Innovation small and big

Innovation is a powerful concept. It influences our personal aspirations, business settings, social movements, world of technology, fashion, media, health services – you name it. It is networked and diffused, complex and measureable, it challenges and increases competitiveness. The discourse on innovation has become so fragmented and pervasive that we feel it may have lost its gravity. Sometimes, it pushes us further than we have ever been before. Occasionally, it makes us do things never done before. Yet, more often than not innovation fails. We have come to understand why and we have a perspective that we want to share.

Theory of innovation has pronounced two, main types of innovation: incremental and disruptive. The former is about upgrading or perfecting existing products and services, without altering the business model. The latter is about creating wholly new products and services that are based on new business models, with the effect of disrupting existing or yielding entirely new markets and consumption patterns.

Companies are not organised to deal with challenges and change, which are outside of their existing business model. Companies are structured to take care of current operations, serving consumers or clients. The strategic, long-term, internal innovation always looses in this configuration, preventing businesses from surpassing and redefining themselves. Avoidance to push the limits of business operations, including cannibalising their own business, brings companies stagnation. The need for constant redefinition cannot be stressed enough – especially in today’s economy of flux.

Furthermore, companies are typically pre-programmed for improvements and optimization, but not for disruption. While incremental innovation is already core of business for most companies, disruptive innovation is regularly misunderstood. This translates onto capabilities: whereas companies are good at making their existing products, services or processes better, they tend to fail with innovation that transforms their business. We believe that disruptive innovation is absolutely necessary in today’s world of ambiguity and connectivity. We also believe that the synergy of incremental and disruptive innovation frameworks will always be greater then the sum of their parts, and will bring optimal growth for businesses and economies threatened today by Asia’s rapid expansion. Thus, it is crucial to appreciate innovation holistically, mastering both innovation types and balancing your portfolio with them.

Linear thinking and the “never-seen-before”

When we are children, we have an infinite set of opportunities – the world is our oyster. As we embark on a lifetime journey of self-development, we suddenly learn that it is more beneficial to rely on experience than experiment. When we make a decision or plan for the future, we refer to the past. We go back to explore what and how we have done previously, and usually we go for a solution that worked before. Moreover, as we grow older, we are continuously judged based on our past performance. We dismiss failures as unconstructive and we tend to emphasize proven successes.

Experience is the most valued trait, especially in business. It seems ironic then, that it is also innovation’s biggest deterrent. Climbing a career ladder commonly happens by exploiting experience. As you progress through to next levels, you utilize the experience gained in the particular framework of this organisation. Especially when jockeying for the top, C-level positions, you are more likely to utilize proven and tested solutions because of both external and internal pressure factors. It is the safest bet after all to follow accepted practice. Yet somehow, experience inertia fails when put in the context of dealing with emerging business models. So, is it good enough for the fast-paced economies and shifting consumer wants of today?

The failure to look beyond existing skill sets means that, although management teams are capable of day-to-day operations, they are inept at creating industry trends or new markets. Past experiences prove insufficient when dealing with challenges never dealt with before. By recycling proven and tested solutions, we reject the unknown and experimental. This praxis reverses the fundamental principle of innovation – embracing uncertainty and ambiguity. If a company is only as capable as the cumulative skill set of their management team, can it imagine a future different from yesterday and today? Are organisations prepared to deal with a future they never anticipated?

Innovate or die

Most management teams use past experience for future inspiration. By celebrating past success they tend to limit their business from developing outside of the everyday routine. What intensifies this stasis is an asynchronous association between a business’ rate of change and the market shifts. In other words, the world of innovation is faster than the pace of adoption among management teams. Only 15 years ago, a company’s ability to change went together with the market’s pace of change. Today the management skill set still takes 20 years to be renewed, while major business model innovations occur every 5 to 10 years. Naturally, juggling your daily activities while taking a leap at building new business platforms is a hard task. But if both your rate of idea adoption and your long-term strategic activities are lagging behind current business operations – your organisation is in trouble.

