Can the government’s innovation initiative innovate us out of the funk?

Can the government’s innovation initiative innovate us out of the funk?

Dec 18, 2015 | Collaboration, Governance, Leadership, Strategy

Peter Drucker said something like “innovation is the only truly sustainable competitive advantage”.

Having just re-read his 1985 musings on Innovation and Entrepreneurship, after 20 or so years, the degree of his foresight is truly astonishing. It is great to finally have a Prime Minister who actually understands how to make a buck, and the strategic, commercial and competitive challenges of bringing new products to market. He may be one of the few in Canberra who do, but at least it is a fair start.

With much fanfare the Government on December 3 tabled in parliament a Senate  report on ‘Australia’s innovation System‘  However, with the exception of Professor  Roy Greens valuable contribution as an appendix, I see little of real  value in the report beyond a few worthwhile observations and some useful changes to the tax treatment of entrepreneurial endeavours.

Our venerable Senators have had summarized for them documents (I wonder how much consideration these busy important people actually gave to the detail of the submissions) that may have started with some valuable ideas but which have been sanitised into a document long on rhetoric and disturbingly short on anything of value, which can only be delivered when someone asks the question “What now”?

As someone who has run an agency outsourced from the Federal bureaucracy charged with identifying and delivering innovation to a specific sector, I can attest from first hand just how powerful the cultural forces are against anything with even a hint of risk, change, or long term thinking in the now politicised public sector.

Successful innovation takes all three, plus a clear definition of the problems to be addressed.

There is little evidence of anything in the report that encourages me to think that the status quo will be truly challenged.

It is useful to look to successful models, and there are none more successful than the US since the second war. Most will now assume I am jumping to Google, Apple et al, but no. if you look deep enough you will see the hand of government at a deep level making very long term investments in basic science, building knowledge that the private sector then leverages with innovation into commercial products delivering new value.

A scientist named Vannevar Bush (no relation to the Bush pollies) was commissioned by President Roosevelt just before he died to report on what needed to be done to promote research and development and the commercial innovation it drives, just as this senate inquiry has done. Bush reported to president Truman in 1945, delivering his report, “Science, the Endless Frontier” which laid out the proposition:

“Basic research leads to new technology. It provides scientific capital. It creates a fund from which the practical application of knowledge must be drawn”.

Directly resulting from this report was the National Science Foundation. Defence Advanced Research Projects Agency DARPA  and several other institutes charged with the charter to do basic science, of discovering new knowledge.

When you look at all the products disrupting industries up to today, and changing our lives, many if not most of them have their roots in the various agencies spawned by Bush’s farsighted ideas, and the ability of the scientific agencies concerned to outlive the political cycle.

Now compare that to Australia’s situation.

CSIRO used to be a great agency, capable of developing technology like the wireless technology in the 90’s now in every mobile phone after years on the shelf until a commercial use with smartphones was found. Scientific Capital at work.

Now CSIRO is a politicised dysfunctional rump of its former self, with a little of the funding ripped out over the last 20 years of hubris restored via this latest in a long line of Innovation “initiatives” to the sounds of grateful clapping. I see few practical remedies for the past 20 years of innovation vandalism being actually addressed, although at least a real start may have been made.

As I always say in workshops, “the best time to start an innovation initiative was 10 years ago, the second best time is now”.

Lets hope it is not too late for Australian manufacturing.

The lesson from Nurofen’s leadership folly

The lesson from Nurofen’s leadership folly

Dec 15, 2015 | Branding, Leadership, Sales

Reckitt Benckiser did everything right, and they did everything wrong with their Nurofen brand.

How can that be?

The ACCC has now successfully prosecuted Reckitt Benckiser in the federal court for misleading consumers with their Nurofen brand of painkillers, requiring them to pull product off the market within three months.

There will also be a fine, potentially a significant one to drive home the message.

In the process, years of investment in the brand will be trashed.

Who will ever trust Nurofen again?

On one hand, I have absolutely no sympathy for a corporation of any type that knowingly and deliberately perpetrated this sort of misleading communication. The writing has been on the wall some time after Nurofen won Choice magazine’s coveted “Shonky Award”  which garnered a fair bit of publicity at the time, including a star appearance on the ABC’s ‘Checkout” program. That Reckitts chose to ignore the ‘social warnings’  and voluntarily adjust their communication is a huge failure in leadership.

The marketing however has been very good over a long time.

Having run large corporate marketing departments, I can understand exactly how it all evolved.

An experiment with a brand extension generated added market share, consumer preference and retail shelf space at premium prices and margins. The marketing people responsible were recognised and rewarded by their employer and peers. Who would not take the next step, and seek new segments?

Back pain, period pain, migraine relief, et al, commercially seductive stuff.

Nobody would tinker with that sort of success. Anyone who dared to suggest that it was wrong, and they should walk away from the measurable short term success in favour of being a brand worthy of long term trust, a truly difficult notion to measure, would find themselves seeking other opportunities very quickly.

The failure is in the leadership of Reckitt Benckiser.

Reckitt Benckiser management simply  failed to reconcile the short term financial benefits of successful brand marketing with the long term benefits of having a brand and business that demonstrated leadership by building trust. They failed the basic test of personal leadership which is to do what is right, even when it is  not necessarily expedient.

