Thoughts on Value Innovation

I’ve been reading how high-growth companies, even in bad times, spend little time thinking about staying with their competitors. Instead, they make their competitors irrelevant. How? By continuously trying different things.
High growth companies—irrespective of their industry—all described what has been called the “logic of value innovation.”  Firstly, don’t try to get better than your competitors. Instead, become different and irresistible. Look for new markets and find out what they want. Look to customers for the future rather than the present.
It doesn’t really matter what the rest of your industry is doing or how it’s faring. Look for blockbuster ideas and add the value that nobody else has yet to do. Reminds me of how one day I opened my mail to find a workout tap from the Sun Maid raisins. Sun Maid raisins? Why they sent it to me, I’ll never know. What I do know is that I didn’t receive a free workout tape from any of the other raisin companies, and that’s stayed in my mind all these years.

Don’t let your competitors set the parameters of your strategic thinking. It’s wise to look at your strengths and weaknesses and then focus on building more advantage.  If you look at the U.S. television networks, they all use the same news format. They’re all in the same time slot and they’re all dependent on the popularity of their anchors. CNN replaced the network’s format with real-time news from around the world, 24 hours a day.  Although this was some time ago, look at the way we get news—real time—when we want it and how we want it.  Instead of focusing on competition, determine what is superior value to your customer and give it to them. Think about the green movement. It’s no longer a movement–it’s a category to be reckoned with. Consider how this mindset affects all facets of your business — from your building to your parking lot, to your salespeople, what you drive and what you sell. Let everyone know you understand it, go to workshops on green and give workshops on green. Deliver a new sense of value to your customers.
What about customers? You’ve probably been told to expand your customer base and retain the customers that you have. There isn’t anything wrong with this approach but isn’t this what everyone is thinking about? How about focusing on the similarities and commonalities of your customers. What makes customers unite? Let’s say you have 20 customers that belong to the local women’s group. These are commonalties. What does the woman’s group do and how can you be part of it. Spend more time on what customers want rather than what you think they should have or what your competitors supply.
Another way to look at it is to not let today’s conditions get in the way of what you will do tomorrow. There’s nothing wrong with building on what you have—but to be innovative you have to build on what you have in order to gain more insight into the customer of the future. While you’re still building on your existing customers, there are new ones out there looking for a place to shop.
Survey your customers relentlessly. Have you ever noticed how many companies that you buy from ask you to take a survey and then enter your name in a drawing? The local supermarket, Price Chopper, continues to survey you, giving you an 800 number and then entering your name in a drawing. Everything from my kitty litter to the yogurt I buy is surveying me—constantly.
Ask yourself some questions: are there factors in our industry that should be eliminated? Are there standards that should be raised, such as installation in the flooring industry? It’s the biggest deal in the selling process. There are stores that don’t offer installation and do very well. It doesn’t mean you have to do it but you have to look at your options.
Are there factors that should be created that we’ve never offered? Such as workshops on how to buy our products or use our products. I was in the Honest Weight Food Co-op the other day and was offered to try a new cool summer corn soup. It was absolutely delicious. The women showed me where the products were that I’d need in order to recreate the soup. I’ve always thought that supermarkets missed the boat by not showing customers how to use their products as well as how to prepare special diets or offer cooking with low fats. Seems like a no brainier to me.
Have a strategic logic. Think about tomorrow’s customers as well as today. What type of high tech information will they be able to get from other products that they will be buying? Look at anything from entertainment to the food they buy to how they buy records and books. How does this impact your thinking?
Think of it this way, some companies are pioneers—offering unprecedented value. They take the lead and run with it. Next there are settlers, they just go along with the industry but don’t do much different. Their standards are set by their competitors or what they’re told. Next are the migratory companies that are somewhere in between—they give customers more for less, but don’t alter how they do business.
No matter how slow business is you will have to aim for the future. The future will still occur no matter what you do. You will have to be there.
“Just as good farmers rotate their crops, good value innovators rotate their value platforms.” Virgin Atlantic
Sources: the Harvard Business Review; “Made to Stick” by Chip Heath & Dan Heat; “The Engaged Customer” by Hans Peter Brondmo.

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