Most companies will not innovate unless they have no other choice. At which point typically, they are already in a state of crisis. In the fast-paced and shifting markets of today, crises happen all the time. They are a threat and an agent of change at the same time. Most companies are unprepared to deal with crises, because above all else they value experience. But once a crisis is a fact, companies are left with only two options – either to innovate or to die.

Cutting instead of building

The principal responsibility of companies is to generate profit for the shareholders. Profit is the difference between turnover and costs. Empiric evidence indicates that most companies will choose to cut costs rather than to create higher turnover. Even one of the greatest business model innovations of the past 20 years came as a cost cutting strategy, and goes under the name of “outsourcing”.

It went like this: in the beginning companies outsourced production, then assembly and lately also the knowledge-intensive aspects of the business. It has become a steady process of transferring the knowledge base, which rapidly increased emerging market’s aptitude for delivering sophisticated services. Budding companies in developing economies spent the last 15 years learning and improving their skill sets by organising production for largest European and American corporations. Today they are capable of matching Europe and U.S. complexity of products and services, but they still do it at a significantly lower price tag. Meanwhile, the corporate world profits from continuous cost cutting as they outsource successive parts of business to emerging markets. They transfer wealth to the developing countries (which is a good thing), while prompting social and economic problems in Europe and U.S. by lowering living standards (which is a bad thing). Will Western economies need to shrink for Asia to grow? We believe that the current experience of the economic downturn is a direct result of those global shifts and marks the beginning of an era of social unrest and apathy. The cycle of economic recession and community disintegration perpetuates, as the current social situation in Spain and Ireland, or the riots in London reflect this condition.

Today, one in three jobs is at the risk of being outsourced to an emerging market – this is happening mostly at the hands of the biggest, global corporations. There is no realistic perspective for this process to change or revert, because corporations generate high profit for their shareholders, thereby fulfilling their business mission. They can cut costs at the same time as they enter a new growing and dynamic market. Who in their right mind would dodge such an opportunity? So, instead of fighting the system we need to build innovative frameworks for new business platform creation and entrepreneurship. Building new business models and creating new markets will help Europe and U.S. regain competitive advantage and generate sustainable growth through constant redefinition.

Disrupting the society

We believe innovation has the power to stimulate collective change. The current state of affairs in Western economies shows that capitalism is failing us. Even the hardened capitalists like Michael Porter and Warren Buffet are beginning to question the prevailing economic set up. The lack of transparency, increased speculation, fierce competition and self-indulgence of the financial sector has led to the crisis we are dealing with now. Capitalism is failing because instead of relishing human growth, it is increasingly alienating us. It is no Marxist revelation. Just reality in the form of WeAre99% movement or growing suicide rates in countries significantly affected by unemployment.

Capitalism’s approach to developing leadership has also failed. It relies wholly on linear thinking, where leaders rise basing their judgements on past experience and not on future capability. Instead of concentrating on creating highest and most sustainable value, they search for fast, cheap and easy solutions. All these observations and insights together create a picture of myopian leadership, which has failed both economically and socially, creating itself the greatest competitor Western economies ever had.

Innovation is not valued highly in the market. Markets hail experience and cost cutting, and innovation does not belong to either category. Our business models rely on linearity in thinking, a focus on efficiency and cutting costs, and the inclination to think in terms of quick, high-yielding results. On the other hand, innovation creates high value through platforms for sustainable growth. It has the capacity to become a significant model for creating positive economic and social change. The entrepreneurial factor hidden in disruptive innovation can help European and American economies regain their sharpness. The constant redefinition of what it means to generate value in a particular industry, market and context is the driving force in disruptive innovation. Governments, businesses and individuals who tap into this will win survival.

The Statement

At Edge, we help our clients look to the future everyday. Yet, to be frank, we struggle with designing a future for ourselves. Working for Client’s success we forget to look beyond today. We also tend to fall for the convenience of doing things as we have done before. By being honest about this and trying to change we hope to inspire others. If we struggle when it comes to redefining our business – even though we work in the business of redefining business – how much harder must it be for organisations or individuals who have never worked with ambiguity, creativity or innovation?

