Align Customer Needs, Innovation Strategy for Growth

While being innovative is important, it's the execution of the innovation strategy that is even more critical to boosting a manufacturer's bottom line. Gone are the days of innovating for its own sake; customer needs must be at the center of any such endeavor.

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If large corporations were people, they would have the lowest life expectancy on Earth. Only a tiny fraction—less than 0.1%—reach 40, which is almost a decade less than the 49.44-year-human lifespan cited as the shortest on Earth in the U.S. Central Intelligence Agency’s 2014 World Factbook. Centenarians, such as General Electric, Johnson & Johnson and IBM, are remarkable and accomplished exceptions to this rule. 

Some corporations are tripped up by a difficulty in innovating successfully, while others “are ruthless about change,” notes The Wall Street Journal, citing a study of 6 million companies by management professors Charles I. Stubbart and Michael B. Knight that determined this short-lived lifespan. “Successfully” is an important qualifier in this analysis, according to the article, because many companies have spent countless hours and hundreds of millions of dollars trying to harness the power of innovation but have been unable to execute. 

In fact, about 10% of innovative ideas for new goods and services succeed, according to Mark Payne, a consultant responsible for successful innovations at Coca-Cola, Starbucks, Samsung, General Electric, Procter & Gamble and others. He told Fortune that many ideas fizzle because companies put “the ‘wow’ before the ‘how,’” wasting precious time and money pursuing unworkable plans that should have not gotten off the drawing board.

Obsolescence and Ongoing Improvement

Of course, every company is different, facing divergent internal and external structures, processes, pressures and product offerings, and most significantly, divergent customer wants and needs. Otherwise, developing an innovation strategy could be a simple matter of imitating industry-leading innovators such as Apple, which has released one game-changing product after another and created relentless disruption not only for competitors but also for its own highly successful products. 

Apple’s fearlessness regarding ongoing improvement, as when the iPhone absorbed the iPod’s audience, and more recently when the iPad mini took market share from the iPad, as noted by Fortune, helps explain why this spry 38-year-old firm appeared at No. 2 of 50 in Fast Company’s “Most Innovative Companies 2015” list. Instead of imitating others, true innovators look at what makes their company and business proposition distinctive and exploit those differentiators.

Three Steps to Innovation

Even across diverse companies, there are some best practices that can help guide successful efforts to boost revenue through innovation. They start with putting customer needs at the center of product cycles, as management consultant Randy Ottinger notes in Forbes. He offers a solid, three-point plan that tends to work when company leaders set out to change course to boost revenues: 

• Management unites behind a strategic opportunity in the marketplace and pulls a team together around a clear vision for exploiting the opportunity, instilling a sense of urgency and purpose in the team to inspire it to achieve the goal.

• While one group of employees keeps an eye on the ball for existing sales, another cross-functional team serves as innovators to knock down barriers and speed growth toward the goal.

• Leadership orchestrates the process and recognizes the final challenge:  Strategies must evolve. Thus leaders clear barriers to implementing the innovation until it begins to generate revenue, continuing to nurture it past launch to assure success. 

Putting Customers First

To execute, keeping customers at the core of any innovation strategy is key to harnessing creative power and generating new revenues, as Harvard Business School Professor Gary Pisano notes in the Harvard Business Review

"Unless innovation induces potential customers to pay more, saves them money, or provides some larger societal benefit like improved health or cleaner water, it is not creating value,” he points out. And without value to customers, an innovative product does not succeed.

One innovation success story with customers at its heart comes from The Guardian newspaper, which gave its readers a voice in its U.S. website redesign, relying on some 40,000 comments from them. The company was rewarded with a 40% year-over-year growth in readership, as noted by Fast Company, which named The Guardian one of the 10 most innovative media companies in 2015.

Some innovations have been developed even before customers have been able to voice their desires to see them. Companies at the forefront of their industries are able to anticipate and know what customers want before those customers may even be aware of how such breakthroughs would make their lives better. 

Consider Tesla, which has become one of the most disruptive innovators in America by creating a product its customers didn’t even know they wanted. The company’s fully electric cars have delighted drivers precisely because it put customers at the center of innovation. Tesla’s team has designed vehicles that feel like sports cars, yet are so safe and quiet many drivers get the sensation they are a step above gas-powered cars.

At Tetra Pak, we also have focused on innovation that serves our customers’ wants and needs, seeking to boost bottom lines. Recently launched globally, our eBeam system for package sterilization, which uses electron beams rather than the industry-standard practice of immersing packages in hydrogen peroxide, is a case in point. Eliminating the need for hydrogen peroxide—some 300 liters per 1 million packages, minimizes a physical obstacle to speeding up the line and saves costs. For some package sizes, this innovation enables lines to go from 24,000 packages per hour to up to 40,000 packs per hour. For our customers, eBeam also removes a source of waste, makes water recycling easier and yields better environmental performance with lower energy consumption.

In this ever more fast-paced and turbulent time for corporations, invention and reinvention that put customers at the core of innovation strategy are corporations’ best hope for adding value, driving growth and accomplishing that goal that eludes so many: longevity.  

Brian Kennell is president and CEO, Tetra Pak Inc., U.S. & Canada. He has been with the company since 1991, most recently as vice president of finance and change transformation for all of North America, which included reorienting his team to become proactive business partners and strategists. His leadership focus is on driving development and growth through superior product quality, sustainability efforts and customer service. Tetra Pak (tetrapak.com/us) is the world's leading food processing and packaging solutions company. Further insights are available at DoingWhatsGood.us.

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