Clearly the ‘leaders’ of Reckitt’s were there not as leaders, but as managers. They are undoubtedly good at managing the numbers, negotiating the deal, maneuvering amongst the corporate politics, but would you want them beside you when the going got really tough? Instinctively you know it would be all about them, they would  not ‘ have your back’

It is easy to forget that business is about people, not corporations.

People buy products from people, not businesses.

While we all talk about ‘relationships’ endlessly, particularly in the digital and social spheres that now so dominate our lives,  we tend to forget just how hard it is to maintain a real relationship.

One night stands are pretty easy, there is  no real personal investment, marriage is hard just because there is that investment required.

We should never forget the difference.

Small business beating the barriers of FMCG category management

Small business beating the barriers of FMCG category management

Dec 2, 2015 | Customers, retail, Small business

Small business beating the barriers of FMCG category management

One of the core challenges in category management is simply the way the term has been interpreted operationally.

Let me explain.

Category management is a data intensive game, the numbers count for everything, and the depth that can be plumbed nowadays with the combination of scan data, loyalty cards and increasingly social data is astonishing.

However, this can lead to a sort of blindness.

If it is not in the data, by definition it does not exist.

Right?

Wrong.

Think about where all  the great innovations have come from.

“Left field” is the usual term. Few genuine  innovations have come from the established orthodoxy of any category, they involve things that currently do not exist or exist in another, unconnected category in a different form.

The disciplines of Category Management, weather we like it or not tend to eliminate these outliers, thus limiting category innovation.

Not the desired outcome.

The challenge of running the data intensive margin maximisation regime by leveraging existing category variables while minimising risk stifles true innovation while encouraging range extension behaviour.

Innovation by its nature is both risky and outside the accepted parameters of category consideration. Successful innovation  requires both leadership and  wisdom to be displayed before a guernesy is given for the investment required to get a new SKU on shelf, even if it is a replacement for a tired item.

Neither management quality is in great supply.

It is in this space that SME’s can build a competitive position against their larger competitors who may have the advantage of scale as well as  category captain status, but are failing to be genuinely innovative. By building a history of innovation in outlier and niche retailers, independents, and direct to customers, smaller suppliers can build the  “attraction  quotient”  with the supermarkets, and have the chance to retain some control.

Become successful in those outliers and the mass retailers will follow, that is their nature, they are followers.

Somehow you have to find a way to manage by both the data, and a product benefit /brand narrative that is entirely from the perspective of the consumer.

The mindset change for small business success

The mindset change for small business success

Nov 30, 2015 | Branding, Innovation, Small business

The mindset change for small business success

On one hand, digital tools offer small businesses the opportunity to look big, to compete with the big guys on a global stage.
On the other, small businesses have the ability to seek out niches that are too small for large business to be bothered with.
Innovation always emerges from the fringes. Clayton Christianson’s “Innovators Dilemma” maps the changes in a number of instances, sputtering inefficient little “Honda 50’s” bikes evolved to take over the motor bike markets, similarly, poor quality, cheap cars from Toyota evolved to replace the behemoths of Detroit.

Kevin Kelly’s 1,000 true fans article was one of the first to combine the ideas of the long tail and scale, positing that there was a spot at 1,000 fans that could be a living if you had that many raving fans prepared to buy what you had for sale.
In effect, the riches are in the niches.

I deal with small businesses all the time, and most will remain small because they do not want to engage with the idea of niches, the notion that they may be narrow but deep, and hard to find, but once found, they can wind their way around the world.

My son is a photographer, but old school. He uses black and white film with large and medium format cameras. Why does he bother in a world where everyone has a great camera in their pocket, why carry 20kg of gear over kilometres to catch a photo. Good question until you see one of the resulting photos, something that touches a place that the camera in your pocket does not know exists. It is a niche, probably a few dozen people in Sydney inhabit, say 30 in 3 million, infinitesimal, but take the 5 billion people in the world, and suddenly there is a niche way too small to be of any value to any of the photographic supplier companies, that has thousands of people in it around the world.
In those thousands there is a living, and riches of other sorts as a bonus.

Find your niche and mine it.

2 truly powerful innovation words

2 truly powerful innovation words

Nov 27, 2015 | Innovation

2 truly powerful innovation words.

Harnessing the power of “re-imagination” can turbo-charge your innovation efforts.

“What if……..”

I was reminded of the power of these two words a few weeks ago when a workshop participant used them while in a breakout group discussing a problem.

He simply asked ‘What if” and the conversation took off.

Having run many innovation sessions, there almost always comes a time when I ask this question:

“What if…………….”

These two words offer an opportunity to re-imagine the situation with licence to go beyond the barrier and imagine the benefits that would accrue from the solution, without worrying about the detail of the solution.

I once asked a group considering the marketing of financial products “what if you could have 30 minutes with Warren Buffet, what would you ask him”?

The resulting conversation led to several initiatives that proved worthy of detailed examination and in once case subsequent successful launch.

Consider the biggest problem facing you right now, and ask yourself “What if I could solve the X problem………”

How powerful is that?

Try it for yourself on something facing you, a problem, a fear, whatever is truly bothering you right now.

“…………………………………………………………………”

See, it works!