menu

frog design: Staying Ahead Of Innovation Challenges

frog design: Staying Ahead Of Innovation Challenges
Advertising

Change is the new normal: no industry is standing still these days, and this means that the innovation challenges we face are also constantly changing.

frog
  • 15 march 2011

We recently hosted at frog a group of mid-career executives who are in the Global Executive MBA program at the IESE Business School in Barcelona. We have done this collaboration for several years now, and it’s enlightening to see how the students are facing an ever-changing set of innovation challenges. Given the diversity of countries and industries (everything from energy to telecom, government to nonprofit) and company sizes (multinationals to startups) there are some striking commonalities that emerge. See if these feel familiar, and consider if they are trending up or down for your business:

Challenge 1: Commoditization

Two factors are conspiring to heighten concerns over rapid commoditization: price pressures from still budget-conscious customers, and market compression from more competitors (and more cut-throat competitors). These equate to a race to the bottom on price, and an inability to differentiate except on price. It’s a death spiral. Unsurprisingly, given the state of the economy, commoditization was even more pronounced in the students’ responses than 12 months ago, and few of them were yet seeing the end of the spiral.

Challenge 2: Simplicity
Last year the focus was on how customers were becoming more demanding. This year the trend has shifted subtly: customers now are seeking simplicity. This means bundled solutions where you provide an end-to-end package, especially for B2B companies. Customers are willing to be offered fewer options if they can get a lower price (see Challenge 1). For companies who are used to working in high-touch, high-segmentation, high customization modes (very common until two-to-three years ago), this can be a difficult shift. One also has to be wary of demands shifting again, when the buying mentality changes back to buying best-of-breed from multiple vendors.

Requests for “simplicity” can also be a signal that customers see your offering as generic, which means they could start treating you as a commodity permanently, and not just temporarily while the economy is bad. Treat this as a warning that your offering may not be as unique and valuable as you think it is.

Challenge 3: Risk
The theme of our meeting was innovation, and most of the companies represented by the students had been undertaking a variety of innovation efforts for several years. These had largely stopped or been dramatically scaled back in the last two years, and few were starting back up at significant scale. Based on the students’ feedback, companies’ appetites have shrunk in the last year for taking risks on innovations and new opportunity areas.

This was a source of frustration for many of the students, who felt that Challenge 1 (commoditization) cannot be adequately solved without facing the risks that come from innovation. I agree. Most companies have cut so much in the last few years that top-line growth has to be the focus, especially if you are not a company inherently set up to be optimized for commodity selling.

Will These Trends Continue?
Change is the new normal: no industry is standing still these days, and this means that the innovation challenges we face are also constantly changing. A worrying sign from our small sample is that many companies are still in too reactive mode to these innovation challenges, and are not doing enough to push smartly into new areas and lay the seeds for growth when the recession finally clears. They would do well to take a step back from the rush of day-to-day operations and consider a strategy for the next one-to-two years that does not assume commoditization, simplified offerings, and risk-aversion will continue to be the basis for competitiveness. What will be the next set of competitive dimensions? If you’re not asking these questions now, you will be yet further behind when the economy really comes back to life.

This article originally appeared in the Harvard Business Review blog

Image by flick user thrig (cc)

By Adam Richardson

Reprinted with kind permission from design mind, a publication of global innovation firm frog design.

Advertising
Trending

Lyft Gives Free Rides To Those Who Have Had Too Much To Drink

Advertising
Syndicated Yesterday

Banned Books Week Urges People To Seek Out Controversial Works

Joining the annual celebration of the right to read, US author Jessica Herthel called for 'more information, more voices' to protect diversity

Augmented & Virtual Reality Yesterday

Outdoor Camp Presented In 360° VR By X Games Gold Medalist

The video features campers riding BMX trails, zip lining through the woods, and performing big-air jumps

Trending

Get PSFK's Related Report: Future of Automotive

See All
Travel Yesterday

Boeing Wants Passengers To Control Their In-Flight Experience Through Their Phones

The airline manufacturer is embracing automation through a new generation of mobile travel apps

Augmented / Virtual Reality Yesterday

VR Surgery Videos Offer Interactive Medical Education

Dutch startup MDLinking hopes to globalize communication between students and medical care professionals with virtual reality content

Related Expert

Seth Porges

Contextual Closet

Culture Yesterday

Use Twitter To Learn A New Language

tDict is an app that uses the social media platform to help you search for words in local dialects

Mobile Yesterday

This Startup Wants To Digitize The Loose Coins In Your Pocket

CoinOut is a new app that lets you save your extra change from cash transactions as electronic funds

Advertising Yesterday

McDonald’s Is Accepting Trash As Currency In Exchange For Burgers

An initiative in Stockholm is trying to keep streets clean while satisfying hunger

PSFK LABS REPORT

Future Of Automotive
Scenarios Driving The Digital Transformation Of An Industry
NEW

PSFK Op-Ed september 21, 2016

Creative Agency Founder: Using VR As A Race Relationship Tool

Maurice Bernstein, CEO and Founder of Giant Step, explores the value in transforming headsets from high-tech entertainment tools into empathy machines

PSFK Labs september 22, 2016

The Future Of Work: Why Innovation Is Every Employee’s Job

PSFK Labs sits down with management at Johnson & Johnson to learn how the company comes up with their next ‘big idea’

Culture Yesterday

Google Is Using Virtual Paper Airplanes To Bring People Closer Together

The tech giant released an app that lets people throw their good wishes out into the world on the International Day of Peace

Advertising Yesterday

Get Paid For Traveling In San Francisco After Rush Hour

BART Perks rewards commuters who take early or late trains by giving them extra points to trade for money

Culture Yesterday

Artist Designs Covers For Books That Don’t Exist

Published by the fictional 'Specious Books,' the subversive works facilitate a conversation regarding the artistic integrity of graphic designers

Work Yesterday

Editorial Roundtable: The Arrival Of The People-First Workplace

Managed By Q, Soma, Workbar, Primary, AltSchool and thinkPARALLAX enumerate the reasons why companies need an employee-embracing workforce in order to exist

Food Yesterday

Bringing Food Innovation To America’s Crowded Milk Market

a2 Milk's Blake Waltrip, Chief Executive of the USA region, discusses how the distributor plans on bringing the popular drink for the dairy-sensitive to the States

PSFK LABS REPORT

Future Of Work
Cultivating The Next Generation Of Leaders
NEW

Financial Services Yesterday

Device Makes Digital Currency Feel Tangible

The concept gadget wants you to experience the highs and lows of spending money

Design & Architecture Yesterday

Why Building Better Offices Is The Key To Employee Engagement

Interaction Designer and Audio-visual Technologist at ESI Design illustrates the value in creating environments filled with surprise and delight

Augmented / Virtual Reality Yesterday

NBC Is Planning To Stream The Presidential Debates In Virtual Reality

Partnering with AltspaceVR, the broadcaster offers another way for Americans to engage with the election season

No search results found.