For manufacturers of highly engineered products common in the B2B industrial world, innovation in industries such as retail, entertainment, and even the transportation industry might seem completely unrelated. You might be surprised. The innovations happening in these fast-moving industries can serve as important lessons for anyone responsible for new product development (NPD) regardless of whether you are in the service or the manufacturing sector.
Often those responsible for new product development of manufactured products focus solely on product technology. Innovation is not only about product technology, but about the market and how that market is served. It can pertain to the entire business model or the boundary between the “product” and the “environment”. A good example is the Apple© IPod, normally considered a very innovative product. In reality all the product technology existed. Not to minimize the engineering required to develop the product, but the innovation was primarily the business model and how music was delivered. Apple viewed the IPod not as a very cool gadget, which it certainly was, but as an ends-to-a-means. It wasn’t just the fact that the IPod was radical from an industrial design standpoint, but that it satisfied an unmet customer need.
So let’s look at some of the innovations happening in the retail, entertainment, and the transportation industries and see what lessons they may provide to other industries, including manufacturers of highly engineered industrial products.
Making It Easier to Use Your Product
A recent article in Forbes (1) listed multiple examples of key innovations in the retail sector. As they point out, most of the innovations are meant to make the shopping experience more enjoyable. In many cases, the technology exists, but is being deployed as a way to solve a customer problem, namely that shopping for many is not very enjoyable. One example is how a men’s clothing chain added QR codes to jeans so that customers could scan the code and get the correct sizes delivered to the changing room. A new mobile app developed for grocery stores allows customers to browse, scan and buy products all through their phone and bypass queues at checkout registers. A UK based grocery chain introduced a section in their stores that are “quiet zones”, requiring patrons to remove shoes and hand over their cell phones.
Even for industrial B2B manufactured products, how can you make the experience of using your products easier? It is not always just about the product and whether the graphical interface is designed well or that the product meets all the safety requirements, but it extends throughout the entire user experience from initial purchase, to installation, to training and support. We all too often “fall in love” with our product and forget why customer’s buy in the first place, and in the process miss out on potential key areas where we can gain competitive advantage. In many cases, product technology can be easily duplicated by competitors, but unique ways of making it easier for customers to use your product may not be easily copied.
A growing area of innovation that applies to new product development, as well as to marketing and even training, is the concept of “gamification” or game mechanics. Video game makers have long perfected ways to engage their customers by designing in reward systems. For example, you get “points” or some other “reward” for passing specific milestones. In part this is why so many get addicted to playing these games. This same concept was used by Nike Mexico who developed an app that allows runners to accrue points for every mile run and use the points to bid on Nike-branded products in an on-line auction. A game for scientists called Foldit (http://fold.it/portal/) was developed to harness the minds of over 40,000 scientists worldwide and their computing power and helped unlock clues to 3-dimensional proteins (2).
There might be multiple ways that this same concept could be applied to industrial products. Maybe it applies to your training material and how that is presented. For instance, maybe if customers watch recorded training webinars on how best to utilize or maintain the product, they receive credits for the purchase of consumable or spare parts. Not only could you expand your revenue for these products, but more importantly it is another way to engage customer’s in your brand. Microsoft made a game for their developers on a global basis to compete on debugging Windows 7 and boosted productivity and employee engagement with minimal investment (2). Think this does not apply to your industry? I would contend that as the Baby Boomers (born 46-64) continue to exit the workforce and the Millennials (born 81-89) become a larger percentage of the workforce, perceptions about how your products should be used will change.
Rapid Learning in Uncertain Markets
A recent article about the trucking industry illustrates this concept important for anyone innovating in uncertain markets (3). A company called Post Bid Ship has a mission to help shippers, brokers and carriers use the internet to manage freight operations. As the CEO describes it, they built the original product for direct shippers and truckers but found after a few months of testing that freight brokers represented the bulk of the transactions. As a result, they had to pivot and re-design the product more in line with their needs.