Since we finally recognize reasons behind the failure to redefine our business, as they melt down to the content of this article, it is now time to act. We need to put emphasis on redefining ourselves while managing our current business. The move does not mean our Clients will be marginalized. Quite the opposite: we believe we need to redefine our business for their sake. Both our Clients and us, we need to continuously re-evaluate what it means to do business. Building new capitalism, in the face of current system’s failure means creating added value through jobs, increasing complexity and assuming responsibility. With the business platform we are building, our aim is to have a significant impact on the society and economy. Leading by doing. Whether we succeed or fail is of course a big unknown. But at least we try. If we all start with ourselves without preaching and demanding change – we may actually be onto something bigger than the sum of our parts. Innovating and re-engineering the principles of business making will have influence over next generations of entrepreneurs, academia, corporations, and individuals. What seems like a big project is merely a collection of small steps. Start today. Start with yourself.

EDGE Contextual Map

Those companies consistently outperforming their competitors show two interlinked commonalities;

(1) they understand customers better, and
(2) they are able to execute on such insights.

This is the single most important realisation we have made in our 15 years of work with growth strategies for clients. It is also the prime reason for our dedication to build unrivaled methodologies for understanding customer needs, and a key driving force in developing ECM. What comes as a surprise to most companies is how easy it is to become truly customer driven, even at the corporate level, once they establish a common platform for understanding consumers.

The case of Coke: In 2006, Mr Neville Isdell, then chairman and CEO of The Coca-Cola Company, launched the famous Manifesto for Growth. Their needs based segmentation map was a key pillar in this growth program. Said Mr E Neville Isdell back then:

‘When people want to know why I am optimistic about the future of The Coca-Cola Company, the need state map is why: because the opportunity is so enormous. When they want to know how, by 2015, we will pursue our goal of doubling the value of trademark Coke and growing the rest of our portfolio to a commensurate size, this map is going to help us find our way.’

Mr Neville Isdell was not joking. The value of the Coca Cola brand grew by 78%, from $41bn to $74bn between 2006 and 2011, according to Millward Brown’s annual Brandz ranking. They are in great shape to blow away Mr Neville Isdell’s 10 year ambition, much thanks to their needs map.

Whilst working with growth strategies we’ve also accumulated unparalleled amount of experience on the most sophisticated (needs-based) segmentation research tools available, similar to Coke’s proprietary model. As psychographic models they work well to define brand positions. However, they fail to deliver the necessary operational and strategic support for decisions leading to innovation and growth, especially at the category and company level. ECM is contextual and situational, and related to your brands and products. Therefore you get the real picture of your market as defined by your most important customers. It is designed as an operational tool for immediate implementation in your organisation, be it for Strategy, Positioning, Innovation, or Communications.

ECM facilitates a better understanding of complex markets and is targeted at companies who wish to be, or remain, market leaders. You can read more about EDGE Contextual Map here.

Apple World's most valuable brand 2011

Apple eclipsed Google to become top dog on the annual 2011 Brandz ranking from Millward Brown. The Apple brand alone has an estimated value of $153bn, almost half the company’s market capitalization (AAPL). The value of the Apple brand has increased by a staggering $137bn since 2006.

It is truly mindboggling what Apple has accomplished in just 5 years:

• Redefining the way we consume music, almost eradicating the CD format
• Revolutionising how we interact with phones, creating an “App ecosystem” allowing for 3rd party software solutions
• Creating a new category with the iPad, which may have the power to reshape the printed press industry in the same way iPod reshaped the music industry
• Leveraging design and user experience better than any other tech company
• Whilst being a brand for the masses, Apple has emulated luxury brands making their products more desirable by increasing price

Apple has created more brand equity than any company in history and has done so in a very short time frame. It was achieved with relatively modest advertising expenditure, focusing its investment on R&D and innovation to create radically better products and experiences for their customers. Steve Jobs seems to have a Midas touch in anticipating rather than merely responding to customer needs.

