202 Innovation : Build An Innovation Zone

In today's retail and wholesale markets, differentiating ourselves is a major challenge. The big box stores look alike and feel alike. The same can be said for the small-time merchants. They are filled with new and innovative products; some are beautifully designed. But new products or old, they have the same problem: commoditization and squeezed margins. Commoditization refers to products being sold for what they cost rather than for what their value to their end-user is.

No sooner than a new innovative product comes out, we find many copycat products follow in just a few months if not a few weeks. This is because in our Internet-connected "global village" this knowledge, information and technology are widely and speedily distributed. Manufacturing and business process knowledge spreads through an industry almost instantly. Reverse engineered and copycat products are often better than the original innovation. It's hard to charge a premium for "new" or "improved" when today's savvy consumers know if they wait just a little while they will have something similar or better and possibly cheaper. It appears new product offerings are doubling every two years!

Yet product focused companies are caught in a commodity trap. What we need to understand as vendors is that our opportunity to increase our margins comes from "service innovation". The service sector as compared to the manufacturing sector comprises more than 80% of today's GDP (our nation's Gross Domestic Product). It's no longer the product but the way the consumer experiences the product that drives the market. The race to sustain profits and expand margins will be won by those retailers who can attract the most user support and offer the best experiences for their customers; wholesalers or retailers who solely focus on the cool handsomely designed new products are going to lose.

The "Customer-Adventure-Cycle" is a model that maps the complete set of experiences that a user goes through with any product from beginning to end. It examines the quality of the experience at each step of the cycle. By quality we mean the emotions of frustration and discovery, the hopes and fears, perceptions of simplicity and complexity, confidence and avoidance, as well as every other emotion that is usually encountered.

The Customer-Adventure-Cycle begins with a problem or desire, often an unarticulated or unintelligible gut level urge. Next comes awareness followed by potential solutions in the form of product, people or both. The next step is expansion (also known as divergence) and exploration of the possibilities, which is followed by evaluation (also known as convergence) and assessment of the most emotionally appealing solutions. Next steps could be: decision-making, transportation of the purchase, unpacking, installing or implementing, initial learning, becoming an expert user, new need discovery, dissatisfaction, abandonment, disposal and finally the start of a new cycle.

Looking at the client or purchaser in light of the Customer-Adventure-Cycle sets the foundation for service innovation. Important insights become apparent in ways, that compared to past methods of looking at the customer, were simply not conceivable. Deep insight to the unexpressed gut level desires of the user is where true innovation begins. We call it Innovation GoLD (G=gut, L=level, D=desires). These insights are made not just by senior management or the marketing department but by employees at all levels of the company, by partners and suppliers, outside-of-industry advisors, and most importantly by listening to the users. The analogy of many blind men feeling different parts of the elephant applies here.

Useful innovation is a result of developing deep insights... which can be generated by ordinary and average people who have been taught to express their observations of the obvious. Innovative companies are able to systematically gather this intelligence. To do so a firm must create a happy, fun protected space, a "zone" where ideas can bubble up, percolate around, get recorded and classified, then receive a fair and appreciative hearing.

Harvesting service-innovation-intelligence depends upon building an "Innovation Zone". Fashioning this Zone may mean improving our philosophy, culture and even our business model. A business model is nothing other than our method, formula, or way that we make money. Southwest Airlines changed from its industry business model by inventing unrestricted, everyday low-cost, one-way seat sales for use by everyone, not just the affluent or the compelled. They set the industry on its ear. Cultural change is often thought as difficult because while most people like change, they don't want to be changed. When a business culture elevates to create a greater sense of appreciation, respect and empowerment, amazing things happen. Philosophical conversion about how the customer is embraced can also have dramatic impact.

"Innovation" (and creativity) is nothing other than simple, commonsense processes that a business puts in place and makes into a continuous orderly discipline, an easily understood system. Innovation is not so much about the superhuman hero-inventor as it is about the collective wisdom and processes of free-wheeling teams. Yet innovation is driven by leaders with passion, curiosity and undeniable hope. Social networks, intentional collaboration and structured idea-recombining interactions (& activities) is where leadership thrives, shifts, and rotates; as teams are nurtured, encouraged and challenged, they inevitably create unforeseen insight and extraordinary commercial value.

