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How to Innovate and Grow in a Flat Market
Source: Stage-Gate International (www.stage-gate.com) The Growth Challenge Most companies have ambitious growth goals. The trouble is there are only so many sources of market growth. Markets in many countries and industries are flat and increasingly commoditized; achieving growth in market share is expensive; and acquisitions often do not work. For most companies, product development means line extensions, improvements and product modifications and only serves to maintain market share. Markets aren’t growing, so firms increasingly compete for a piece of a shrinking pie by introducing one insignificant new product after another. The launch of a truly differentiated new product in mature markets is rare these days. The Solution is True Innovation The solution is true innovation – breakthrough products, services and solutions – that create growth engines for the future. This means larger-scope and more systems-oriented solutions and service packages. Examples such as Apple’s iPod, are often cited. (Note that Apple did not invent the MP3 player; nor was this opportunity in a Blue Ocean; in fact there were 43 competitors when Apple launched!) What Apple did succeed in was in identifying an attractive strategic arena (MP3s) where it could leverage it strengths to its advantage and then to develop a solution that solved users’ problems. The result - an easy-to-use, easy-to-download MP3 system, which also happened to be “cool”. Three more examples There are dozens of other similar examples of true innovation where companies created “big concepts” and bold innovations, typically an integrated system or total solution package for the customer, and won: P&G’s Olay skin-care business: Once almost given up on by P&G, the business was rejuvenated based on the “one big concept” - preventing the signs of aging on women’s faces. The company searched for and found the needed technology (outside of P&G) and relaunched the business with multiple new products: Regenerist, Definity, Professional, and others. Olay now does over $2 billion in sales annually. Barnes & Noble, U.S. bookseller: Barnes & Noble, the huge U.S book retailer, operates hundreds of bookstores across America. Facing new on-line competition, the company has boldly launched a reading system called Nook. One can download books from B&N’s huge library and do so wirelessly (anywhere in the U.S. and Canada, on the fly, direct to the tablet, and with no need for a computer). Sanifair in Germany: The company developed a systems solution to a problem we all face when travelling on the highway – finding a clean and well-equipped restroom. The company developed and operates a chain of public toilets that are clean, open and modern, especially at service centres along highways. They charge per use, but the user gets a voucher for the shop in the service centre, thus up-selling the rest-room user to spend more in the service centre. Five Innovation Vectors Our benchmarking studies of hundreds of firms reveals that five vectors must be in place to undertake this type of innovation to yield bolder and imaginative projects that create integrated, larger and more systems-oriented solutions and product-service packages.
If you are looking to create game-changing new products for your company then consider how you fare on the five innovation vectors. Each vector strongly impacts success and if you truly desire this type of innovation then all five need to be effectively deployed within your organization. Now might be a good time to critically assess whether your company is ready for the challenge. You can carry an innovation audit of your company with the ProBE®. You can also sign up for the seminar 'How to Innovate and Grow Your Business in a Flat Market'.
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