R&D (Invention + Process) = Competitive Advantage

February 14, 2012 in Competition, Differentiation, Innovation, Processes

As much as new product development relies on an underlying creative – and thus unpredictable – process, it also relies on planning, forethought and analysis. Blending these organizational “left brain/right brain” activities is what produces the successful innovation. Such was the subject of a Business 2.0 article that featured German optics maker Carl Zeiss (“Priming the R&D Machine,” September 2006, p. 60). By virtue of its longevity alone, Carl Zeiss can make a claim on the ability to continually drive to market products that fit customer needs; not many companies get to be 160 years old.

But the company can also make a claim that its longevity is no accident. The company today earns about two-thirds of its revenue from products that are less than five years old. And one of the biggest reasons why is that company is ‘fanatical’ about research and development. “Innovation is about more than invention,” the company’s CEO, Dieter Kurz said in the article. “It is about creating something useful that gives the company an advantage.”

The process that Carl Weiss goes through to ensure a stream of innovative products is as intense as the resources that go into it. Some 1,600 R&D employees bring hundreds of new ideas to its annual innovation conference; about 25-30 of those will be selected for a six-month review process. Those that make it this far then go to prototyping and further vetting. It’s a process that ensures the place of ongoing creativity within the company.

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Fighting the Good Fight of Differentiation

January 31, 2012 in Culture, Differentiation, Innovation, Product/Market Fit

Sometimes we are victim of our own success, and such has been the case, in one respect, with the modern company. We became so adept at producing – and mass producing – goods that we the trade-off between mass producing a version of an existing product became more appealing than inventing a new one. In the process, we gave ourselves a little heartburn, in the form of runaway price competition.

In some respects, of course, this is a positive development. More consumers have been able to afford more goods than ever before. On the negative side, though, the result has meant increasing pressure on profit margin growth for companies. Price competition inevitably reaches a point at which it no longer contributes to the ongoing health of the company.

Where companies have been able to successfully combat this trend, they have done so by getting off the price competition treadmill and on to a path toward innovative new product development. These companies, thus, have changed the conversation with consumers from “hey, I’ll give it to you for 10% less than the other guy will give it to you,” to one that sound much more like, “look at this great new product that will solve real-life problems for you and make your life better. I am the only one who can give it to you, and it’s going to cost you, but it’s worth it.”

Which conversation would you rather be having?

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Companies Change With the Right Focus on Innovation

January 27, 2012 in Culture, Innovation, Team Improvement

Procter & Gamble might not be the first name that comes to mind when thinking about a list of the Masters of Innovation. The company, more than 100 years old, makes products that most of us grew up with, and many of our parents grew up with. And many of those products hardly seem game-changing. Take Pampers for example. Or Crest. How about Tide? Good product, but hardly the iPhone.

With this in mind, when A.G. Lafley took over the helm as CEO in 2000, he saw that the way out of the struggles the company had at the time was through the portal of innovation. The process he took to do that is well documented in the book, The Game Changer, which was written with Ram Charan. A review of the book can be found in the April 14, 2008 issue of Businessweek, p. 73, “How P&G Pampers New Thinking.

As the article highlights, the distinctive feature of this book is the way in which it provides granular look at P&G’s process, elevating it above the typical philosophizing on the subject of innovation so popular in the press today.

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