The "Zone" is a place where people can move ideas from concept to reality. The Zone thrives amidst uncertainty, constraint and scarcity. It is the resourcefulness by which we rethink how we create value. It's the place where risk is carefully managed and experiments are made with small amounts of money. The zone can be a physical place in a building or it can be the building of a new open-minded passion led culture.

The Innovation Zone is a "reward" place. People find meaning there. They find individual and collective significance. They discover a new sense of identity. They expect recognition. They get feedback of a special sort. People in the innovation zone function at higher levels. They are also willing to become subservient to an important idea or those leading that idea. Some special few take on the role of Intrapreneur - - a dedicated worker on a specific project either as a volunteer of their free time and weekends, or as a laser-focused full-time employee of their initiative. Such intrapreneurs are the ones who earn bonuses and or royalties. However, most people in the zone prefer nonmonetary incentives to keep the motivational pump gushing.

The Innovation Zone requires careful structuring. It must not interfere with our company's source of profits, "The Performance Engine". This engine can be thought of as the every-day means by which our business makes most of its money and fuels all of its operations and plans. (Our Innovation System will produce “Future Performance Engines”). Most of the budget goes to improving the “Current Performance Engine”; funds for the Innovation System are relatively tiny and rightly so. However these two vehicles must be in balance, with both receiving more than sufficient time, attention and resources; the Innovation System is critical for survival in our fast-changing tomorrow.

Executive compensation needs to be tied to developing a robust Innovation System Portfolio - - but not of course to the individual initiatives within the portfolio. In other words, unless the senior executives' and critical managers' compensation structure is tied to developing the future, when push comes to shove, innovating the next Performance Engine for subsequent product cycles doesn't happen, not really. Further, unless a reward system (mainly non-financial) for all stakeholders and employees is carefully created, innovative efforts eventually languish and die on the vine. The best organizations have all staff working on innovation continuously: some rotate people through on a full-time basis; others have it as a part-time responsibility in their job description; in other cases, innovating is simply made a top-of-mind-awareness in everything that is done by each and every stakeholder.

Creating an Innovation Zone is not that difficult. However, it will be unique to every company; there is no single formula or cookie-cutter that can be written out on a prescription pad. It's a fun and critical activity.

These days our Innovation Zone must be bound up in the experiences of the users, in the Customer-Adventure-Cycle. If that is not front and center in our Zone, then we might as well be doing our work off in a cave in the nether regions of the Canadian Shield. When we come out, we will be connected to nothing, know nothing, and no one will know us or even care who we are. Our Innovation Zone will work because we have critical insights into what makes our customers tick and what will satisfy their deepest urges. Then we will strike Innovation GoLD!

Map out your best-selling, most-profitable product. Use the Customer-Adventure-Cycle model in as much detail as you can manage paying particular attention to the emotional components. Now go visit an IKEA store, an Apple Store, and two or three other retailers outside of your industry that you admire. Pay particular attention to how they create personalized customer experiences. Innovation is about altering the conditions in a user's life and creating possibilities that they never dreamed of before. Innovators are always in the process of building new dreams. Map out what you think their models are - - it doesn't matter what they really are; what matters is what you observe. Now compare these models to yours.

Write down in as much detail as you can your critical insights. You're beginning to build a service innovation model.

Begin by jotting ideas down about how to create an innovation zone in your company. Just brainstorm; stay away from evaluation or feasibility. Deal with the emotions of what would make your best people, your average people and your underperforming people, happier and more excited about their work. Think about what you could do to get your suppliers and customers talking more intimately to you. Don't kill your ideas by figuring them out. Go for flow. Emotions are not intellectual neither are they subject to logic and reality testing. The goal here is to get you to be gut level connected with all the stakeholders inside and outside of your company. Compile a list of how they can become more creative and open-hearted.


Go to: Next article in the series Go to: Articles Go to: Specialty Practices Go to: Home


© 2025 by Armstrong Carter Pe-Trick .... A Professional Services Practice Making You Powerful... Executive Search Since 1979
top