Having explored in previous posts how to explode a concept to improve the odds of finding a winning combination, and looked at the pros and cons of different approaches to evaluate these ideas, focusing especially on how you measure synergy, we now turn to the issue of getting your sampling right.
In order to savour a good whisky, you need to start with the right glassware. So before we start this whisky lesson, get your tumblers out of the sideboard, and place in your recycle bin these relics designed not to accentuate, but to dull the taste of bad, prohibition-era, bootlegged moonshine. Instead, reach for a small, round-bottomed wine glass, brandy balloon, or even certain sherry glasses, or ideally a tulip-shaped whisky nosing glass. And much like your whisky deserves the right glass, market research deserves the right sample.
The consumer sample should all be relevant for the task in hand, i.e. they should be regular malt whisky consumers. Hence for qualitative methodologies, researchers quite rightly recruit against a pen portrait of their archetypical or core target consumer. For the co-creation phase, we might want those with above average involvement in this category because they are likely to be able to contribute the best ideas. Enter Archie:
Archie is a self-employed consultant who can afford to work when he chooses, following a successful career in the city. 5 years ago he moved out of his Bloomsbury apartment into a converted farmhouse in the Oxfordshire countryside - making London easy to reach for meetings, and easy to ignore the rest of the time.
He was introduced to whisky by his boss who toasted new deals with a premium blend, but developed a taste for malts when he and the boys chased Bollinger with Laphroaig when they had something to celebrate like the fact that for once they were not pulling an all-nighter. His palette is now more discerning, preferring an 18 year old Glenlivet, which he enjoys while doing the Telegraph crossword when his wife Prim has gone out for the evening and his terrier Wolf stretches in front of the fire...
And this is why you may be unlikely to be recruited for a focus group on the subject of malt whisky unless you are an affluent, late middle-aged male who spends his winter evenings in his slippers by the fire, dram in hand. And have a wife called Prim.
This also means qualitative samples are not necessarily representative of the market, nor will they often try to be. Archie is probably going to have more detailed ideas to contribute than the "average" consumer. At the co-creation stage, generating only ideas that only have mass appeal is not the concern, for the breadth of appeal of the leading ideas will be evaluated subsequently.
Beyond this, there should also be a degree of homogeneity within the sample. Why? Because if you're going to put consumers in a room together, the conversations within the group will flow more smoothly if they are from the same psychographic segments. Where is this room? Increasingly these days, it is virtual chat room (a.k.a community), but if offline, respondents will necessarily be sampled from the same geographic location.
The difference in the need for a qual sample and a quant sample to be representative could barely be starker than that between a mellow aged Speyside and a young spicey Islay. As the name implies, the purpose of quantitative research is the application of robust numbers, which will only ever be representative of the sample interviewed. Do you want to know which are the most popular ideas among all whisky consumers, or only among those who do a bit of high-end consulting to keep a hand in following early retirement (and call their dog Wolf)?
So before we copy and paste the qualitative screener into our quant survey, let's review the relevance of each recruitment criteria:
1. Regular category consumers
Yes, this remains absolutely relevant. Our need to talk to consumers who are active in this category remains equally valid. What is your category? On-shelf neighbours provide a good starting point, but also consider who volume is likely to be sourced from. This will help determine how narrow or broad? Are we only interested in buyers of aged Speysides, a broader whisky sample, or anyone who spends more than £30 on a bottle of premium spirits?
2. Above average category involvement
For co-creation we targeted these consumers as being the most likely to contribute new ideas. In the quantitative stage the task is easier for respondents - they only need to provide feedback to ideas presented. And while infrequent users individually may consume less, collectively they contribute a significant proportion of category sales. Furthermore, studies such as those done by the Ehrenberg-Bass Institute demonstrate that what appeals to lighter users appeals equally to heavier users, so eliminating lighter users from our sample won't change the insights generated, but will negatively impact incidence, which inflates fieldwork costs and can stretch project timings.
3. Demographic homogeneity
Quantitative respondents do not have direct, peer-to-peer interaction, so group dynamics is not the relevant cause for sample homogeneity it is for many qualitative methodologies. Nor is it necessary to use demographics to define category users. Just because most baby wipe buyers are mums, doesn't mean we should exclude Archie if he also buys them because they're the only thing that gets the stains out for the carpet when he falls asleep, half drunk glass of amber nectar in, and slipping out of hand. Quotas, not terminates, are better guarantees of sample quality.
