More processes than product innovations and should it be continuous?
Q: We’re an FMCG (fast moving consumer good) packaged, processed food company and I’m the product development manager. While there are process innovations that come our way once in a while, our own experience is more with product innovations. So when last Friday, you also talked about continuous innovations as true or should be true with both product and process innovations, my product development people had a heated debate with just one agreeing with your column. The rest of us were unbelievers.
When the one agreeing with your column could not explain or give convincing examples, he suggested we write to you and get the explanation and the convincing examples. Here’s our question: “Is it true that there’s more process innovations than product innovations? How can process innovations be continuous?”
A: We’re sorry that last Friday we did not start by being clear about what process innovation is. So let’s start with “process.” Process is what you do. It’s made up of steps or series of steps to get you to what you want done. Innovation is what’s new and different. So process innovation is what’s new and different in what you do. In your case, it’s what’s new and different in your product development work.
When you just think for a while what you do in your everyday work in product development, you’ll realize they’re a whole lot. And every so often, even for the sake of variation, you do something new or different or both. Because these new and/or different ways are in what you often routinely, regularly or habitually do, you’re not that conscious about them or else you just take them for granted.
But we’re fairly certain that there must have been one or even two new, different ways you packaged or processed your food product that made a difference in that packaged, processed food product. That new and different way was the real innovation. It just so happened to have been hidden by and was within your manufactured product. This should make you appreciate why process innovations can be and are often much more than product innovations.
The fact that process innovations are all around us every day is what dulls our sensitivity to their innovative character. Just consider two financial process innovations: the ATM and the credit card.
The ATM constituted in effect a distribution channel innovation of mass market proportion. It multiplied a bank’s branches for the withdraw-and-deposit service needs of its bank customers especially its ordinary depositors. As to the credit card, if you bother to analyze its market significance, you have to admit that it’s a process innovation of even a higher level of mass market significance. As a process innovation, the credit card gave the consumer an unprecedented buying power.
Unfortunately many alarmist writers blame it for the spread of “shopoholism.” It’s unfortunate because the Senior MRx-er once heard Pastor Andrew Liuson preached against the credit card. He said that if it’s the credit card that’s leading anyone to go into more and more debt, then get a pair of scissors and cut it up.
The thought quickly crossed the Senior MRx-er’s mind that this is a terrible and a very poor way to teach the “guilty” credit card holder the virtue of self-discipline and self-control. The culprit is not the credit card. It’s the user. So, cut up the user? No and of course not—teach the user to learn self-discipline. Teach her or him what’s now available, for example, from Brother Bo Sanchez’s books and camp, namely, about “financial literacy.”
What about your second question regarding continuous innovation? One source is something we previously talked about and that’s asking your customers the MADI questions on what they are now buying from you whether product or service. So we’ll not take that up anymore. There’s one other source which derives from the anthropologist’s method, namely, ethnographic or observation research.
The MIT (Massachusetts Institute of Technology) professor Eric Von Hippel wrote a best-seller 2006 book about it, Democratizing Innovation. There are two basic insights in this book that directly relates to our question on continuous innovation.
The first proposition says: “It’s more the consumers, the users who innovate and less us, marketers and manufacturers.” So how exactly do consumers innovate and how can we and you as product development experts uncover those consumer innovations? The answer is in Professor Hippel’s second proposition which recommends that to effectively insight consumer innovations, “Watch, monitor how consumers, users, solve their daily as well as emergent problems.”
What consumers do in their daily life that are rough gems of innovative ideas escapes them as well as us marketers and product developers. It’s for the very reason that consumers do them routinely and most of the time out of habit. Just two quick examples. These are both from the Senior MRx-er’s series of “Consumer Coping Behavior Surveys.”
In one survey wave, several mothers told the survey interviewers that they have multiple uses for a package of instant noodle. One unexpected use was as “ulam” (viand). This led one of the survey sponsors, Monde Nissin to come out with an innovative instant noodle, “Pancit Ulam.”
Here’s the second example. For instant coffee, Class D and in particular Class E (borderline and extreme poor) mothers talked about their use of coffee that they buy from a nearby food stall as a cup of hot mixed coffee. These mothers considered that coffee cup as “nutritious.” There’s milk in there and sugar. And what they do is to pour the hot coffee into a bowl or rice for the breakfast meal. One alert brand manager of Nescafe later revealed to the Senior MRx-er that he sold his Nescafe in squatter area food stalls as breakfast rice meal mix and obtained more than good enough revenue productivity from it.
We’re out of space. So let us summarize with this Marketing Rx: “You can source for continuous consumer innovations by fishing and harvesting meaningful insights if you do these. Listen to your customers with an insight-hungry pair of ears. Watch them with an insight-searching pair of eyes. And think of what they are doing with an insight-thirsty mind.
To discover how to get mentored by Dr. Ned, visit www.NedMarketingAcademy.com
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