The book The Lean Startup (4) is an excellent resource on this concept and applies the plan-do-check-act iterative learning cycle to a startup business that faces an uncertain market environment like that of the trucking software application described above. The technique is also used as a project management tool when you are dealing with technology development that has a significant amount of unforeseeable uncertainty (unk unks) and/or complexity (5). It is the same methodology that agile, or more specifically “scrum” techniques are based on. The short time-boxed design-build-test “sprints” used in scrum is a way to quickly iterate and learn what works and what does not work in the uncertain world of software development where in many cases customer’s cannot verbalize what they actually want.
Question Your Assumptions
We are all subject to this mindset when it comes to long held beliefs. Have you been in meetings about new products and someone has said: “Well, we just don’t do it that way.” A recent product introduced by Disney called the Infinity gaming system illustrates an example from the world of entertainment (6).
This new game is based on a concept that allows a user to create their own virtual world populated with multiple animated characters from different films. For instance, maybe the world you create includes Buzz Lightyear, Sulley from Monster’s Inc. and Mickey Mouse. During the initial discussions about the concept, John Lasseter, Disney’s long-time leader of the animation studios reacted by saying: “That’s always been taboo. We just don’t do that. I can’t stand [to] ignore the story and put them in a magical world where they all live together.” Eventually the concept was approved and is now being introduced to the market. It is still a risk, but reminds us that every company has long-held assumptions about their products and market that need to be periodically questioned. Senior management especially have to be open to new ideas and promote a culture that rewards questioning long-held beliefs.
Understand What Business You Are Really In
This final example is illustrated by an excellent recent article about Amazon (7). The article describes many facets of how Amazon has and continues to grow and dominate the on-line retail marketplace. For example, last year worldwide e-commerce transactions were more than $1 trillion and Amazon accounted for 5% of that volume. Amazon has been a disruptive force throughout the entire retail world and impacted big-box retailers like Circuit City and Best Buy, and changed the way we shop. For instance, more than 10% of big malls are expected to close in the next decade.
Everything Amazon does is driven not so much by what it sells but how it sells and how they view what business they really are in. For instance, they recently purchased Kiva that manufactures factory warehouse robots. Why? Because they know that a key part of their competitive advantage is driving down the time it takes to deliver a product to the customer, and the technology associated with factory automation is important to meet that need. AmazonFresh is a new service just being rolled out for grocery deliveries, but is really a way to build the infrastructure needed to dominate the market in same-day deliveries. Many on-line companies who are long forgotten focused on the products they sold, not how they sold them. Amazon has been masterful at always understanding what business they are really in and delivering value to the customer, while building competitive advantage.
In summary, you should never ignore what might be happening in industries that are seemingly not related to your own. We all tend to become inward looking and believe that all the answers for our business resides within our own “four walls”, so to speak, or by only considering what direct competitors are doing. A key activity for senior leadership, R&D management, and marketing in every company is to consider what is happening in other industries, and what lessons might be learned and applied.
Do you have examples of where you learned something from an unrelated industry that you applied to your products or business model? Was it successful? Is there resistance in your company to looking outside your “four walls”? How does the culture in your organization treat questioning of long-held beliefs?
(1) Kreinczes, Chris. 5/9/2013. These 10 Ideas in Retail Innovation Will Change The Way You Shop. http://www.forbes.com/sites/springwise/2013/05/09/paying-with-kilometres-and-the-top-10-ideas-from-retail-over-the-last-12-months/
(2) Thanks to Rick London for this example. Mr. London is an adjunct professor at the Villanova School of Business and teaches courses related to game mechanics. Mr. London can be reached at www.ricklondon.com.
(3) Goodwill, Dan. 4/6/2013. Innovation and Technology Come to the Freight Brokerage Industry. http://www.dantranscon.com/index.php/blog/entry/innovation-and-technology-come-to-the-freight-brokerage-industry
(4) Eric Ries, The Lean Startup. (New York, NY: Crown Business, 2011)
(5) See, for example, this article: How Project Risk Impacts Project Management in New Product Development (NPD)
(6) Kessler, Sarah. 2013. How A Video Game Called Infinity United The Disney-Pixar Universe. Fast Company September 2013
(7) McCorvey, J.J. 2013. AmazonFresh is Jeff Bezo’s Last Mile Quest For Total Retail Domination. Fast Company September 2013.
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