You are viewing Aaker on Brands blog posts tagged as “innovation” (15 total). You can also view all blog posts.
Becoming an innovative firm capable of engaging in substantial and transformational innovation that will create new categories or subcategories requires an enabling organization. An innovative organization is difficult to create because it really requires three characteristics that are inconsistent with one another. The organization needs simultaneously to be “selectively opportunistic,” to have “dynamic strategic commitment” and to have an organization-wide resource allocation system.
The organization practicing selective opportunism actively but selectively seeks to identify opportunities through insight or technology development, and then takes advantage of them. The idea is that the environment is so dynamic and uncertain that the prudent and profitable route is to detect and capture opportunities when they present themselves. Strategic…
June 12, 2013 • Permalink
One of the empirical facts of business strategy is that “big” innovations that create new categories or subcategories do not come from the leading incumbents - they come from outsiders. Successful incumbents have the resources to lead but, in fact, success breeds complacency, lethargy or arrogance. What is also disturbingly true is that incumbents not only fail to innovate, but also fail to be relevant to major innovations of others and sometimes lose not only their momentum but their very existence as a player.
In a brilliant new book, Unrelenting Innovation: How to Build a Culture for Market Dominance, Gerry Tellis explains why this is. His answer, based on nearly a dozen major clinical studies conducted by he and his colleagues, is that it is the culture of the incumbent firm…
January 30, 2013 • Permalink
I serve as one of the judges for The HUB Prize 2012, presented by The Hub Magazine. As such, I got a preview of the winner for excellence in the retail experience. First place went to a New Delhi flagship store for Asian Paints, the third largest paint firm in India. It took retail innovation to a new level.
The concept started with the insight, garnered in part from in-home interviews, that consumers were not comfortable with color experimentation in their homes. They found paint a confusing category and were even intimidated by the idea of choosing colors.
The solution was a retail store that provides personalized color solutions within a magical in-store experience. It begins at the store entrance, where consumers step on footstones of different colors to activate a play of light and color that involves a huge chandelier and the external façade signage. This warm-up gets the consumer into color experimentation, shows how color affects space and the displays impact of light…
October 10, 2012 • Permalink
Apple’s court win over Samsung feels good. Finally, a firm in the consumer electronics sector has stood up to those that copy substantial, transformational innovations that have resonated in the marketplace. That means that others will have the motivation to engage in “big” innovation, and the innovators will have a chance to benefit from their extraordinary advances and time to improve and leverage those advances. It just feels right.
The only way to grow is to innovate and create “must haves” that define a new category or subcategory (as documented in my book, Brand Relevance). All of that “my brand is better than your brand” marketing rarely creates real growth. The problem is that big, impactful innovations are often copied, so building barriers is necessary for success.
August 29, 2012 • Permalink
Big innovation happens too rarely. This is the kind that creates real, enduring “must haves” that define new categories or subcategories and is the only path to real growth. One major reason is that the budgets are controlled by the large business units that are focused on their profitable businesses that use incremental innovation to improve the offering and/or reduce costs. Returns to such investments are predictable, and there are organizational and personal biases against risky alternatives even when the upside can more than compensate for the risk involved.
Organizations can attempt to counter those biases by creating an entrepreneurial culture, with centralized innovation budgets that take power away from the existing big business units. The entity controlling those budgets will have to encourage ideas and idea champions to surface, select those that seem most promising, and then support progress toward commercialization. The goal is to overcome the bias toward incremental…
August 1, 2012 • Permalink
The human library has its roots in the city library of Malmo, Sweden, which allows curious visitors to check out living people for a 45-minute conversation. The experience is designed to confront prejudices and promote understanding. The people available to be “checked out” included a gypsy, a transvestite, a blind man, a journalist and an animal rights activist, and the conversation allows people to learn about the life and beliefs of an individual that had been misunderstood, stereotyped and often avoided.
Prophet’s version of a human library is designed to provide inspiration to a team that wants to develop a big innovation, improve an offering or user experience, enhance a brand relationship, or improve a sales or marketing program. With context and objective in place, a wide array of human “books” that are relevant but tangential to the context are purposefully selected to create unexpected sources of insight.
An apparel manufacturer found that its multi-product…
July 25, 2012 • Permalink
A serious threat facing most brands in dynamic markets is the loss of relevance because the category or subcategory they are serving is declining. Customers are no longer buying what the brand is perceived to make. New categories or subcategories emerge as competitors' innovations create "must haves." This dynamic can happen even if the brand is strong; customers are loyal; and the offering has never been better, thanks to incremental innovations.
Relevance dominates. If a group of customers wants a battery powered car it does not matter how much they love your hybrid brand. It will not be relevant. A newspaper can have the best new coverage and editorial staff, but if readers are diverted to cable news or blogs, relevance will decline. The ultimate tragedy is to achieve brilliant differentiation, winning the preference battle, only to have that effort wasted as its relevance declines.
How does a brand stay relevant? How can a brand avoid the disinvest or milking decision? There…
July 18, 2012 • Permalink
As noted in my book, Brand Relevance the only way to grow is to innovate, creating “must haves” that form new subcategories. One source for innovation are noncustomers that are usually ignored by firms trained to look to the heavy user, where the money (and competition) resides. But there can be a substantial market that is lying dormant because there is a deficiency or omitted feature in the current offerings that prevents these people from buying.
Turn the heavy user obsession on its head. How would you define the customer that wouldn’t qualify as part of the heavy user group? What segment would be the opposite? What offering modification would turn off the heavy user? What new application wouldn’t be of interest to the heavy user?
The noncustomer might be attracted if the offering were augmented or changed. Energy bars pioneered by PowerBar had very male taste, texture, ingredients, packaging and associations when Luna and then Pria created an energy bar…
May 2, 2012 • Permalink
The Genius Bar is a place dedicated to providing technical support within Apple stores to customers having problems with the product or application. In large part because it is branded, the Genius Bar is a lynchpin of the most successful retail concept of recent times and a builder of the Apple brand and relationship.
The Apple store's financial performance and impact on the Apple brand is amazing. The sales per square foot for its 380 or stores is more than $5,000, which is six to ten times other successful retailers, and the average store pulls in 18,000 visitors a week. Perhaps more important, the stores provide a way to express the Apple brand and showcase its products. No longer are Apple products and brand tarnished by retailers who are unwilling or unable to provide an in-store Apple experience.
And the stores provide a source of energy to the brand and a new link to its rabid fans. The fact that nearly 2,000 stood in line for the opening of its Ginza store is illustrative.
April 4, 2012 • Permalink
There’s evidence that firms are no different.
Firms over-invest in incremental innovation and under-invest in innovations that would create “must haves” that would define new subcategories, which, with rare exceptions, are the only innovations that create real growth. I won’t review this evidence here (If you’re interested, see Brand Relevance) but will instead explore the question: Why do we see this suboptimal, timid investment pattern? There are four interrelated reasons:
1. Firms and key decision makers are simply risk-adverse. Prospect theory, developed by Tversky and Kahneman and reported in a classic 1979 article (for which the Nobel Prize was awarded) demonstrated that individuals do not make decisions rationally by selecting…
March 21, 2012 • Permalink