4. Geographic location
In the days before online research (anyone remember that?) geography played a key role in the science of sampling, to mitigate the risks of consumers from one particular locale being very different from the geographically dispersed peers. For quantitative research, thankfully we now have the internet and a wide net of online panels with consumers from every corner of your geographic market, and with a minimum of quota controls we can ensure samples diversified not only by mileage, but also by community size.
Where qualitative samples may be narrow to hone in on the most quintessential consumers, quantitative samples should be broad to be representative of as many potential buyers as possible. To force a quant sample to adhere to a pen portrait definition reduces the validity of the results as much as it increases fieldwork costs.
A highlight of Ben's recent holiday in North Devon was watching the craftsmen of Dartington Crystal hand-blowing exclusive bottles for a very premium whisky. He has now returned to helping organisations make better marketing decisions by including consumer wants, needs, and behaviours alongside the corporate agenda. You can follow Ben on Twitter at @BenLangleben.
Over the past few weeks the proposed 2.3% medical device industry tax has caused anxiety among industry professionals. While there is a lot of discussion on the need for the medical device industry to revolutionize their commercialization process, there has been little emphasis on actual solutions that will bring more customer-centric products to market.
I’ve been fortunate to work with individuals in the medical device industry that are using innovative approaches such as evolutionary optimization to understand what physicians and economic stakeholders would use and purchase today, given the current healthcare environment.
Traditionally, the medical device industry focused on physicians who were willing to pay more for products with incremental improvements. However, with the implementation of the Affordable Care Act, physicians will now work with individuals, clinicians and non-clinicians, that sit on value analysis and purchasing committees to not only evaluate the clinical benefits, but also consider the economic value of a particular product. This means that medical device companies will need to develop more customer-centric products that are clinically relevant and economically valuable to a broader group of key stakeholders versus just physicians.
Evolutionary optimization is a proven approach to product development and marketing innovation that has been used for over a decade by Fortune 500 companies. Many of the companies that have adopted this approach faced similar challenges that companies in the medical device industry are facing today. They had to bring more innovative products to market with less time, money, and resources. Evolutionary optimization helps overcome this challenge by allowing companies to optimize through the exploration and selection phase of the product development process.
This unique approach engages targeted customers to vet through a robust space of ideas in a holistic manner. This enables marketers, engineers, and market researchers to test more inputs such as features, benefits and even economic and clinical information, earlier in the process to make informed decisions to fund further development or reallocate time, money, and resources towards another project. While the product development process in the medical device industry can cost between $5 and $300 million dollars and take 2-5 years, evolutionary optimization is cost effective and takes 7-12 weeks to optimize and to provide clear direction for the next phase of the product development process.
The capacity to test more ideas with physicians and other key stakeholders empowers project teams and increases the chances of identifying a customer-centric idea or product. Evolutionary optimization also dramatically shortens time associated with iterative rounds of qualitative research that are often done today in the exploration and selection phase.
The need for the medical device industry to reinvent itself has never been more critical as it is today. Over the next five years, medical device companies will compete in a $350 billion marketplace. As other industries have had to adapt due to changes in the external environment, the time for the medical device industry to revolutionize their commercial strategy is now. With the need for change, there is a great opportunity for individuals in the medical device industry to lead that revolution, by tackling the challenge of developing customer-centric products at lower costs.
Sasanka Atapattu is a Director of Client Services at Affinnova and currently leads initatives in the Medical Technology Industry.
The story so far: In the first installment of this mini-series, award-winning new software was used to organise a multitude of ideas for each aspect of a new whisky, covering the name, age, cask-finish, reason to believe, tasting notes, and bottle colour. Last month's post examined the pros and cons of different approaches to evaluate these ideas. This post takes a closer look at how the most appetite-whetting whiskies can be identified from 4.8 million holistic concepts.
Perhaps the most enjoyable and challenging tasks in whisky production belongs to the Master Distiller. For it is he who must not only constantly taste samples drawn from different casks varying in age, size, provenance, and even position in the warehouse, but also determine the optimal combination for the whisky in creation. In the Highlands of Scotland this process is called "marrying". And just like a marriage between people, the best partnerships are not necessarily those between the best individual people. It's a cliché because it's true: The whole is not merely the sum of the parts; for in bringing different elements into the mix, the best combinations also contain an additional ingredient: Synergy.