One of EDGE’s core capabilities is decoding and anticipating customer needs. It’s gratifying to see what can happen when customer needs becomes the cornerstone of the company’s growth strategy.

The Apple story is truly inspirational and we are eager to see how the Apple can carry Jobs’ legacy forward. Meanwhile, we will continue to capture the great learning this story has to offer.

Consider going back to the brand strategy drawing board if you can identify with any one of the following early warning signs. You may find that you need to adjust your brand’s target, tune the positioning and the proposition to your target’s sweet spots, or modify your communication or channel mix.

Your days are a never-ending chain of running between meetings, putting out fires and staying on top of your inbox. Meanwhile, you’re hoping you can rely on a solid brand strategy, which is like an insurance policy for effective communications and hitting your number.

But is your strategy solid, really? Are your day-to-day marketing efforts driving the results you need? Just as you can experience accelerated growth when you get it right, the exact opposite can happen if you don’t. Take these early warning signs seriously.

1. You’re not sure with whom and how to connect.

If you don’t know who you should connect with, where to find them and what makes them tick, then you could waste a lot of time talking to the wrong people and spending effort that won’t drive business results. Instead, define your target audience and determine what benefits and messages matter to them. Only when you know who they are and where you can interact with them will you be able to select and balance out the appropriate channels, such as television, radio, social media, blogs or online newspapers.

2. Media may or may not be driving sales.

The old myth that advertising works long term is only partly true. If your ads communicate a clear and relevant message, to the group of people most likely to be interested, you should see an immediate effect on sales. If you don’t, it is almost certain either your strategy or its execution is off.

3. Promises made = promises kept?

Brands carry a promise of an experience, which creates expectations. Deliver something different, good or bad, and you confuse your customers. Your brand loyals don’t identify with your communications, and new customers are either bewildered or disappointed. Research how your products are used, what people love about them and align your brand strategy accordingly. Close performance gaps vs. competitors and go after opportunities in terms of product experience. This is a solid base for a revised brand strategy.

4. Your marketing is all over the place.

Well-managed brands are consistent across all consumer touch points; all interactions support the promise, with a unified brand message. Inconsistent messages and visual imagery confuse consumers. They stop buying simply because they find another brand with a clear unique selling point. If your website, advertising, packaging and marketing materials look like they come from different companies, or even worse, if they could be for just any brand, then you need to retool your mix for consistency.

5. You don’t know where you should go.

If you haven’t set long range and short-term goals, then your marketing efforts might not be driving your brand in the right direction. Heading down the wrong path yields sub standard results. Take the time to determine your business objectives and then direct your brand and marketing efforts towards them.

6. Your brand isn’t social, but rather self-centred.

If you rely on a web presence to engage your audience, make sure you strike a balance between being social and self-promoting. People who only talk about themselves aren’t making many friends. The same is true for brands. Invest time into  getting to know people — on social media sites like Twitter, Facebook and LinkedIn — and build relationships with them. If you start to matter to them they will reward you handsomely in terms of brand loyalty and advocacy. Speak with a consistent (tone of) voice, be it traditional advertising or social media. Think of your brand as a person, and preferably not one with split personality disorder.

7. The competition looks better than you.

If your competitors’ communication or expression beat you in any of the above factors it is a sign that you need to start working on your next move. The idea is to stay ahead of the curve.  Don’t mimic just to keep pace, but aim at going one better. Determine what differentiates you from your competitors and what benefits you can deliver to consumers that your competitors cannot. Your uniqueness should be the focus for all your efforts; letting the world know why and how you are better.

Brand Strategy makeovers force you to ask the right questions and offer you an opportunity to get it right once and for all. Consumer needs are fairly stable, which means you can maintain your strategy for long periods once you find something that works and resonates with your key audience.  Don’t do anything too radical or you risk alienating your existing customers. Instead, pursue stepwise changes to ensure your brand is heading in the right direction and thus enhancing your brand and business rather than completely reconstructing it.

Wishing you all the best in your endeavours of giving your brand a leading EDGE.

