This summer join Inukshuk on a virtual road trip through some of 2017's hottest topics in business management.
At the wheel is the change management lead and our scheduled stops include the informative and insightful destinations of: innovation, creativity, disruption and agility before catching the checkered flag at change leadership. There are lots of stories to tell and the mercury is rising so grab your shades, hold on to your hat and join us for Part 3: Y'all Want Fries With That CX?
In Part 3 of Inukshuk’s summer blockbuster road trip trilogy we check the GPS calibration for analogous alignment to customer needs and then cruise through the ever so vital intersection of business strategy, innovation and change management.
Analogies aside – when was the last time you considered how your business operations align with the needs of your customers and their end to end experience?
If the answer isn’t today then you may be due for some customer-centric re-calibration. Everything that your business does should be validated through the lens of customer need and experience. Failure to do so could be costly – let’s look at some examples from the past.
The New Coke, McDonald's Arch deluxe and Amazon's new Fire phone all share a common, unfortunate fate: market failure. While all of these products came from established, well-respected brands, they did not resonate with the public and they failed miserably. in the end, these flops cost companies millions of dollars in research, development and marketing resources.
They’re also a reminder that innovation doesn’t come easy. When companies launch a new product, there’s a high likelihood that it will fail. In many companies, developing the next billion-dollar idea is one of the most vital strategic tasks.
Products fail when they don’t fill a real customer need in the market. That’s why customer-centric innovation is so critical to business success. The following statistics* speak to the importance of developing better products today and help reveal why large enterprises, even more than upstarts, need to infuse customer centric thinking and change management into the innovation cycle.
1. If you’re planning on launching a new product, it will likely fail. The Harvard Business School estimates that 95 percent of consumer products fail.
2. The cost of launching a new product is high.
On average, the North American cost of launching a nationally retailed product is in the neighborhood of $15 million USD.
3. Customers expect brand innovation.
A 2016 study shows that 63 percent of customers like it when manufacturers offer new products.
Eighty-four percent of customers say it is somewhat or very important that the company they buy from is innovative, according to the research firm Lab42.
Customers are willing to pay more for innovative products. For instance, 83% of customers indicate that they would pay more for innovation in electronics.
Nine in 10 customers agree that brand innovation needs to impact society, according to a study by the PR agency Edelman.
The same study found that 69 percent of customers expect brand innovation to improve society.
4. Business executives see the value of product innovation.
Forty-three percent of business executives that participated in a recent PwC study agreed that innovation is a “competitive necessity” for their organization.
PwC also found that 93 percent of business executives believe that “organic growth through innovation will drive the greater proportion of their revenue growth.”
5. Smaller companies tend to have the edge when it comes to innovation.
Innovation is not just about spending money on R&D. According to consulting firm Booz & Company (now part of PwC), brands that invest heavily in R&D are no more innovative than those that don’t.
In 2017, small and mid-sized companies stole 0.76 points of market share from large enterprises.
Between 2009 and 2017, large companies have lost a total of 2.0 points of market share, representing $23 billion in lost revenue.
Creating hit products isn’t easy, but, as many product developers know, you’re more likely to succeed if you have a deep understanding of the customer.
Accelerating the innovation cycle requires customer feedback in each step. To get the quality customer input companies need to make better decisions about their products, it’s important to understand the various sources of customer intelligence available and how to put the emphasis of day to day business operations on the customer. Kind of like when you are at a fast food restaurant and are asked would you like cheese with that?
There are two components to successfully creating value from customer relationships.
Although technology has simplified the process of obtaining customer feedback, most companies use feedback loops as a mechanism to evaluate customer satisfaction – and that’s it. Meanwhile every connection with a customer represents an opportunity to gather meaningful data which drives insights that in turn drives better, more informed, and ultimately smarter business decisions. In addition to asking your customers “how was the ride?” don’t forget to ask them where they want to go next, when, how, why and with whom? Authentic, meaningful relationships with customers are critical if you want a deeper understanding of where to focus innovative effort.
In addition to focusing on customer needs the other key component to successfully bring ideas to life is developing organizational capability to manage change. Inukshuk's operational management and change leadership training improves alignment, accountability and agility. These three characteristics are the hallmarks of a high-performance culture where innovation thrives. Why?
If you don’t first educate your workforce in a theory of organizational science, they will apply their own theories. The ensuring lack of a cohesive and agreed upon set of management principles does nothing to help translate strategy into action and makes change management virtually impossible. Change management is a function of management - many companies fail to recognize this truism by assigning change management to a single resource. Although the role of change manager should be accountable for executing change strategy and tactical plans, the doing needs to come from the business.
It looks like we’re here – the intersection of business strategy, innovation and change management. We hope that you enjoyed the ride and invite you to connect with us to continue the conversation. I hope you enjoyed Inukshuk's summer blockbuster road trip trilogy. Have a great summer!
*adapted from https://www.visioncritical.com/stats-product-innovation/