And this creates a problem in my endeavour to distill down to the very best fully-fleshed propositions from all the partial ideas for my new whisky. For there isn't really a scientific way to to evaluate my ideas for each element of the mix without either ignoring the influence of the chemistry or culling the vast majority of ideas on little more than a hunch. Or at least there wasn't, until a fortuitous meeting of minds in Massachusetts. He an expert in bio-chemistry; he an expert in mechanical engineering; the two from divergent disciplines brought together by a fascination in improvement through evolution. Together they had an idea. And this evolved into IDDEA.
So what is IDDEA?
I will continue with my whisky fantasy to illustrate what IDDEA means to those with different priorities and agendas according to their involvement in the innovation cycle.
For senior management, it's how we get better products to market more quickly. Better, because it roots out the very best combinations of all the ideas in the business. It's dependable because it is proven to significantly improve the proportion of new products that meet internal requirements to launch, their likelihood to survive in market, and the revenues they generate.
For my brand manager, it is an easy and efficient way of creating better holistic concepts that also takes into account the synergy between the different elements. Being able to accommodate large numbers of ideas cost-effectively reduces timelines and internal politics because there is no reason to eliminate ideas or combinations internally before the select few are subjected to consumer evaluations.
It gives my consumer insights manager the confidence of a best-in-class methodology, using choice-based tasks to get more discerning data, and advanced algorithms which add value in actually improving concepts beyond the mere evaluation that alternative concept tests provide.
And for consumers taking part in the survey? It is an easy and engaging way for them to share their preferences individsually and collectively, so they can collaborate with the team and help to create the optimal consumer propositions from all the part-ideas on the table.
And who are these consumers taking part in the survey? Next month we'll look at how we can optimise our survey sample. Until then, I'd love to know what is your warm-weather whisky of choice...
Between drooling over drams, Ben helps organisations make better marketing decisions by including consumer wants, needs, and behaviours alongside the corporate agenda. You can follow Ben on Twitter at @BenLangleben.
From the over 1,675 unique links shared on the Twitter #innovation community in the past week, I thought I would share with you some stories from Apple, Netflix, the United States and ourselves.
Five Years After the iPhone, Carriers are the Biggest Threat to Innovation
Along with increasing carrier control over customers, exclusivity has been a huge culprit of stunted competition and stalled innovation from. Vizio CTO Matt McRae says “The cell phone market in the United States is not set up to encourage innovation. The inability to sell product directly to the consumer means that companies can't experiment and iterate quickly." It is that inability that directly stunts innovation as companies design their new products around “what they think carriers might want, not where the market or consumer behavior is heading.”
The doomed Palm attempted to launch on Verizon but was forced into a deal with Sprint where it could not directly compete with the iPhone. When Verizon finally picked it up a year later, they refused shipment and Palm was left with millions of unsold units. Google had a similar problem. As the story goes, Google was to launch the Galaxy Nexus on Verizon, however Verizon supposedly purposely delayed shipment in order to give the Motorola Droid RAZR a better chance.
Over 1 Billion (Hours) Served: Netflix, Big Cable, And The Innovator’s Dilemma
In general, people watch five hours of TV a day that, according to YouTube’s Hunter Walk, can be broken into three categories.
- First – “Must See” TV , Hour 1. For myself this means Trueblood!
- Second – “Nice to See” TV, Hour 2 and 3. Like a classic Seinfeld rerun.
- Third – Filler TV, Hour 4 and 5. This is the stuff you leave on when you’re hanging out but not really watching.
Currently, YouTube and Netflix are focused on hours four and five, but with Netflix announcing that its viewers watched over 1 billion hours of video in June alone, Big Cable needs to start innovating.
Big Cable won the initial battle over broadcast TV with original programing on networks like FX, AMC, USA, TNT and TBS. But now Netflix is creating several original series, YouTube is investing hundreds of millions developing and promoting 100+ original channels and Hulu is investing heavily in its own originals. Big cable should be getting a move on it; all of these low-cost services are available on a wide range of devices, which means more viewers have access to these videos on any screen in the house or on the go.
