different contexts, do your research; this takes time and resources.

# Find out what they would like to see you do i.e. talk to and listen to the people who give you value.

# Benchmark against the best in your industry.

# Matrix them on two dimensions – X axis – what is important to the customer, rate them in importance; Y axis – how difficult is it for our organisation to change/improve in this area?

Plan what you intend to do short/medium/long term to address these key issues – operational marketing implementation and integration of plans in relevant departments within your organisation.

Enough change is enough – know what you are capable of achieving with change programs (financially, culturally, legally, within regulatory frameworks and timewise etc.) Be brave, but not too brave.

Using project management tools to facilitate the process e.g. Linear Responsibility Charts – allocation and accountability (doing rather than lip service i.e. implementation), Gannt Charts, Critical Path Analysis etc.…
Where necessary, based on organisationally knowledge, resources, capabilities – seek external advice if necessary to facilitate as an ‘honest broker’ of innovative change and value creation; invest in the cultural process of innovation and value creation.

It is easier to be 1% better than your competitors in 1000 things, than 1000% better in one thing of importance to customer value.

Your competitors cannot see your innovative process, what you are doing, why you are doing it and how to copy you. Now, you have your unique selling point!

They will find out over time than you are better, envy you and you will develop your brand and develop sustainably competitive advantage – that is innovative and value creation.

An ode to the Innovator

Innovation is about bravery, being brave enough to be wrong, to fail in the eyes of others; to be laughed at for failure and strong enough to endure and take it. Confident enough to do it, to be willing to step outside your comfort zone – to be brave. Nobody likes that. Fundamentally we all want the same things. Safety, comfort, warmth of our friends and family – a comfortable life, a happy family, nurture our children and enjoy the fruits of our labour! Leave the world a better place than when we found it. Innovators are risk takers, motivated by their circumstances, frustration or curiosity – to be brave is all it takes!

The Future of Innovation, isn’t what it used to be!