Monthly Archives: February 2015

Putting “I” first in Insight to Innovation

lightbulbs

Welcome to the first in a series of posts as we travel the journey from insight to innovation.  Our plan here is to share some ‘insights’ ironically behind what differentiates the businesses that succeed in finding an insight, generating compelling new product or business ideas and concepts from their insights and taking them through a systematic process to innovation in the market place.

Before we begin we need to start with a simple definition of what an Insight is and Why? it is so important to uncovering unmet consumer or customer needs to create new ideas for products and/or services for your business.  Edwards (2013) points out Insight is a term commonly bandied around in marketing circles and often misused and misunderstood.  Edwards’ definition is:

“Consumer insight: is a revelatory breakthrough in your understanding of people’s lives that directs you to new ways in which to serve your customers better.”

The “revelatory breakthrough” bit really bites. Do not expect “revelations” on a daily basis.  How do you know when you’ve got one? You will feel both surprised and find it obvious at the same time. Insights make you exclaim “Of course!” The revelation makes sense because it fits with what you already understand about human nature; yet there is something about it that is utterly fresh, to which you had been blinded by your, category-based, “curse of knowledge” (Edwards, 2013).

Insights are often discovered through your own painful experience(s) as a consumer or through deep discovery research like ethnography, Pampers nappies is a good example of an insight discovery from research.  Previously everyone in the nappies category was talking about ‘leak-free’ performance during activity and all the innovation and category and brand communications centred on this attribute.  However, following ethnographic research following consumers closely Pampers discovered that what counted for most in a home with a baby was sleep! Everyone craved it – and wetness was often the reason they didn’t get it.  Hence the “Aha!” revelatory breakthrough discovery and a shift in focus from ‘leak-free’ to ‘golden sleep’ and Pampers innovated with extra ‘dry layers’ for bedtime.

pampers baby dry

Entrepreneurs and small businesses often lack the funds companies like P&G has to do extensive and expensive ethnographic consumer studies.  However, there are countless examples of entrepreneurs own “Aha!” discoveries often bought on by their own ‘pain points’ and real life experience(s) that what they are buying or using in the home is simply not satisfactory and spurns a strong desire to create and innovate – what I call the Insight of “I”!  For example, Rafferty’s Garden baby foods were born out of a firsthand consumer insight and discovery of the founder Adrian Pike, an unexpected full time Dad – looking after two young children and a terminally ill wife.  While trying to feed his 6 month old niece on an extended family holiday with supermarket bought baby food she hated it and when he tasted it he understood why?  Pike was using organic and fresh ingredients in his own kitchen in a bid to improve his family’s health. Years earlier he had made all of his son’s food from scratch, so he knew a thing or two about what babies liked.

“Within that four-year period of looking after my late wife, I learned a lot about nutrition,” Pike says. “I thought, we are doing this upside down. We should be giving children good nutritional food from birth, not start when they are older and get ill.” (Lindhe, 2011).

Adrian Pike

In what today has become common parlance and the mantra of ‘lean Startup’ methodology Pike did what every resource scarce and persistent driven entrepreneur or small business owner does and rapidly prototyped his own very first batches of Rafferty’s Garden organic baby food with his own children and niece.  Before checking in with consumers on his products he already knew pack formats were woefully inadequate for busy modern parents ‘on the go’ to kinder, activities and parks.  Glass jars were inconvenient on the go so Pike assembled a prototype for how he thought the food should be packaged using a foil soup packet from his pantry and a tube of toothpaste. “It was very rough … I cut it to size myself but I thought it could work,” says Pike (Lindhe, 2011).

raffertys garden

An unexpected benefit of the packaging is that babies can suck the food directly from the pouches, saving parents time and mess when they are travelling.  Almost unknowingly or with deep first hand ‘insight’ and experience Pike had stumbled across a deep consumer insight and unmet need.  Trends toward healthy eating and whole foods were globally evident, products in the baby category clearly lacked credibility with modern parents in this space.  Coupled to this fundamental product insight was the need for more flexible convenient pouch formats to heat and eat on the go, in the car, in the pram, remember both parents are often working now so a traditional cook and eat at home experience with baby is a luxury in many households.

From an insight or “Of course!’ or “Aha!” discovery of what consumers really need in a category or market space comes a great opportunity platform to create ideas for new products and services to meet those unmet needs or to recreate your existing product or service offer.  You are digging in rich gold laid territory and the likelihood of finding some gems that people will pay more $ to buy are exponentially increased compared to coming up with product ideas on a hunch or a gut instinct.  Large companies invest spend a lot of $ and time digging for insights.  Personally, I wonder if the incumbents in the baby food category –already had the insights that modern parents were looking for healthier organic baby food options in convenient to carry packages.  Were they asking the wrong questions? Not listening to their consumer and customer feedback lines or heavily invested in existing glass jar manufacturing plant?  In any event a Startup caught them off guard taking a whopping 40% market share of the ‘wet’ baby food and eventually getting snapped up for A$70m by PZ Cussons in 2013 (Bailey, 2013).

Insights are valuable both to existing businesses in their existing categories and markets and to new entrants.  I’s are important in Innovation and starting with the first one – an Insight is a great place to start a value creation journey to innovation pay dirt.

Interested to find out how to find insights in your industry or new markets, please feel free to reach out to us, share your own story or case study and have a no obligation conversation.

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses innovate with certainty from insight to innovation in the marketplace using proven methods and partners. Contact Dermott if your business needs help digging for insights and starting the insight to innovation journey.