U.S. Drops in Global Innovation Rankings
After ranking 7th in 2011, the U.S. is ranked 10th in this year's Global Innovation Index published by Insead, an international business school, and the World Intellectual Property Organization. Together they rank 141 nations on nearly 100 innovation factors containing 21 sub-groups. Areas ranked for innovation include
- Business sophistication
- Human capital and research
- Knowledge and technology outputs
- Creative intangibles
- Ecological sustainability
- Trade and competition
- Market sophistication
In higher education, the U.S. ranks second for enrollment, but 74th in students graduating with science and engineering degrees; number one in the amount of students taking the GMATs but 53rd on GMAT mean score. But the bigger question is do these categories truly determine the innovation of a country?
Confronting the Pain of Innovation
Pain is the ultimate feedback tool. Michael Schrage argues self-knowledge is key for working with innovation pain; “Most intriguing is how attuned innovators have become to distinctions between "good" and "bad" pain… One pain signals new efficiencies are afoot; the other means one has to carefully watch one's step.” But what differentiates a successful innovator is the understanding of when painful persistence is likely to pay off due to constant boundary pushing of their competences and capabilities. “If your organization doesn't talk openly and frankly about its "innovation pain" as it pushes to create new value in new ways, you're guaranteed to misdiagnose and misunderstand critical elements of your innovation culture.”
Until next time, keep out of trouble and keep the innovation going!
At the end of February, I attended MIT’s annual healthcare conference where several industry leaders, such as Sanofi’s CEO Christopher Viehbacher and Biogen Idec’s CEO George A. Scangos, gave their thoughts about innovation in the life sciences industry.
I must admit I was not surprised when Chris Viehbacher said “Innovation is at the core of our values…but big companies don’t innovate…” For many big companies, innovation is seen as a disruptive element, one that fights against corporate culture and creates compliance, legal and budget issues. With all these problems, it is easy to see why people abandon innovation having associated it with more harm than good.
However, as technology continues to advance and access to information grows, innovation in healthcare will continue to be a MUST. Pair this with the rapid changes the pharmaceutical industry will undergo in the next 5-10 years and I cannot help but wonder:
- What are Pharma companies doing today?
- Which companies are doing something different in preparation for these changes?
- What are they doing differently?
- What else should they be doing to not only provide value to their customers but also create sustainable growth?
Sanofi is doing a number of unique things starting with their positioning. Instead taking the traditional stance as a pharmaceutical company, they have positioned themselves as a diversified healthcare partner. In the last month, they launched a blood-sugar monitor that comes with data analysis and patient counseling services called the iBGstar. Sanofi has started to recognize that patients are becoming more technology savvy with tools like iPhones and iPads.
Bigoen Idec is also redefining they way they do business. Partnering with Samsung, Biogen Idec has created a joint venture called Samsung Bioepis, which will develop and commercialize biosimilars (subsequent versions of biopharmaceuticals). This is a smart move for an environment where 8 out of 10 prescriptions filled in the United States are generics.
But is this enough in to create sustainable growth? Though Sanofi and Biogen Idec are thinking outside the box in the way they do business – there is still much work to be done.
Ernest & Young recently published a report titled: Progressions: 2012 – The Third Place: Health Care Everywhere. According to the report, changing patient behavior represents the single biggest opportunity to improve health outcomes. A first step in this movement would be to look at other industries like Consumer Packaging Goods or Retail where they are rapidly evolving and understanding how their customers think and make decisions.
Look at Costco, the largest membership warehouse chain in the country; they understand the American consumer. American consumers see value in the concept “more for less”. On average Costco customers spend more than they would if they went to their local grocery store. There are no fancy displays or “new innovative” products. Costco sells large quantities at a lower price. Consumers feel and think they are getting a great deal when in reality they are often buying more than they needed; quite often consumers are even purchasing items that they never needed, because of the value that they perceive of buying “more for less”.
With an increasing global middle class with increased access to technology – health awareness among patients is rapidly growing. More accountability among patients is inevitable and pharmaceutical companies must create sustainable growth by creating customer centric business models. Leaders in innovation such as P&G and Wal-Mart have turned to new tools that are effective in bringing better ideas to market faster. It’s the adoption of these approaches along with the willingness to “think out of the box” that will allow life sciences companies to be successful. The question is: which companies will lead the pack?
Sasanka is a Director of Client Services for Affinnova's Life Sciences clients.
