Platt Perspective on Business and Technology

Balancing a focus on your competition with one on your innovation 2

Posted in strategy and planning by Timothy Platt on September 7, 2013

This is my second posting in a short series on understanding the nature and scale of change, here very specifically focusing on the nature and quality of innovation. I began this in Part 1 with a foundation discussion of cosmetic, more genuinely significant, and disruptive and market changing innovation, and with a goal of firmly establishing a basic point of understanding:

• The value and significance of any innovation can only be found in how that change impacts upon and is evaluated by the buyer and end-user.

I stress this point again here. This is not about how much the business that creates and offers an innovation has invested in it, and either in cash value or hope. This is not about how significant or even centrally pivotal this innovation might be to that business and its strategy and planning. This is about how the consumer sees and values or, or sees and fails to value it.

To further clarify this and with an extreme case working example, a true disruptive innovation is one that arrives as an unknown due to its novelty. The business that develops this might be seeking to break into new and blue ocean marketing and market building territory when they design and build it but if a disruptively new innovation begins as a fad, and regardless of eventual duration of public interest in it, the providing business is likely to find that its customers and the marketplace they comprise, value it a lot more than they have. So:

• A valuation and significance determination mismatch between a producing business and a marketplace of consumers, as to the merits of an innovative change, can tilt either way.
• The providing business might overvalue what they would offer and find their expected customers see less in it than they do,
• Or they might find themselves playing catch-up in reevaluating the significance and the value creating potential of an innovation because the consumer sees more in it than they do, or at least than they initially did.

And this brings me very specifically to the area of this discussion that I would focus on here:

• Operationally and strategically more effectively aligning a business’ perception of the value of its innovations and changes, with their customers’ perceptions of them.

And with this I connect this short series with a second series that I have been developing, as these discussions converge: Putting Change in Perspective (see Business Strategy and Operations – 3, postings 417 and loosely following.) I address the issues and challenges of change per se in that series. Here, I focus specifically on innovative change, and more specifically on a business’ own innovation and product development, as a very specific and significant area from that larger operational and strategic arena.

• It is easy to invoke a piece of advice like “know your customers” so I will offer that as it raises a valid point.
• But the more novel and significant an innovative change, the more likely that it will appeal to an at least somewhat novel audience and target market demographics profile.
• In the more extreme case of a truly disruptive and game changing innovation, it is one of the hallmarks of this type of event that the offering business finds it has to redefine its market demographics as its best opportunities come from new and novel directions.
• So “know your customers” cannot simply be seen as a rote validation-of-consumer event.
• Knowing your customers should always at least in part be seen and acted upon as if a voyage of discovery, and one where you view and question any assumptions that you are making as to who your customers and your potential customers are.

To put that point in a different though I add equally significant perspective:

• When a product and its providing business are maturing into development and innovation complacency, as for example from competing in a stable market and a mature industry,
• Simply taking their customers for granted and failing to see where, in their target demographics their sales are in fact falling off,
• Can and with time probably will lead to disaster.

So the issues and principles that I write of here, apply significantly to any product provider and regardless of the level of maturity and stability in its marketplace.

I stated that I would shift to address the issues of this series from a more operational and strategic perspective, and I began that here with an outline of some of the basic organizing principles that need to be taken into account. I am going to follow this with a more operationally specific series installment next. Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 3 and also see the first page and second page listings to that directory.

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