AN EFFECTIVE WAY OF CONTINUOUS INNOVATION

AN EFFECTIVE WAY OF CONTINUOUS INNOVATION

May 13, 2018

By Fabiha Naz Kabir

“Creative destruction is the essential fact about capitalism,” said Joseph Schumpeter in his 1942 book Capitalism, Socialism and Democracy. Creative destruction refers to the never-ending product and process innovation mechanism through which new production units replace old outdated ones. What does actually lead to innovation? Nowadays, the popular answer to that being –Demand-led Solutions. Demand calls for solutions, which is somewhat of an ambiguous term. It can refer to processes involved in creating new products, practices, procedures, and so on.

Demand-led solutions, to be specific, are those which need to involve the deliberate design of innovation activity, so that it substantially elicits and uses information about user features, requirements, and creative ideas in the course of shaping research, development, design, and/or other major aspects of the problem. Led is considered a stronger term than “driven”, in the sense that demand or users are considered to be active sources of signals or ideas. They lead the innovation process in definite directions, while drivers seem to just provide an incentive that may be taken in several possible directions i.e. alternative “solutions” to the “problem” that the driver might be signaling.

“Demand-led” companies are slowly but surely making progress on demand-driven concepts. Some did start on them but eventually abandoned them due to the barriers, irrespective of the high rewards. A common reason for failure is the lack of understanding of the basic concepts of demand latency, sensing, shaping and translation. Consequently, many companies have mislabeled supply-centric initiatives as demand-driven. There are both an absence of good data and a lack of understanding of what organizations do with information about consumer needs and preferences. However, it is also difficult to gather such data because it is not easy to measure. Yet we need to know more about how organizations address consumer preferences and engage users in innovation. Demand-driven solutions are not at all an evolution rather a step in change needing either the rearrangement of existing technologies or the usage of new platforms. 

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IDENTIFYING NEEDS

In order to come up with a solution, the first step is to identify the demand that currently exists. Since demand is the illustration of consumer requirement through the market, this can be seen to be signaling about consumer requirements. Nevertheless, such signals prove to be very hard to interpret, since the purchaser does not face an unlimited array of offers from suppliers. The existence of information asymmetries and restrictions of the time devoted to making decisions also needs to be taken into consideration. Sometimes market dynamics are clearly signaling that one thing is preferred to another, but often suppliers need to gather further intelligence to help them decide just what it is that demand is signaling at.

Hence, the first step in identifying customer needs is to make an outline of the project and then move forward with developing the solution. It must address – a product or service description, key business goals, primary and secondary markets, assumptions, and stakeholders.

The second step involves gathering data from the market and possible consumers. Even in the absence of technological innovation, market research may thus be very important in informing suppliers as to what features of their products, their marketing, and additional factors (the packaging, delivery channels, aftersales, etc.) are valued, and which are the critical features for users. In B2B markets, use may be made of discussions at trade fairs and exhibitions. Feedback about purchasers from sales and aftersales staff is also widely used as a source of information about user reactions to existing products. In such ways of gathering intelligence about users, information may be sought about user requirements and about unmet demands which might be satisfied by new or improved products, as well as about possible reactions to innovations. Lehmann and Winer suggest that, to fully understand the customer, the following needs need to be addressed:

  1. Who buys and uses the product – initiator, influencer, decider, purchaser, and user?
  2. What customers buy and how they use it – purchasing frequency, customer purchase benefits, etc.?
  3. Where and when do customers buy – channels of distribution and seasonality of demand?
  4. How do customers choose – customers perceptions and preferences?

To answer these stated questions, focus group discussions and interviews can be carried out within a group of 7 to 12 participants in a favorable environment. Another method to retrieve customer information is to observe the product in use. This method has often been put to use by Honda, Toyota, and Intuit; it has led to highly successful products.

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INTERPRETING DATA

In the data interpretation phase, the need statements by consumers need to be “translated” into a language that can be used by product development teams. The requirements should focus on the benefits and not necessarily the features that customers sometimes suggest. There are some ways to facilitate this process:

Innovation Opportunity: For user-driven innovation, allow more opportunity for innovation within the procurement process, by establishing and proactively managing relationships, and through better education of purchasers and suppliers of the potential. Purchasers should build long-term relationships with suppliers, professional bodies and others to discuss potential innovations.

Assessing Feedback: Most consumer feedback reflects existing preferences, so more needs to be done to uncover consumers’ hidden preferences and ideas to stimulate innovative responses. Organizations must construct mediums through which positive and negative feedback can be fed into the innovation process, without mediation or structure. Your very own employees are often a great help while providing feedback.

SUSTAINABLE SOLUTIONS: INNOVATE OR BE SWEPT AWAY WITH THE TIDE

Einstein was most right — we really cannot solve problems by using the same kind of thinking we used when we created them or by recycling old methods. We need to develop new ways of thinking in order to design better solutions, services and experiences that solve our current problems. To solve the new wave of problems we face today and in the future, we need a new kind of thinking i.e. a new approach. Thus, innovation is key. See the table depicting 10 types of innovation that will prove to be helpful while developing solutions.

The challenges firms face today are much more multifaceted and complex than the ones we faced a few years ago. Part of the reason being globalization, which has brought together various agents across the globe into an interconnected web of systems that influence one another. To solve these new, complex problems, demand-led solutions come in with a newly systematized and human-centered approach. These solutions adopt a human-centered perspective in creating innovative solutions while also integrating logic and research. It is only when we will align our mindsets, skills and environments, will we be able to come up with solutions that will allow us to survive the disruptions we might face in the near future.

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