Does innovation count if no one pays for it?

I've always liked the old existential riddle regarding a tree falling in the forest that no-one hears.  Did it really happen?  A more pragmatic or appropriate question might be, "Does it matter?"

If an innovation doesn't sell, it doesn't gain a higher price, a higher margin, or a greater share of market - I not only have to ask if it matters, I wonder if it can be called real or meaningful innovation...is it really innovation if no one values it enough to pay for it?

Innovation for the sake of exploration may very well be an important part of how we extend knowledge, understand the meaning of life, or someday discover cold fusion, but in the context of business, this question becomes simple to answer.  If no one is willing to pay for it - as far as business is concerned, it shouldn't matter.

This was illustrated quite graphically to me recently.  Amidst the imminent collapse of the U.S. auto industry, there has been quite a bit of criticism about a lack of innovative over the last few decades.  No one outside of GM and Chrysler is surprised to find that at the end of 2008, they are unable to operate without significant help from the US government - as fewer car buyers are willing to purchase their products every year.

I recently met a very smart person who has"big 3" auto companies as clients and asked him why he thought US car companies have stopped innovating.  His answer astonished me.

"US car companies have been delivering innovations at a terrific pace for more than ten years."

He wanted to talk about restructuring and the deals being made in Washington DC, but before he went deeper into the details of labor issues and unfunded pensions - I had to press him further on what those innovations are.

"Just look at the Hemi engine," he said, "the GT, the Cadillac, even the Hummer...these represent amazing technical advances that no one else can match...the amount of horsepower they are now putting under the hood is astonishing."

He was right. When you look around at modern American cars, the amount of pure power is astonishing.  The last time I drove a rental car, I was thrilled to pull out from a toll booth at a nearly criminal velocity.  It is amazing how much horsepower you get with an American car.  The engineers in Detroit have innovated many aspects of what's under the hood - and every year people have been able to accelerate just a little bit faster.

But...

I have one question...with most driving done in cities, and most city speed limits between 30 and 50 MPH, is shortening the time spent going from 0 to 60 MPH the most valuable thing to innovate?  I love being thrown back in my seat when I step on the gas - but is that worth $30,000 to me?  Are there other innovations that might create a new market, attract more customers and grow margins?  

In other words, has Detroit been innovating the wrong things all this time?

While Detroit increased their engine power,  companies elsewhere used innovation to create significant new business- Toyota produced a small hybrid car (with anemic acceleration, I might add) that has waiting lists of buyers willing to pay over $30,000 for essentially a small and slow car.  Zip Cars experienced explosive growth in major cities by challenging the concept of ownership - offering a new kind of hourly rental And there are several other promising innovations surfacing, including Better Place in Israel that is changing the entire model for fueling cars by offering swappable batteries for electric cars that consumers pay for by the mile - instead of by the gallon.

Other companies are trying to solve car user problems such as environmental impact, fuel costs, total price of ownership and convenience.

Detroit is improving acceleration.

I don't want to denigrate the astonishing engineering accomplishment of a Hemi engine.  I do, however, question it's value in a world of drivers spending hours a day in rush hour traffic moving at 20MPH.  It seems that auto buyers throughout the world are asking the same questions - and are waiting for more meaningful innovations - innovations they are willing to buy even if it costs more.

I'm surprised at how easily innovation teams can overlook this fundamental idea.

And so when I work with my clients in other industries, the lesson of Detroit sugessts a useful - and perhaps somewhat obvious - rule for everyone to use when evaluating what innovations to persue:

 

Innovation doesn't count unless someone wants to pay for it.

Is it Marketing or is it Nagging?

Communication is a central part of managing companies, of persuading markets or of leading governments. However, when people talk about communication, they often seem to be missing out on what the word actually means.

Inside organizations, when an individual or small group comes up with an idea, innovation, or plan of action, they hone it, make sure that they have worked out how best to make it work, how best to implement. Then, when the plans are all in place, they decide to "communicate" it to whomever has to live with the new idea.

Most professionals have spent time with change management and six sigma consultants. Well-trained employees talk about gaining "buy-in" for an idea - of communicating with key people and getting them to support the idea. In marketing departments, a value proposition is carefully constructed and then a series of communication strategies are used to communicate that value proposition to the target market. In politics, the message masters hone their talking points, then repeat them until the voters can recite them verbatim. Professionals are using a communications formula.

But the formula rarely works as well as it should. People hear the messages, but they don't always believe it. Audiences lose interest. Markets enjoy the commercials but don't buy the products. Voters focus more on a sigh than on a platform position. Why is that?

Perhaps there's more to communication than the current formula? Perhaps our assumptions about communication are flawed?

A central assumption is that communication is a one-way activity. The communicator talks and the audience receives the message. But look at the word "communication" itself. The first half of the word is "commun" - a root for "community" and "commune". Does this suggest that communicating is a group activity? And if it is, why do our formulas for communicating tend to only work in one direction: I talk and you listen?

As a test of that assumption, imagine your own family communications. Can a wife effectively persuade a husband telling him to put away his shoes over and over again? Can a father persuade a teen-age son to avoid smoking with a series of bullet points? Perhaps...but family counselors and other experts seem to suggest that a more effective (and more enjoyable) approach maybe to enter into a real conversation with family members, find out why they are doing what they are doing, make clear that you understand and value their point of view, discuss together how it might be possible to change - and maybe even come to a decision together that neither one thought of before.

Another way to look at it is - when you commune, you are learning. Communicating requires that you learn from the people you communicate to - what they need, what they want, what they know, how they might help solve a problem, how they can help you to do better. Too often, the assumption is that the speaker knows something and therfore needs to place that knowledge with the listener.

And why then, even though nagging family members doesn't work so well, do we insist on nagging our customers, colleagues and constituents? Why do we hire advertising and PR firms to nag the markets with greater skill and polish than we could manage? Why are we nagging?Instead of working on becoming more and more accomplished nags, perhaps we should change our assumptions and stop nagging altogether.

What would a company look like if it changed the communication assumption in order to listen and learn from the people?

A few months ago in the New York Times, I saw a company that has begun to find out. (http://www.nytimes.com/2008/03/01/business/01nocera.html?pagewanted=1) Mickey Drexler, the current CEO of the retailer J.Crew, has managed quite a turnaround for the company. As described by the NYT, key to his process is a constant and in-depth conversation with his customers and his employees.
"Visiting stores, quizzing the staff, critiquing everything in sight — and most of all, meeting customers — is at the core of how Mr. Drexler runs J. Crew. It’s also what makes him happiest. "
Mr. Drexler is known throughout the J.Crew chain for showing up in a store and talking with customers and salespeople and finding out what they like, what they don't like, what works and what doesn't. He delights in trying to persuade someone to put on a new outfit and tell him what they think of it. Instead of telling customers what they should buy, he asks customers what he should offer.

Mr. Drexler has found a way to market to his customers by constantly learning from them. He communicates the company's mission, values and strategy by listening to associates and customers - by "communing" with them.

How can other companies stop nagging their customers and commune like Mr. Drexler?