Upon reading his 1897 obituary in The New York Journal, Mark Twain (who actually lived until 1910) responded, “the reports of my death are greatly exaggerated.” We were reminded once again of this witticism when we read an article describing the “end” of product innovation and the rise of “price” as a way that customers define value. This is not the first time that the death of innovation has been reported. However, with our combined experience of 40+ years in the innovation game, we have a completely different view of the matter.
Innovation in the creation of new and different products and services is not and never will be dead; however, “innovation” comes in many styles and flavors, some of which will be far more successful than others. That’s why it seems a bit over the top to declare innovation dead simply because what was intended to be a premium product did not live up to expectations. Perhaps it’s fairer to say that when a new product or service cannot distinguish itself from its competitors, it’s more likely to be seen as a commodity, and that commodity purchase decisions are frequently driven by price consideration.
Many factors influence the success of an innovative product or service, but one of the most powerful determinants is whether its intended customers perceive it as not only novel, but also relevant, beneficial, and necessary. It’s important to note that new features, although technically innovative, may not always be seen as sufficiently beneficial to justify a purchase, especially if there are competitors which meet the customer’s needs at a lower price. What really sends a new product or service over the top is its ability to go beyond offering new features that satisfy customer “wants” and offer benefits that customers truly satisfy their needs. This is especially true if the new product/service satisfies a need in a way that is not currently available by other means; in this case, customers will frequently pay a premium price because they perceive premium value.
Of course, it’s not always easy to figure out what customers will see as a “need to have,” as opposed to a “nice to have,” since perception of value is subjective and based on many intangible as well as tangible factors. One thing is for sure — over and over again we’ve seen that simply asking people “what do you want” frequently garners either blank stares or simple rehashes of things with which they’re already familiar. Likewise, the approach of brainstorming new features by isolated developers or project teams, then running concepts past customers for post hoc approval rating also meets with frequent disappointment. In contrast, innovators who find ways to interact with and observe customers, probing into what they value and what they find difficult in their daily lives, have much greater success in discovering what customers need and will value, even if the customers themselves have trouble articulating it.
A case in point is Apple’s continued success in creating distinction in established as well as emerging markets with products like the iPhone and iPad, which meet consumer needs for high functionality, including some unique capabilities, combined with uncomplicated operation and highly attractive design. It is notable that customers are standing in line to get their hands on the iPhone 4G, in spite of a huge abundance of other cell phone and smartphone brands. This is in marked contrast to many brands of flatscreen televisions, which rapidly displaced conventional cathode ray tube televisions by meeting consumer needs for lighter, more compact TVs, but then became virtual commodities as manufactures built in more features which did not tie into other customer-valued needs.
As we’ve discussed in our article, The Keys to Unlocking Sustainable Innovation, the ability to tune into a market and home in on consumer needs provides a substantial advantage to companies as they work to cope with a constantly changing marketplace and create new and distinctive value for their customers. Ultimately, customers will pay premium prices for innovation they truly believe is “valuable” to them. The more that you observe what people actually do in addition to what they say in focus groups, interviews, surveys, etc., the more likely it is that your company’s innovations will strike a chord that resonates with customers and pays dividends as well.