ILLUSTRATION BY ALBERT RODRIGUEZ
Innovation has become a buzzword again in the last few years as many companies struggled to survive and thrive during the pandemic. People normally confuse “innovate or die” with many results that are not actually from innovation.
Myth No. 1: Innovation is not about playing catch up
Adopting modern advertising and sales promotions practices when everybody else in the industry has done so is not about innovation; it’s catching up. True innovation involves introducing a novelty in the industry with commercial success. For instance, there are many generic drugs available inside different drugstores, but The Generic Pharmacy had launched its all-generic drugstore before changing its name to TGP subsequently (signaling a change in strategy to be more than generic drugs).
TGP was innovative in successfully introducing a totally new retail category, a new market space for generic-only drugstores, and expanding to over 2,000 mostly franchised stores.
As a related value chain example, Rhea Generics by Philusa was innovative, marketing-wise, by being the first to position as a world-class, branded generic drugs successfully—a move which helped it establish trust with consumers, solving a category pain point that affected adoption of generic drugs in the past.
Myth No. 2: Pivoting is not an innovation
Pivoting is about changing strategy but not all pivots can be classified as an innovation. During the 2020 lockdown, many companies selling nonessential items were not allowed to operate. Some had to add new products. Many added e-commerce channels. A few others launched new businesses. While these pivots were launched quickly, there had been existing competition in the marketplace.
Myth no. 3: Invention is not an innovation
An invention is not an innovation until commercial success has been attained. Segway was a two-wheeled, self-balancing personal transporter that had a phenomenal launch in 2001, but the original model series was phased out in June 2020. Actual sales and profit were way below its projection. It did not live up to the hype that Segway would do to walking what the calculator had done to pad and pencil.
Innovation does not even need to be a new invention. Cebuana Lhuillier started as traditional pawnshop but introduced the “sachet” concept as part of its community financial empowerment vision. It was the first to convert a pawnshop into a microfinancial retail store that pioneered micro insurance, bills payment and many other services.
Myth no. 4: Innovation is not necessarily about tech disruption
Mang Inasal was started by entrepreneur Edgar “Injap” Sia II by combining fast food and barbeque chicken, both of which were already existing long before. But the recombination led to a new category, an innovation. Seven years after launch, with over 90 percent of the 300 plus stores franchised, it was bought by Jollibee at a P5-billion valuation. Brilliant recombination!
Mang Inasal’s market-driving innovation is not about technological disruption—proof that you can innovate without technology.
Cirque de Soleil—the circus act started by street performers in Canada that is now performed all over the world—did not make use of technology. Instead they used their skills and creativity. Cirque de Soleil started performing in upscale theaters instead of low-end tents, added sophisticated circus themes with lights and sounds and stopped the use of animals, then a conventional practice in circus.
Myth no. 5: Innovation is not about being first to launch
It is about being the first to succeed and do so continuously. Chooks-to-Go was not the first rotisserie chicken store in the Philippines. But it became the biggest and most successful integrated chicken processor with over 2,000 stores nationwide. It created not a product or process innovation but a business model innovation, coming from its desire to neutralize the potential impact of lower import tariff, as well as the huge bargaining power of major retail chains.
To succeed continuously entails the ability to convert an existing advantage into an ongoing market advantage. It cannot be about catching the first wave and missing the next wave. Kodak, Polaroid, Motorola, Blackberry, Nokia, Palm, Atari, Yahoo and many others were all winning companies once, but they were unable to catch the next wave.
For tech products, the importance of crossing the chasm of technology life cycle, or the stage between early adopters and early majority, is indispensable. This requires not just understanding and solving pain points of a well-defined target market but subsequently offering solutions that are reliable and complete. An example of both being the first to market and first to succeed is GCash, leapfrogging its number of customers from 20 million at the start of 2020 to over 50 million users by the start of 2022.
Life cycle theory points to existential threat to incumbent market alternatives, such as what Google has done with traditional advertising, or what Facebook has done with traditional media.
Myth no. 6: Continuous improvement is not innovation
Building on whatever an organization already has is technically not an innovation. It requires fresh thinking to create new value. While doing more (like continuously improving the layout of a website) or doing less (like giving discounts) can improve performance, it is considered business as usual and not innovation, unless a new value is created.
On the contrary, starting an original category or stopping an industry norm may lead to innovation. For instance, Mansmith and Fielders Inc. started an advocacy-based marketing consulting and training firm, and thus became an awards-giving body promoting Young Market Masters Awards, Mansmith Innovation Awards, Mansmith Market Masters Awards for senior mentors, etc. without charging entry fees. It stopped the use of powerpoint, audio video showing, and giving speeches in the annual Market Masters Conference, resulting in a highly interactive conference with discussion format, where the audience gave unprecedented satisfaction and approval rating versus the traditional marketing conference format.
As another case, Converge ICT was the first to launch fiber internet technology in the Philippines. It also stopped outsourcing infrastructure development by creating its own support subsidiary to lower cost.
What is innovation?
In summary, innovation
- has two elements: novelty and commercial success;
- requires fresh thinking for novelty in order to create new value, including a new recombination;
- requires continuous adoption by consumers, or commercial success; and, is not a one-time thing
It needs to be market-driven and continuously stay relevant to the consumers by adopting demand side thinking to create value and avoiding supply side thinking merely to reduce cost.
So what will you start doing and stop doing in your organization? Curiosity and constantly challenging assumptions of conventional wisdom and the company’s operating model are required.
The 2nd Mansmith Innovation Awards and Summit will be held on April 26-27 as a public service. Registration is free via mansmithinnovation.com.
Josiah Go is chair and chief innovation strategist of Mansmith and Fielders Inc., Innovation Awards winner of 2021 Asean Business Awards. He facilitates eight innovation courses. Details can be found at www.mansmith.net.