From the over 7,000 unique links shared on the Twitter #innovation community in the past week, a number of stories numbered the numerous tips and traps faced when innovating.
- Conduct an Audit
An innovation audit allows you to formally find out what’s running well and what’s running poorly. In your audit, ask analytical questions like “how many ideas per employee are submitted”, “how many are approved?” and probe softer issues like “to what extent are people empowered to try out new ideas?”
- Use a Checklist
Often, tackling innovation is seen as a mystery. Where do I start? How do I start? When do I start? If these questions are rattling around your head, perhaps it’s time you start using a checklist. A checklist puts reasoning and organization behind your actions and decisions. It also helps you think about items that you may have been forgotten in the rush of innovation like stepping back and questioning the current trajectory of the innovation.
- Find the Innovators
You know when you’ve found an innovator because it’s like finding a four-leaf clover; it may seem like there is no hope when suddenly the person you’ve been searching for leaps out. How do you find the innovators in your company more easily? They often share these common traits:
- Intellectually restless
- Inspiring rather than convincing
- Proven ability to drive innovation
- Have scaled a peak
- Willing to commit to something bigger than themselves
- The Five A’s
Advantage – Make sure your innovation either has a unique competitive advantage or brings you closer to the playing field.
Alignment – New ideas should either add value to existing initiatives or show significant ROI to justify diversifying. If they don’t do either, don’t pursue.
Assess – Saying you’ve done a risk/reward, cost/ benefit analysis is one thing; doing the actual calculations is another.
Accountability – Every task for the new innovation initiative should be assigned to someone and progress tracked
Actionable – You can’t stay in the strategic phase forever; you need to execute.
- Get Loud
Disruptive innovation has been on the horizon for a while now, but it’s stayed there because many people don’t know how create shock waves. Try your hand at creating disruption by flippig the customer/company perspective; maybe you’ll be able to “Totally eliminate your industry’s persistent customer pain points”. Want to be bolder; cut prices by 90%. Instead of investing in a $100 navigation device, create a $10 iPad app.
- Too Much Power
Innovation leaders beware! New research shows that “When we feel a sense of personal power, we overestimate our ability to make good decisions, which can lead to higher risk-taking coupled with poor decision-making.” As a person gains formal authority and power within their organization, they start to assume they need less critique, feedback and input from others. WRONG. This is the very stuff that fuels innovation! As a leader, the smartest, most powerful thing you can do is bring people together that will inspect your thinking and challenge ideas.
Just because you planned and thought hard, does not mean your project / idea / innovation will work out as planned. Do not expect the same reliable results that you get with a minor business tweak from innovation, and don’t get defensive about “concrete” assumptions you made early on. Budgets and pressure to be “right” for innovative initiatives are hard things to challenge, but breathe and face the facts: life rarely goes as planned.
- Too Little Management
Now, don’t be fooled, management does not mean wielding power over innovation. Instead, those that have found the strategic balance in innovation management have done so by planning for “total innovation”. Total innovation means you look at the big picture: where you do want your innovation to play and how you want to win there?
- The Wrong Definition of an Idea
Let’s be very, very clear; just because you have ideas does not mean you have innovation. Ideas have little value; while they sometimes can lead to great things, they more often lead to costly, disappointing, or even disastrous issues. In all honesty, “ideas in and of themselves are nothing more than unrefined, random thoughts”. Innovation on the other hand “…a sound idea, vetted through great process, refined by innovative application, and brought to market by outstanding leadership.” So don’t get caught up embracing the latest idea – run some initial analysis, create sound vision and execute with a solid plan in place.
- Existing Structures
Just because the original organizational structure supported current operations does not mean it will adequately support an initiative like innovation. Organizations are stubborn, habitual creatures that will resist to just about anything. Instead of throwing innovation blindly into the mix, try to create new supportive structures that will help make the organization stronger.
Until next week, beware of the 5 traps and use these 5 tips to keep innovating!
In my last post I wrote about how I had fun ideating 4.8 million unique whiskies. Unfortunately my drinks cabinet can't support such a selection. What I really need to do is sort the wheat from the chaff, or as those further from the start of the whisky-making process would put it, the malt from the grain.
