Companies are consumed by their consumers. Worldwide, firms strive to understand them ($47.3b a year on market research), to give them choice (250,000+ new products every year) and to communicate with them ($628.63b a year on advertising).(1) Despite these efforts, companies rarely surprise and delight their customers. Of the 250,000+ products launched each year, 85–95% of consumer goods will fail.(2) Unsurprisingly only 6% of executives are happy with the innovation process in their organizations.(3) Yet firm’s persevere in their quest for breakthrough business ideas.
Consider Singles. Created by Gerber, a baby food manufacturer, Singles were marketed as a revolutionary ready-to-eat meal for young bachelors. The meals ranged from “Creamed Beef” to “Blueberry Surprise” and they were packaged in baby food jars. Singles lasted only three months on the market. Or consider Febreze Scentstories. Created as an extension to Proctor & Gamble’s Febreze household odor eliminator line, Scentstories were a scent “player” that looked like a CD player and emitted different scents every 30 minutes. Confused consumers didn’t understand if it was an air freshener or a music player. Scentstories were quickly removed from shelves. Or consider the Kin telephone. In 2010, after two years and $1 billion spent on development, Microsoft introduced a new mobile phone targeted at the Millennial social networking market. The Kin provided the functionality of a stripped down flip-phone at the price of a smart-phone. Kin spent 55 days in the market and sold less than 500 units.
Extreme examples, certainly. But they reflect the risks companies face with moonshot strategies. As a result, most innovation teams focus on incremental advances that are more pleasurable than fundamental. This leaves both customers and companies feeling dispirited. “We wanted flying cars,” as one famous venture capitalist noted, “but got 140 characters instead.” It’s reprehensible to think that at the most advanced stage of human development, commerce is defined by churning out one “me too” product and service after another. The corporate inclination to act with minimal action is well established, but we expected more. As one Facebook engineer recently said, “The best minds of my generation are thinking about how to make people click ads. That sucks.”
Meanwhile buyers impatiently wait to be wowed as firms struggle to find new growth opportunities. Today “innovation” is a byword for distraction instead of a force for human advancement. And all signs point to a deepening innovation recession. Look at indicators from a 50% decline in entrepreneurship in the last 20 years; to a pop-culture tech backlash; to the fact that just 3% percent of newly financed product and service ideas will make it to launch; to the growing length of time to make new discoveries; to sclerotic productivity; to the reality that last year 83% of IPOs were unprofitable.(4) Should we throw our hands up and finally admit that our predictive powers are inherently faulty? Is innovation just a crapshoot?
Or is it that we are in another trough between innovation paradigms? Thirty years ago, the shift from an inside-out “we make it, you take it” innovation paradigm to an outside-in “tell us what you want” customer-centric paradigm was not smooth either. What is the paradigm after customer-centricity? There is a chance that we may have ventured too close to the sun. What if our obsession with listening and pleasing customers is the reason why the global ideas machine is stuck in first gear?
Over the last twenty years I’ve been lucky enough to work with companies worldwide in the pursuit of organic growth. Central to each and every successful breakthrough offering we have created has been the shift from customers to noncustomers as the reference point of value creation. Time and again we have been able to systematically create new offerings that not only capture a larger share of the existing market, but increase overall demand by focusing first on noncustomers.
This approach is largely based on the theory and frameworks of Blue Ocean Strategy/Shift, which I have been fortunate enough to have been a part of since 2001. It requires no special skills or insight, but relies on control and perspective to, “see what everybody else has seen, and to think what nobody else has thought.”
In this series (Plausible/Impossible) I will explore the cognitive, organizational and strategic barriers to creating breakthrough value propositions and illustrate how to systematically overcome them. Then through real-world case studies we will illustrate how to leverage noncustomer insights to construct market creating products, services and business models. We look forward to continuing this journey with you.
© 2020 JASON HUNTER. F&W STRATEGY|INNOVATION.
Coming up: Cost of Customers | Weights and Measures | Power of Noncustomers | Canned Creativity | Six Paths Revisited | Oceans in Practice | The Desk is Dangerous
(1) Statista. “Global revenue of the market research industry from 2008 to 2018.”
https://www.statista.com/statistics/242477/global-revenue-of-market-research-companies/. Carmen Nobel. eMarketer. “eMarketer Releases New Global Media Ad Spending Estimates” https://www.emarketer.com/content/emarketer-total-media-ad-spending-worldwide-will-rise-7-4-in-2018. “Clay Christensen’s Milkshake Marketing” Harvard Business School, Working Knowledge. https://hbswk.hbs.edu/item/clay-christensens-milkshake-marketing.
(2) Elaine Wong. “The Most Memorable Product Launches Of 2010,” Forbes, Dec 3, 2010. http://www.forbes.com/2010/12/03/most-memorable-products-leadership-cmo-network.html.
(3) McKinsey & Company. “Growth & Innovation” https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/how-we-help-clients/growth-and-innovation
(4) Hugo Hopenhayn, Julian Neira, Rish Singhania, “From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share.” NBER Working Paper №25382. NBER Working Paper №25382. The New York Times. The Decade Tech Lost Its Way: An oral history of the 2010s. https://www.nytimes.com/interactive/2019/12/15/technology/decade-in-tech.html. Benjamin F. Jones. “‘The Burden of Knowledge and the “Death of the Renaissance Man’”: Is Innovation Getting Harder?” The Review of Economic Studies, Volume 76, Issue 1, January 2009. Nicholas Bloom, Charles Jones, John Van Reenen, Michael Web. “Are Ideas Getting Harder to Find?” Stanford University. https://web.stanford.edu/~chadj/IdeaPF.pdf. John Detrixhe. “Investors have never cared less whether an IPO makes money” Quartz. https://qz.com/1410043/ipos-are-less-profitable-than-ever/.