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The consulting firm A.T. Kearney published results of a client who reduced their concept development cost by 400% and generated $750 million in new sales by using Predictive Innovation. Well on the way to $ 1 billion from just one client. They are a large consumer goods company so you can likely outperform their results. Since I formalized Predictive Innovation over 12 years ago people asked for case studies about the success of using it. Hopefully, this will satisfy the fence sitters and get this innovation revolution rolling.
Some of the other results are equally fascinating. They increased their concept-to-new product conversion ratio by 9x. That type of improvement is typically unheard of in big companies. Keep in mind that their ratio is still only 27%. They can easily increase it another 3x for a total of 27x. Imagine how much your top line would grow if you released 27 new profitable products.
They also increased their project success rate 2.5x from 20% to 50% which is still low but 2.5x success meant a 300% return on investment. That beats the stuffing out of the stock market.
If you work at a large company this proves you can make large improvements. Their results were not a special case. In fact, they were low. You can do much better especially if you are in a low innovation industry. You have more opportunities for big improvement. And if you are in a high growth industry the sky is the limit. The important thing is there is a proven method to reliably create high value innovations from readily available resources.
I’ve been publicly saying for over 12 years you can predict innovation. You can get reliable results. You can drastically increase your sales and your new product success rates. Hopefully now that big firms are announcing the benefits more people will ask me to help them create the innovation results I’ve demonstrated are possible.
The world business environment has fundamentally changed Customers can now both find and filter information to get what they want. This means traditional interrupt based advertisement is losing its effectiveness. At the same time customers can search the entire world for exactly what they want. Technology is also making it possible for customers to easily build more of what they want for themselves. So to succeed you need to:
Provide exactly what the customer wants, when the customer wants it, in the way the customer wants, and for the price the customer is willing to pay.
And you must communicate to customers you have what they desire while the customer is actively trying to ignore you because so many others are trying to get their attention.
Innovation gets you half way, but you can’t just innovate, you must Predicatively Innovate to stay ahead of the competition. And how do you communicate something new to people who are ignoring you? Search based marketing won’t work very well because people must first know something exists in order to search for it. That is why Evangelism Marketing is so important.
The great news is Evangelism Marketing doesn’t just introduce a new product; it builds the confidence of each level of user from early adopter to mainstream to late comers. But it’s not just a technique for selling. Evangelism Marketing guides the processes of innovation. In order to get customer to freely sell your product for you, you must first Make them so happy they want to do it. Giving them exactly what they want when they want how they want in the way they want for the price they are willing to pay is essential to Evangelism Marketing.
Evangelism Marketing is a relationship. You are helping someone by giving them information. They in turn give you back information and continue to spread the information you gave them. You might say surveys and marketing research does that, but it doesn’t. How do you get someone to take a survey? Often you can’t. Even with bribes it’s hard and the data is frequently heavily skewed. What about getting customers to freely spread the message? Traditional top down concepts don’t work in a distributed environment. More power, more widely spread is the wave of the future. There are HUGE opportunities for people willing to embrace it and horrible disruption for those that cling to the old way. Which will you be?
Here in the Detroit area the economy has been brutal. A bunch of people have been laid off. Many would have loved 6 months of warning but the truth is almost everyone that’s been laid off had much more than 6 months warning and they didn’t do anything. That’s not to say they were lazy or stupid. Most of these people didn’t know what the warning signs were. And the rest didn’t know what to do so they did nothing and simply watched their financial future go off a cliff. Now they are unemployed, many have experienced bankruptcy and we aren’t even suppose to be in a recession.
It doesn’t have to be that way. There are a few very simple to spot signs and even better there is something you can do if you see the warning signs.
- Higher price per unit
- Fewer units sold
- Fewer opportunities for advancement
Is your per unit pay increasing? If you get paid by the hour or even an annual salary is it going up? This is a very bad sign. Huh? Getting paid more is bad? No, getting paid more is great. Getting paid more per unit is bad. It’s the first step towards the cliff. If you can for a moment, look at it from the customer’s view point. You go to the store and the price of bread goes up. For a while that might be OK. And if the quality of bread gets better then you don’t mind at all. But if the price keeps going up and up you start to think, “hey can I get bread somewhere else without paying as much?”
The most dangerous part of an increasing price per unit situation is when you are making the money, you don’t see the problem coming. You might sell fewer units, in this case that means get more time off, cool. You are making more per hour so your income stays the same or even goes up. You don’t see any problem. And there might not be a problem, but sooner or later someone will move in and do your job for less money than you are doing it. Remember, you used to do your job for less money.
Again, you might not care right away that someone else will do your job for less money. And maybe you are doing a different job or you are more productive so you feel its not an accurate comparison. You still are at risk. You probably did what anyone would do when they made more money. You spent more money. I remember when I was in college. Every week I would take out $20 from my checking account and it would last me all week or more. Now I take out $300 and that doesn’t count the house payments, car insurance, cell phone bill, cable bill, etc. I used to live very happily on $24,000 a year and now I need $80,000 to just pay the bills. How about you? Have your expenses increased? How much do you need now?
So when you are way up at the top of the price per unit scale you discover you can’t go any higher. And there are a bunch of guys below you moving up the ladder right behind you. There isn’t any place to move up and you can’t turn around. And that is when you see the cliff and the pink slip.
What is the solution?
There are two solutions. Both require innovation. But you must first understand that in order to successfully innovate you must provide more value to someone and preferably to more people. Again, picture yourself at the store. If your favorite store consistently lowered their prices you would be very happy. You would tell your friends. If your favorite store lowered their prices and increased quality and service you would never leave. You would probably refuse to shop anywhere else and insist your friends do the same.
That is exactly what you need to do in your life. Provide more, better, with less hassle or cost.
That can’t be done with more time. It only happens with some serious innovation. Aren’t you glad I also teach how to achieve serious innovation?
So the first approach is to recognize early that your on the march up to the top of the price per unit cliff and change directions. What if you can already see the edge coming? What can you do? Easy, choose a different path.
There are lots of customers in the world, 6 billion at last count, with more each day. As each need is met customers look for a new “more, better, for less”. Find one that matches your abilities and start making your new customers happy. In business speak this is creating a new or expanding an existing market. How can you do that?
Use the OutCompete Predictive Innovation method.
- Identify the ideal product or service
- Choose one unmet need
- Plug that need into the solution grid to generate at least 15 solutions
- Rank the solutions by value
- Generate the opportunity map
- Follow the opportunity map to satisfy each need in order of value.
Here is a clue if you didn’t already realize it. The same rules apply to businesses. And if you are in charge of a business on the path heading towards the cliff you can prevent that fatal leap. Remember if you don’t stop the business from heading over the cliff its more than one person getting laid off. All the families of the workers depend on you to make a good decision.
Now is the time to learn how to innovate. It isn’t magic and doesn’t require some special creative talent. It just takes learning and applying an effective system, the OutCompete Method can help.
- Look for the warning signs in your job, business, and industry.
- Think of at least one part of your product or service which is less than ideal.
- List three ways to improve that one feature that is less than ideal (you don’t need to know how to achieve it, just the basic approach)