With unlimited resources the optimal method would be to print every unique concept and somehow select which one appeals the most. But even if my inkjet could cope with the production demands, I'm pretty sure my eyes could not process the informational overload, and it is my personal opinion that headaches caused by whisky are only permissible through very occasional over-indulgence.
At the other extreme I could just look at the list of 40 element variations and decide for myself which combination makes the best holistic concept. I much prefer sharing a dram to drinking alone, but what if my friends don't like my choice? Unilateral decisions negate most of the benefits of a good ideation, and are likely to gravitate to "safe" combinations, which research has shown perform no better than a randomly selected concept. This decision making model is known as the "highest paid person's opinion", or HiPPO, presumably by those who don't use it.
The compromise solution is to examine each element - the branding, substantiator, bottle colour, cask finish, maturation, and tasting notes, in 6 separate exercises. That would certainly make the task more manageable. I prefer the idea of French oak over the other cask options. I like the sound of a "leathery" finish. But what if this combination isn't the strongest? What about the synergy created by a Fino Sherry cask with a leathery finish? Umm, that sounds good...
So has the creative process been a waste of time and effort, either providing potentially terrible concoctions of individually appealing elements, or handing control of the distillery to a HiPPO and hoping that everyone else likes what it makes?
Or could building evolutionary algorithms into a discrete choice framework of holistic concepts save my whisky from status quo innovation, and help me design my double dram iddea?
Outside of running an imaginery distillery, Ben likes to help organisations make better marketing decisions by including consumer wants, needs, and behaviours alongside the corporate agenda. You can follow Ben on Twitter at @BenLangleben.
The traditional approach to concept testing has been given a black eye. It’s like a boxer that has been in the ring past his prime: after all, there has been an overreliance on concept testing in the past 20 years.
To see how this happened, it’s helpful to look at the history of concept testing. Let’s go back to the turn of the century – the turn of the 20th century, that is. If you lived in the U.S. in 1900, when you needed to buy groceries, you would go to your local “mom and pop” store. You would often only buy groceries for the day, because you had little disposable income, space or refrigeration. You might go to a general store, a dairy and a butcher. At the general store, if you asked for toothpaste, the clerk would give you some from the one brand he stocked. In this environment, there wasn’t much need for innovation.
Even so, some innovation was bubbling up. Especially patent medicine based on carbonated water, which was believed to offer health benefits: John Pemberton, inventor of Coca-Cola, claimed it cured dyspepsia, headaches and impotence! Caleb Bradham, inventor of Pepsi-Cola, said it aided digestion and provided an energy boost.
In 1917, the wife of one of the founders of Clorox – the company at that time produced chlorine bleach for industrial use – heavily diluted the industrial Clorox and found that it whitened shirts. She began demoing it in her store, showing how it made a brown shirt white again. Instead of the shirt dissolving, the dirt dissolved.
Innovation in this era was all trial and error. In-store product tests, key to the early successes of Coke, Pepsi and Clorox, provided customer feedback and helped the companies adapt their products and pitches. But this pace of innovation was insufficient for postwar America.
In the 1950s people started buying cars, moved into larger suburban homes with bigger kitchens…and refrigerators. Now you could shop for the week, rather than for the day. The Interstate highway system facilitated the evolution of the "super"market and retail chains. With an increasing array of products, the products came out from behind the counters and went on shelves, where you could review them and select from them. No longer would you ask for a toothpaste and be given the product the retailer stocked—now it was just one of many choices you would make.
The rise of these choices and the packaging to describe them caused innovation to take a completely different turn. Economies of scale were leading to interesting pricing decisions too. Branding was more important than ever. Now there was far more for manufacturers to think about. Factor in the rise of TV and Madison Avenue, and blatant consumerism was born, hitting FMCG (Fast Moving Consumer Goods) first, because everyone could afford such products.
Innovation could no longer be done through trial and error. P&G was driving the emergence of market research, doing qual, quant and ethnographies: sending researchers into homes to understand the issues of the day. The next innovation in innovation was product testing, exposing consumers in selected local markets directly to products. Yet by the early 1970s this was perceived as too slow and too laborious. After all, the products had to be created first, to get the reaction of the test market. The next research goal was skipping this phase where possible, leading to simulated test markets.
And here our pugilistic hero enters the story: concept testing. It won a lot of bouts in the 1980s – because when your opponent isn’t working out (isn’t doing research before creating the first products), any research that you do will give you an edge. Concept testing was as important for the products it kept from the market as the products it approved for the market: killing products before test marketing saved millions and led to stronger products hitting the market.
