Innovate or die

In a world where trends change by the second, the ability to move along the trend and even define the trend is important for any firm that wants to survive and become a trailblazer in its industry. The subject of innovation has become a much talked about issue in recent times. So what at all is innovation? In simple terms innovation is the ability of a firm to create something new which brings value to customers.

The use of the word “bring value” is important because not all innovations benefit the customer. What is the benefit of innovation if the people for whom the changes are being developed for do not find any need for it? In this article I wish to elaborate on why any firm that wishes to survive in the 21^st century must innovate continuously by using some companies as examples.

Apple computers is currently the second most profitable Company in the world and lies 5^th on the Fortune 500 list not because their products sell everywhere but because Apple defined a niche market and continuously anticipated what customers in that market want and convinced them that they stand to derive value from their products even though they are priced exorbitantly. This is clearly manifested in their two flagship products; the iPhone and iPad. These two products continue to lead the market in their category even though there is stiff competition from rivals like Samsung and Huawai.

In the smartphone market, Apple continues to lead Samsung largely because they continuously innovate by bringing up new models annually with a few added features that customers cherish, with the most recent flavors of the product being the iPhone 5s and 5c. Customers cherish their product so much that some will queue 48 hours just to be the first to lay their hands on the freshest iPhone or iPad. Some of their customers even compare the love for Apple product to the love they feel for a cult. On the other hand, Blackberry which used to sit at the pinnacle of the smartphone market due to its powerful and secure email services was almost on the verge of filing for bankruptcy last year.  It is shocking that a company that a few years back World leaders, rulers, captains of industry, the rich and famous  had so much faith in to protect what they do online is now hanging on to the straw to survive. Research in Motion (RIM), the parents company of Blackberry’s inability to anticipate that a smartphones were a lot more useful than just for office work contributed significantly to Blackberry’s down fall. It all started in January 2007 when Apple first introduced the iPhone which had a lot more features and uses than the Blackberry at the time. Instead of Blackberry to have added some more features and adapt swiftly to make their phones more useful, relevant and stay competitive, they remained stacked in their comfort zone thinking that the IPhone was a toy that was going nowhere. The resulting effect of their inability to innovate is a massive drop in the share price from $230 to $10 six years later.

Amazon is another firm that continues to be a leader in its industry. It started off by selling books but grew rapidly as a result of continuous innovation and improvement. It now sells everything from books to movies to car parts. Amazon has even ventured into cloud services, now competing with the likes of Dropbox, Microsoft and Google. It entered into the tablet market a few years ago to reduce Apple’s dominance of the e-books market with the Kindle family of electronic reading devices that gave it the ability to offer books in a way that hasn’t been available before.  

Amazon already had a huge chunk of the books market at the time and all it needed to do was to add value to the service they were providing by making available the kindle that helped it to distribute books electronically and cut down cost on production, storage and distribution. No wonder it revenue continues to grow earning a record $90 billion last year. It is obvious that if Amazon continues this way, they are likely to eliminate all middle-men along the line (zero inventory business model) and all that will translate into revenue for the company. Amazon has become the most important sales channel for the publishing industry though competitors like Barnes and Noble which was founded almost 100 years earlier are lagging behind. Barnes and Noble failed to capitalize on its ubiquity to reach out to more customers. It still continues to operate mostly from its brick “n” mortar stores when todays market space is online.

Another company that continuously innovates is Google, a firm synonymous with online search. Though it started as a search engine, it grew rapidly acquiring all potential competitors and adding other services and products to its line, making it a leader in its industry. Products like Google Maps, Google Earth, Youtube, Google Drive, Books, Blogs have helped the company to be firmly rooted in the ever growing search engine industry.

At a point Google even started building products like mobile phones etc all in a bid to maintain its hold as one of the top brands in the world. Google’s ability to negotiate with Mozilla to become the default search engine on Firefox contributed a lot to it maintaining its status as the leader in search. However, Google’s biggest rival, Yahoo continues to lag behind in the search and email service provision market largely due to lack of innovation and refusal to change with the times. As John Maxwell said “everything rises and falls on leadership” and the good book also tell us in that where is there is no vision the people perish. Yahoo’s problems were leadership oriented as well. Its current CEO Marissa Mayer (an ex-Googler) is the seventh CEO in five years whiles Google has had just 2 in 17 years.

Although continuous innovation can help an establishment to grow rapidly and become leaders in its market, the opposite is also true. Most firms which were once leaders in their industry but failed to innovate have now collapsed or are on the brinks of collapsing.

A typical case in point is Motorola, the company that invented the cell phone. Motorola has now faded out completely. This is because it could not stand the competition from innovators like Apple and Samsung. It was recently acquired by Google after having lost 4.3 billion dollars within 2 years. There are number of reasons for Motorola’s collapse but notable among these is their inability to come along when 3G technology came into being. Instead of Motorola to do the will of its customers by offering 3G enabled handset, it decided to go along with the carriers who thought customers didn’t need 3G technology. Aside that, Motorola should have moved into content provision instead of just like Apple did with iTunes instead focusing on creation of hardware and software. The success of Apple’s App store and iTunes is ample evidence that customers wanted a better user experience through access to good content on their phones.