References:

Helen Edwards (2013) The true meaning of ‘customer insight’ – and why marketers should treat it with care July, 29, Marketing Magazine, http://www.marketingmagazine.co.uk/article/1193164/helen-edwards-true-meaning-customer-insight—why-marketers-treat-care viewed on 18/2/2015.

Jane Lindhe (2011) Baby Basics, April 28, BRW, http://www.brw.com.au/p/sections/features/baby_basics_tAA85mjCPUDxw8MSe8hEaM retrieved on 15/1/2015.

Michael Bailey (2013) Rafferty’s Garden founder cleans up thanks to Cussons, BRW, 8 July updated 11 July, http://www.brw.com.au/p/entrepreneurs/rafferty_garden_founder_cleans_up_F5j2hJX3P7IbTYzD40nnlK viewed on 26/2/15.

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When to enter new markets?

First and foremost we stood back and used our head as well as our heart to determine Where to go? 1st, 2nd, 3rd, etc.  Secondly, we looked at each market on our Market Opportunity Index© and worked through the appropriate market entry model: Export, Contractual or Investment?  Last, but not least we need to time phase our market entry over the coming horizons of growth so that we can competently and capably execute on our international business strategy.

One of the most enduring and misunderstood growth strategies used in business today is the McKinsey ‘Three Horizons of Growth’.  Having worked in large corporations for well over a decade and consulted to both large and small businesses for several years now I often hear comments from busy executives in corporates and business owners alike “we will do core (Horizon 1) activities this year, then get to international markets (Horizon 2) next year and then start creating new products for those markets (Horizon 3) in 3 years’ time”.  The reality is you need to be working on all 3 horizons of your business growth simultaneously to build a sustainable business growth platform for your business.  Of course you cannot spend equal $/people/time on all 3 horizons but you need to be clear in your choices, communicate them widely across the business and allocate some of your precious scarce resources to all 3 horizons to realise the growth that comes from effort exerted in the ‘now’ that will payback ‘years’ into the future.

McKinsey Model: Three Horizons of Growth (Coley, 2009)

McKinsey 3 horizons of growth

Creatovate has been privileged to work with clients who clearly get the need to plan the “When to enter?” in their international business strategy and work simultaneously on all 3 Horizons of Growth – defending and extending their current home base(s), building momentum by entering new international markets and allocating some of their scarce resources (the most scarce being their time) to creating options for future new market entry which may also entail new market entry models.

Let me share an example.  One of our clients knew they needed to grow fast in their existing ‘hub’ or core home market(s).  They did not want to distract unnecessarily their executive team in their home market(s) with international business opportunity in the immediate term.  They engaged Creatovate as consulting partners and together we set a clear choice based strategy for international growth that had a clear structure with hub or home markets to focus 100% on their patch whilst simultaneously supporting the international business development unit (a dedicated small team).  The leader(s) in the International Business Development unit worked with Creatovate to identify, rank and prioritise new markets for entry and systematically we phased those markets for entry over 3 time horizons, knowing some would be easier to enter than others for example using perfect partners and easier modes of entry like export.  However, our client did not stop there allocating some precious resource: $/people/time and strategic foresight to simultaneously explore and create future options for business growth in difficult but very large new markets that would require more complex entry models like contractual and/or investment.

Speed bumps and unexpected surprises hit them hard in one core home or hub market.  However, the work for international business growth has been done and they are in the very fortunate position of having a queue of difficult to enter highly attractive growth markets sitting in their new business development pipeline ready to activate.  Contrast that story with the vast majority of businesses who are spending almost 100% of their $/people and time defending and extending in their saturated core home market(s) and quite simply can never get out of the daily grind to contemplate growth outside their home base.  I know which business I want to be working with and a part of especially at their budgeting and strategic planning cycles when the topic of ‘new horizons of growth’ comes up for discussion.

The need to focus and split your scarce resource allocation wisely over your core Horizon 1 business – say 60%, and emerging new business – say 25% and finally creating options for future new businesses – say 15% is not simply the domain of big business.  Creatovate has also been privileged to partner with a family owned client business who has very successfully extended and defended their core home market, entered a new market adjacent to their home country and built significant momentum from a standing start in less than 18 months and created a viable new business venture into another new and highly competitive and complex country all in the space of 2 years and all with a team of less than 10 full time employees.  The When to enter? question is vital to your business planning and differentiates the true growth businesses from those that are simply ‘doing the business’.

The lifespan of a company today is getting shorter and we do not have to look far for evidence of this fact.  The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or broken to pieces (Business Week).  To increase your business chance of survival we believe you need to work on more than 1 Horizon of Growth and we believe you need to work on all 3 Horizons of Growth simultaneously.  Reach out, give us a call, send us and email, share your thoughts and comments and experience with us.

Without a clear strategy of Where to Go? How to Enter? Export? Contractual? Or Investment? And lastly but not leastly When to enter? You risk making mistakes and damaging your growth plans.

Dermott Dowling is Managing Director @Creatovate, International Business consultancy. Creatovate help businesses grow outside their home base from market entry strategy to route to market to go to market launch. Contact Dermott if your business needs help expanding your business internationally.

References:

Steve Coley (2009) Enduring Ideas: The three horizons of growth  http://www.mckinsey.com/insights/strategy/enduring_ideas_the_three_horizons_of_growth     retrieved on 12/02/2015

http://www.businessweek.com/chapter/degeus.htm  viewed on 12/02/2015


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