Once everyone starts hitting the gym though, basic exercise isn’t enough. Earlier users of concept testing saw dramatic increases in the purchase intent scores of improved benchmarks, but as more and more winning products made it to market, purchase intent scores hit a ceiling, making it hard for new concepts to succeed.
The easy answer was to modify the concept and retest to try to achieve a passing score. And this worked sometimes. But it too became harder and harder over time. Concept testing’s success led to this failure.
Now cycles of concept tests are being fielded as optimization tools, but they take too long with no clear end in sight. Good measurement is not good optimization. And this is why concept testing is getting a black eye: it’s fighting a fight it cannot win.
The 21st Century belongs to optimization. Whether it is Google telling you the optimal site for a specific search term based on everyone’s links to that site, or YouTube automatically showing you the most entertaining videos, the future belongs to optimization. Concept optimization is the new champion.
From the over 4,000 unique links shared on the Twitter #innovation community in the past three weeks, a number of stories will help you manage your innovation efforts.
How Do You Create A Culture of Innovation?
Scott Anthony, author of The Little Black Book Of Innovation, breaks innovative culture down to four basic elements:
The Right People “Natural” innovators have actually become that way through learned behaviors. These learned behaviors include:
- Questioning to impose or remove constraints
- Networking to broaden thinking
- Observing to find surprising stimuli
- Experimenting to purposely complicate their life, which then spurs the other three behaviors.
The Right Way to Reward and Punish First you need to find the right person to reward: “Look for innovators that invest time to understand their target market, think holistically, design and execute smart experiments, and demonstrate a willingness to change course.” As for rewards, the best seem to be blend of monetary rewards, growth opportunities, and recognition. Most importantly this takes place in a failure-tolerant atmosphere.
A Common Language “Having everyone understand what innovation is — and what it is not — is critical for culture change.” You should also have categories of innovation that matter to your company so that each category can be measured and managed distinctly.
Leadership Organizations looks to leaders as role models. What they say matters, but what they do matters even more. Leaders who actively seek to make their culture more tolerant of innovation directly shape the context in which innovation can occur.
Who in Your Company Can Say "Yes" to Innovation, Without Permission?
Innovation is often pushed from executive to operating level because it is seen like most other projects. But innovation is different; it requires a hands on management and active engagement of an executive sponsor. Who is this sponsor? The person who can say “yes” without permission. To find them ask yourself
- Who can say yes to dedicating people, money and time for a new idea without permission?
- Who can decide to say yes to spend even more money, people and time without permission?
- If the new idea goes against the grain, who can provide protection for the idea and team?
With the support of this sponsor and active management, your innovation will be better prepared to brave the front lines of the business battlefield.
The Big Innovation Leap
Taking on innovation can be a scary endeavor. Let the following suggestions be a guide to better manage your step forward.
- Talk versus Action Develop a strategy but allow for adjustments once the action has started. If this is hard for you to do, team up with people who can help.
- Education Nothing is scarier than not knowing. Educate those around you so they can understand what your innovative ideas really mean.
- Common Language Just like Anthony’s point, make sure everyone has the same definition of innovation so that everyone is on the same page.
- Communicate Communicate frequently and clearly both internally within your team and externally to stakeholders outside of the team.
What Doesn’t Motivate Creativity Can Kill It
Creating an atmosphere that harbors innovation inside of an organization is tricky; too much or too little management kills the creativity. However, successful managers of innovation have found a way to balance these four factors:
- Goals Telling people exactly what to do and how to do it constrains innovation. Instead, give clear direction for one strategic goal but with plenty of leeway in how to get there.
- Evaluation Both strong evaluation pressure and lack of feedback lead to lower levels of creativity. The happy medium is a loop of continuous feedback and evaluation that acts as a support structure for innovators.
- Reward Research has shown “good” rewards “provide information about employees' competence and the value of their work, or enable them to do something that they really wanted to do.”
- Pressure Pressure can easily fall to one extreme. To keep it balanced, remember it is comprised of level, form and meaning. For example, a high level job, on a tight timeline, constructed in a positive atmosphere where you will be rewarded doesn’t create “bad” pressure.
Until next week, keep innovating!