Eastman Kodak for examples was synonymous with digital photograph readily comes to mind when tackling the other side of the argument. Kodak inability to realize that smartphones were going to change the paradigm in photography and disrupt the digital photography industry was a major cause of its downfall. Kodak could have partnered with makers of smartphones by convincing them to use Kodak cameras which were the very best at the time in. They could also have become a maker of mobile phones with high end mega-pixel cameras thereby killing the threat posed by the likes Nokia, SonyEriccson and Samsung which were leaders in the smartphone industry at the time.  Kodak’s failure to realize that digital photography and not paper-based photography will dominate their industry and going along that path resulted in their demise.

In our local telecommunications industry, there are some notable examples as well. MTN was the third company to enter the telecommunications market after Ghana Telecom (now Vodafone) and Millicom Ghana now Tigo. At the time SIM cards were very expensive and Ghana Telecoms made it extremely difficult for customers to easily obtain SIM cards. Customers sometimes had to wait for months in order to secure SIM cards. Another mistake that Ghana Telecoms made was its thinking that landlines will still dominate the telephone market instead of mobile phones. Aside the fact that it had most of the country’s IT backbone infrastructure at the time which it could have used as a springboard to leap ahead of MTN and Tigo, Vodafone now lies second in with a subscriber base almost half of what MTN has in the market.

In a space of twenty years MTN has become the leader in the mobile telecoms market in Ghana  with a subscriber base of 14,113,432 as of February this year. Over the years it has designed and offered promotion after promotion all in a bid to make its customers happy. Some say it has a terrible network but customers still prefer it to other networks because it has a wide coverage although the service quality is not one that that customers are be proud of. With all its problems, You can’t falter MTN for its innovations.

So the real question is, how can firms innovate? Paul Sloane, an author and public speaker on lateral thinking and innovation proposes the following activities to help companies innovate.

• Copy someone else’s idea. One of the best ways to innovate is to pinch an idea that works elsewhere and apply it in your business. Henry Ford saw the production line working in a meat packing plant and then applied to the automobile industry thereby dramatically reducing assembly times and costs.
• Ask customers. If you simply ask your customers how you could improve your product or service they will give you plenty of ideas for incremental innovations. Typically they will ask for new features or that you make your product cheaper, faster, easier to use, available in different styles and colours etc. Listen to these requests carefully and choose the ones that will really pay back.
• Observe customers. Do not just ask them, watch them. Try to see how customers use your products. Do they use them in new ways? This was what Levi Strauss saw when they found that customers ripped the jeans – so they brought a line of pre-ripped jeans. Heinz noticed that people stored their sauce jars upside down so they designed an upside down bottle.
• Use difficulties and complaints. If customers have difficulties with any aspect of using your product or if they register complaints then you have a strong starting point for innovations. Make your product easier to use, eliminate the current inconveniences and introduce improvements that overcome the complaints.
• Combine. Combine your product with something else to make something new. It works at all levels. Think of a suitcase with wheels, or a mobile phone with a camera or a flight with a massage.
• Eliminate. What could you take out of your product or service to make it better? Dell eliminated the computer store, Amazon eliminated the bookstore, the Sony Walkman eliminated speakers and record functions.
• Ask your staff. Challenge the people who work in the business to find new and better ways to do things and new and better ways to please customers. They are close to the action and can see opportunities for innovation. Often they just need encouragement to bring forward great ideas.
• Collaborate. Work with another company who can take you to places you can’t go. Choose a partner with a similar philosophy but different skills. That is what Mercedes did with Swatch when they came up with the Smart car.
• Run a contest. Ask members of the public to suggest great new product ideas. Offer a prize. Give people a clear focused goal and they will surprise you with novel ideas. Good for innovation and PR.
• Watch the competition. Do not slavishly follow the competition but watch them intelligently. The small guys are often the most innovative so see if you can adapt or license one of their ideas – or even buy the company!
• Go back in time. Look back at methods and services that were used in your sector years ago but have now fallen out of use. Can you bring one back in a new updated form? It has been said that Speed Dating is really a relaunch of a Victorian dance format where ladies had cards marked with appointments.
• Use social networks. Follow trends and ask questions on groups like Twitter or Facebook. Ask what people want to see in future products or what the big new idea will be. Many early adopters are active on social network groups and will happily respond with suggestions.

Although innovation is the real deal as far as corporate growth and perpetuity is concerned, it is not all the time that innovation results in success. Products such as Coca Cola’s New Coke, Harley-Davidson legendary perfume and Ford motor’s Edsel all failed woefully though the managers of these companies thought at the time they were innovating to make customers happy. However, in most instances innovation has led to rapid growth in revenue and customer satisfaction.