Results from interesting.org survey asking more than 100,000 people in numerous industries

Recent ANFO seminar on business innovation and creativity took place on 26 January in Oslo, Norway.

ANFO, the Norwegian Advertisers Association (Annonsørforeningen), organised a one-day seminar on innovation and creativity on 26th January at the Hotel Bristol in Oslo, Norway.

Tom Ingvoldstad from EDGE was present and spoke about one of our recent innovation cases and the managerial challenges related to innovation.

If you missed the seminar and are curious about our perspectives on innovation feel free to contant Tom by email or telephone +47 951 42 888.

Kavli mayonnaise has once again been highlighted as an innovation with commercial success

Kavli mayonnaise won the prestigious SIAL d’Or price for innovation and commercial success in the Norwegian food market.

Created in 1986, SIAL d’Or are awarded in partnership with 30 trade magazines from the international food and retail press.

SIAL d’Or pinpoint and highlight innovations that have become major commercial successes in the food markets of the 30 countries represented.

Kavli mayonnaise was chosen as the winner in the Norwegian market in competition with other innovations across 9 product categories. More information about the price and winners can be found on the SIAL website.

You can also read what the Norwegian trade magazine Dagligarehandelen wrote about the prize in this article (Norwegian language).

The new Kavli mayonnaise was awarded a prestigious design award and continues to receive attention

The Norwegian industry magazine Plastforum presented the new design on the front page of their April issue.

The Award for Design Excellence 2010 was awarded to EDGE for our contribution to the new and innovative packaging design on Kavli mayonnaise.

In reaction to the design award, companies have renewed their focus on new and innovative packaging design. In a recent issue, the Norwegian industry magazine Plastforum presented the Kavli Mayonnaise design on their front page and featured an article describing the concept in detail.

Presentation given at “Markedsanalysens Dag” 2009 (MAD09) on the 5th of November in Oslo, Norway.

”Markedsanalysens Dag” is a yearly conference held by the Norwegian Market Research Association (NMF) that highlights topics and case studies relevant within the field of market analysis.

In a break-out session on insight the audience learned how MatPrat and REMA 1000 successfully used insight to strengthen and revitalise their existing brands.

The session was held by Martin Klafstad from REMA 1000, Jeanette Torp from MatPrat/OFK, and Yngve Kristiansen and Helge Krane from EDGE Consultants.

They addressed how market analysis and insight was used to develop crucial knowledge that enabled the team to make the right decisions, at a reasonably low risk, to reach their goals. E.g. how REMA 1000 used insight to create extraordinary results through their concept ”Grillkongen Craig”, which made REMA the winner of the barbecue season in Norway and strengthened their brand.

The session was concluded with a discussion on the ideal process from establishing facts and findings to delivering results.

Presentation given at Norwegian Design Council’s Business and Innovation conference 2009.

The Business and Innovation conference (“Næringslivsdagen”) is an annual business and design conference directed by the Norwegian Design Council (“Norsk Designråd”) and focuses on the use of design as an important mean to develop good innovation.

Tom Ingvoldstad presented our reflections on the importance of dedication from top management to succeed in the development of breakthrough innovations. This is based on our experiences with the innovation process, how it is handled in many companies and all the possible problems that stand in the way for realising strong and strategically important concepts. He also gave some recommendations on this can be resolved to ensure better results with your innovation efforts.

You can view the presentation here (in Norwegian):

From research-based consumer insight to strategies and successful communication.

This was one of the topics on the agenda when the Norwegian Market Research Association (NMF) invited to their conference “Brand Building 2009 – Effective Communication” in Oslo, Norway, on the 5th of May.

The presentation described how “Opplysningskontoret for kjøtt” (OFK) successfully revised the communication concept “MatPrat” on their website and in other communication channels (TV, print etc.). One of the results was a 63 % growth in unique visitors on the website (December 2008 vs. 2007).

Speakers were Jeanette Torp, Strategic Advisor at OFK, and Yngve Kristiansen, CEO at EDGE Consultants.