The headline "Don’t Mistake Innovation For Strategy" posted by my friend Bruce Temkin (Forrester) on his blog Customer Experience Matters caught my attention. He was quoting Al Reis' article in Advertising Age with the title: Innovation Should Be Seen as a Tactic, Not a Business Strategy. Here are some excerpts from Ries:
- What makes a powerful automobile brand today is not innovation, but a narrow focus on an attribute or a segment of the market…
- Innovations outside of a brand’s core position can undermine a brand…
- Most brands don't need innovations; they need focus. They need to figure out what they stand for and then what they need to sacrifice to get there.
I was surprised to read this and almost jump off my chair. What is he talking about? With a generation of marketing folks trained similarly as Al Ries, that's why we have the problems we have in marketing. I know a lot of old school ad agencies people like Al Ries. That's also the reason why marketing remains to be tactical in many organizations and have less and less influence on a board level. Because they chose to live-in-a-box (see may post last week on radical innovation). Mr. Ries is so wrong e on this one. Let me explain why:
- What the automobile industry needs today is NOT a narrow focus or an attribute or another brand. They have been doing that for decades and look at Detroit today. They need radical innovation, not brand focus. They need to get away from this brand bullshit and look at using innovation to reinvent the industry. If we look back 30-40 years, Detroit gained its preeminence in the 20th century by being very good at the prevailing industrial business model. America used to be productive in making things to and Mr. Ford was a latterday Charles Foster Kane when it came to artifacts of innovation.
Detroit's future is about innovation and transformation. For example, how to re-leverage capabilities that go into making the contemporary car, competencies that have been honed to a razor's edge such as the engineering of the propulsion system, the materials that go into its construction, the digital network and software that now reside in current prototypes, to say nothing of manufacturing efficiencies and logistics, supply chains and marketing prowess. That this concentration of talent, technology and know-how is considered valuable is validated by non other than the competition. Toyota — the world's biggest corporate R&D spender — has a large research laboratory right in the middle of Detroit. A powerful automobile brand needs innovation, not brand focus. There's only so much brand can do at this stage.
- Innovation should NEVER be limited by a brand's core position. A brand's core position also needed to change to adapt to this highly disruptive world. One of the best examples is Samsung. In the mid 90’s, Samsung Electronics’ chairman made an important decision that Samsung would not longer stands for "electronic components" and would no longer provide commodity electronics products to the world’s retailers. Instead they would focus on the development of innovative product design and stake out its own claim to become a global brand. The company focused on product innovation that was not limited by their brand, and saw a meteoric rise in sales and brand value in just a few years and is not a serious threat to big boys like Sony. The transformation of Samsung's from manufacturer of commodity electronics to a product innovator was successful because they were not limited by their brand's vision. The company’s current brand value was estimated to worth between $15-16 billion.
- Brands needs innovation, NOT focus. You can knock yourselves out figuring what your brand stands for and all those brand bullshits while your competitors are eating your lunch. Without innovation, your brand ages. Innovation rejuvenates your brand and makes them relevant again. Brand strategy and marketing can only give them a Botox, innovation brings new life ..at least temporarily like Viagra. When was the last innovation that came from Detroit? Saturn? That was a long while back. Look at what Honda is doing, they understand why innovation is strategic. Read the article in Fortune Magazine called “Inside Honda’s brain“ that talks about Honda’s R&D/innovation efforts. Here’s an excerpt:
Honda researchers were curious about how the human brain reacts to images. They found that people recognize faces, especially angry faces, more quickly than other images. Honda has incorporated this research into its motorcycle designs (like that of the DN-01). By designing the front of the bike to evoke the features of the human face, Honda believes that other drivers will recognize the presence of a motorcycle more quickly and therefore lead to less accidents.....
Finally, INNOVATION is STRATEGIC, unarguably the most strategic of all. Treating innovation as a tactic is an ill advise and I hope no one is taking that seriously. Let me quote my friend Gary Hamel where he explained why innovation matters most:
"Innovation is Topic A in companies around the world. This shouldn’t be surprising. After all, innovation is the only way to create wealth over the medium-term. In the short-run, companies can cut costs through off-shoring and outsourcing, they can capture the efficiency gains from industry consolidation and plump up the share price via stock buy backs. But in the longer-term, there are no substitutes to innovation.
Importantly, though, some forms of innovation deliver more in the way of competitive advantage than others. My research, and that of my colleagues at the London Business School, suggests that management research—fundamental advances in the way companies allocate capital, motivate employees, organize activities, create strategies, and set priorities—has the most potential to create long-lasting competitive advantage. Indeed, if one looks back over the last 100 years of industrial competition."