Companies that successfully innovate and gain a lead in the marketplace rarely keep their lead over time.
1. Innovations are non-conforming
Many innovations are misunderstood. Sometimes consumers are slow to understand a new product and the value it provides. It takes time for the marketplace to absorb the fundamental aspects of an innovation – and for people to appreciate the value. An example is the gift card industry, which has gone from zero to $100 billion a year in the last twenty years. 93% of Americans either purchased or received a gift card last year and 83% of businesses use them for employee incentives. Once considered unacceptable by many, today gift cards are a safe option when gift giving. But gift cards may be on the decline, with $1 billion in unredeemed cards last year.
2. Innovations run their course
Copycat competition is a marketplace certainty. New entrants will replicate and commoditize innovations, getting their slice of the pie without incurring research and development costs, and driving consumer prices lower. Successful companies may focus too heavily on what made them successful. This often happens at the expense of new innovations, resulting in wasted ideas and insulation from customer feedback. Eventually, the marketplace becomes saturated and only those companies that innovate anew will survive.
3. Innovation drives consumer demand
It is important to listen to customers, but not necessarily at the outset of an innovation process. Why? Businesses fear their inability to deliver products that are faster, more efficient, and better value, all for less money. If a business can set the pace and parameters for innovation, they can exceed customer expectations by delivering something that customers have not yet envisioned. Customer feedback typically drives business improvement, but not necessarily innovation. Businesses that can innovate in ways that drive demand from a current product set to a new one break the mold and create a whole new way to live and get things done.
Better not Bigger: 3 Ways Innovation is Contrarian ©Change Create Transform
Back
