4.4 The Big Picture: The Cycle of Satisfaction
To the casual observer, innovation seems to appear out of nowhere. In reality, that seldom happens. Innovation comes from a creative, but disciplined design process. For over 10 years, Strategy&Business has asked the question, “What leads to R&D success?” To get an answer, Strategy&Business conducts an annual survey of the 1,000 largest corporate R&D spenders to uncover the secrets of “high-leverage innovators.”1 Here are some of the key findings:
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Spending. How much money you spend on R&D does NOT determine success. How you spend it does. The remaining points focus on how; that is, they share best practices!
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Strategy. Based on its innovation strategy, your company might be a Need Seeker, Market Reader, or Technology Driver.
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Need Seekers go straight to customers to generate ideas.
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Market Readers are fast followers—they monitor the market and incrementally improve the cool ideas.
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Technology Drivers rely on their technological expertise to drive both incremental and breakthrough innovations.
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Deep Customer Insight. You have to know what your customers want—even if they can’t articulate their needs. Big data and digital reality are beginning to give decision makers key insight into why customers behave the way they do. Deep customer insight helps you make the key trade-offs inherent in creating new products.
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End-to-End Process. Innovation is cross-functional. It requires top leadership involvement and company-wide support. Better visibility and control is needed to understand what is going on throughout the NPD process, especially in early stages of project selection and evaluation.
High-leverage innovators align innovation strategy to business strategy.
What does the research really mean? High-leverage innovators invest in and carefully manage an end-to-end, collaborative idea infrastructure (see Figure 4.7). Let's take a closer look at the core elements of an effective NPD process.
What is "e-commerce"? For most people, e-commerce is electronic commerce. E-commerce means convenience—the ability to browse as many websites as you want anytime, anyplace (as long as you have access to the Internet) and have products delivered to your door. E-commerce now accounts for 8.6% of retail sales worldwide (7.8% in the U.S).
E-commerce also exemplifies service innovation. In fact, you might argue that the innovation is just beginning as companies strive to solve the last-mile delivery problem. For instance, Amazon's sales growth is phenomenal, but Amazon has yet to learn how to deliver profitably. Nobody has. Everyone is thus trying to come up with "new" last-mile solutions. Consider two concepts under trial.
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The Dash Button. In 2015, Amazon introduced the Dash Button, a push-button ordering device you can place anywhere in your house. When you run out of a product—like laundry detergent—you simply push the button and Amazon delivers your Tide Pods within 48 hours. Amazon's goal: Make shopping so easy you never have to go to rivals' bricks-and-mortar stores again. 2
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In-home Delivery. Sweden's supermarket chain ICA AB is also trying to simplify online shopping. If you install a special, "smart" lock on your door, you can share the code—which is good for a specified time window—with a courier via a smartphone app and you no longer need to waste time waiting for the courier to show up. What's the advantage? You save time and retailers save the huge cost of failed deliveries—estimated at $1.13 billion in 2014 for the U.K. alone. 3
Now, ask yourself, "What do these—and other—e-commerce innovations have in common?" Answer: By creating unique service experiences, companies are trying to remove your pain points. Their goal: Turn you into a satisfied (and loyal) customer!
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