Barry Jennings of Dell presented yesterday at the 2012 Annual Conference of the Marketing Research Association. Barry described himself in Twitter hashtags as “#PassionateInsightsProfessional #TripleCollegeTuitionPayer #GlobalTraveler and #ConstantLearner”. “You can’t be in this industry if you’re not a constant learner,” he said.
He shared some quotes that inspire him, from Peter Drucker and fortune cookies:
- “The purpose of business is to create and keep a customer.”
- “The aim of marketing is know and understand the customer so well the product or service fits him and sells itself.”
- “All wish to know, few wish to pay.”
- “Knowing and not doing are equal to not knowing at all.”
Both sources reflect his understanding of the role of customer insights. “Business can’t operate unless we know who are customers are,” he said. “Yet corporate researchers are constantly directed to bring more insight, more often, with new methods and fewer resources.”
The “New Normal” has broken old paradigms. In the past, Barry could tell his internal clients “Good, Fast or Cheap – pick any 2.” And this would help him bend their requirements to something more manageable that still met their objectives. Now those clients have no patience for research that is too expensive, takes too long, and gives them too many things to process. “Now they want Good, Fast and Cheap. Data is not the problem: insight is the big problem. We have to deliver answers everywhere, all the time: Global/365.”
Nor is it enough any longer to be “a rock star researcher” – you have to be “consultative insights guru – leverage hindsights, drive the research role into the social business and add new social tools to allow us to get broader perspective on what we know.”
“All of which leads me to my HiPPO problem! I have to worry about the Highest Paid Person’s Opinion. We have VPs of everything, who run huge P&Ls that drive our business. They get paid a lot of money to make decisions: with good information, bad information or no information. They will make a decision, and it’s my job to make sure that they take customers’ thoughts into account when making that decision.”
To do this, Barry turns to what he calls “triple vision”:
- Hindsight—a perfect understanding of something after it happened
- Insight—an indication of some relationship between data (or meaning within a diverse set of data) that promises significant impact
- Foresight—a plausible, internally consistent story of what could be
Dell has built out a platform to provide “triple vision”, “enabling us to create, share, and act upon conversations to drive innovation, engage customers and conduct market research”. It is “simply the fastest, easiest and most cost effective market research platform ever.” Key elements of this platform include:
- Ideas – Dell embraces idea generation, from its IdeaStorm community to other social and community groups. “We encourage people to come in and tell us their ideas and what they need.” In the past, it was hard to see who was making requests, leading to some new products that failed in the market. Community members are profiled in depth: “We had to better understand who is there and what they are doing to really understand what customers want.”
- Panel – “In our platform we can profile you, like empaneling a good set of folks. We use DirectFlow™ research to recruit users by site activity and demographics. We get people from tech sites, LinkedIn and Facebook and profile them and keep them and build that relationship.”
- Surveys – From quick polls to longer surveys.
As an example, Barry talked about a product manager wondering if it would be important to make servers that ran cooler. “We can find a group of people talking about servers two days after they’ve made their posts. We are getting hotter and fresher insight – it’s like a quick and dirty focus group talking to the right people at the right time rather than six weeks later. We can get in, get out and provide a directional answer in 24 or 36 hours. We’re not going to do this for every question but it helps drive insight. We then take that back to Engineering, back to Marketing, and say ‘here is what you need to do’.” This allows Customer Insights to make an impact much earlier in the innovation process.
One internal client needed to present to Michael Dell in eight hours. “We were able to get information to present to Michael. Without it, the decision would have been made with no information. Better that we get them some information.”
“This makes the HiPPOs happy. When they can get rapid response to such issues, they don’t mind paying more for the critical answer to the multimillion dollar question.”
Much of the work in the platform is done by the internal clients themselves. “The business owns a community – they manage the roadmap and the content. I make sure they are asking the questions the right away, not influencing the answers. As they own that insight generation, those insights get infused into that business. Dell stakeholders rate the platform 5 stars and love it. When you hear your clients saying ‘it’s because of the research we did this that way’, that’s a huge success.”
Barry wants to “lobby” on behalf of the customer viewpoint, to make sure it is heard, even though there are times it is not acted upon. “I never believe the customer is always right: if they were, laptops would weigh a pound, cost $1, last forever and we would be out of business! But customers absolutely deserve to be listened to.”