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Trick or Treat

| On 31, Oct 2007

Cass PursellHalloween is a good day to remind us of the choices we’re faced with in the context of our innovation conversations. I don’t know if the “trick or treat” paradigm was invented by Halloween, but it was certainly popularized by the holiday. It’s so common to hear the words, I never even think of the inherent choice they imply, the hidden threat they contain. Trick or treat? I’ve chosen wrong in the past, and wound up with a yard full of toilet paper damp with morning dew. This is a good day, maybe the best day, to talk about choices.

I think most of us involved in the innovation conversation have already decided that choosing to develop and maintain an innovation intention is a good idea for the organizations we work for and with. It’s possible, though, that we made the choice so long ago we’ve forgotten how important it is to re-set the intention, to remind decision-makers (and maybe even ourselves) of the arguments for actively pursuing a strategy that centers on innovation. I can think of two choices inherent to the innovation conversation that should be re-set at least once a year: to innovate or not to innovate, and when and how aggressively to pursue an innovation-focused strategy.

My best argument for why to innovate (I’d like to hear yours, too, so please feel free to comment back) goes something like this: revenue, profitability, market share, and customer satisfaction are all examples of metrics that provide insight into your organization’s current health and market position. However, none of these metrics can help you develop strategy for tomorrow; they are inherently backward-looking, and markets change too quickly to accelerate into the future using only your rear-view mirrors. Value and innovation, however, are forward-looking and work very well together in creating strategy. Without paying attention to innovation, your organizations will be stuck with with strategies that are designed to keep pace with market trends, which is what everyone else in your market space is already doing; without innovation, you’re stuck in a cut-throat environment with margins that must inevitably decline over time. Value is a perfect compliment to an innovation focus, as it requires you to pay attention only to innovations that buyers are willing to pay for.

After reminding yourself of why strategies based in an innovation intention are superior to those based on competitive benchmarking, it’s a good idea to revisit your assumptions on which markets have the most opportunity to value-innovate. In general terms, markets are made up of companies that either compete on offerings common to the industry group (me-too organizations), companies that compete on their innovative offerings or innovative approaches to the market space, and companies that are somewhere in between. While two of the three market types require innovation in order to successfully compete, the third – the market made up of me-too business – offers excellent opportunity to value-innovate, expose new markets, and drive double-digit growth.

So there you have it – you can be tricked into falling into the trap of designing strategy that will lock you into entrenched, head-to-head competition, and all the morning-after clean up those strategies entail, or you can treat yourself to a strategy based on value-innovation and enjoy the pleasure of having a market all to yourself. Choosing right is like having a bag full of candy and no one to share it with.