Sales Innovation - Go Beyond Benefit

I love the truth. 

The more I understand the truth of a subject, the better I can understand it. The more transparent a process, the more likely it can be made to work. The more honest a person is, the better I can trust them. Honesty and truthfulness are foundations for how society works and for how we all become better people living in a better world.

Very few would disagree with the statements above...and yet we all live and work in a pragmatic world, where shadings of truths, omissions, contextualization and emphasis can make things less than transparent, slightly misleading, a bit less true - especially when it comes time to sell something.

I'm not suggesting that selling is dishonest- but when one sells or tries to persuade, the accepted practice is to show, describe or even demonstrate benefits. Few people sell by telling a potential customer what's wrong with their product, service or idea. That's why a "pitch" for something describes the positive, downplays or omits the negative, and paints a splendid picture of how our lives, businesses and communities will be improved by those benefits.  

It's not a lie, it's a pitch.

No one believes a lie...but no one really believes a pitch either.

That's one of the main reasons why advertising is steadily losing its power to sell...not because the ads are bad, quite the contrary, some of our best design, writing, photography, and acting are applied towards pitching products and services. It's hard to imagine better produced or better distributed advertising than what is seen today. But here's the problem: no matter how well produced, how entertaining and how well placed an advertisement, no matter how compelling the benefits described- customers know immediately that they are getting "pitched".  

"Pitching" makes people more skeptical and it becomes more difficult to persuade them. Quite often, no matter how well produced, people will buy something despite the pitch, not because of it.

If someone tells you how wonderful they are -  can they be believed? 

Could it be that describing benefits isn't the best way to sell?

Here's a little thought experiment. Imagine a single woman meeting a single man for the first time. This hypothetical man is very handsome, has an Ivy League education, possesses a considerable financial portfolio and runs a successful company that builds schools for lower income children. If this hypothetical man, let's call him "Mr. Right", is interested in striking up a friendship with our hypothetical woman, ("Ms. Right"), perhaps leading to a romance and a long-term relationship how successful would the following sales strategies be?

1. Features:  Mr. Right describes his background in colorful detail, with stories and accomplishments that prove how he is a valuable, charming, and interesting guy.
   
   
2. Benefits:  Mr. Right describes the benefits of dating him.  He could describe his passion for long walks in beautiful park land, meals in Parisian cafes, sweet nights watching old movies with someone special.  He could talk about how he is so good with kids, how he can provide a stable economic future for his family, how he is a good shoulder to cry on, how he can make a long-term, loving relationship a reality.
   
   
3. Conspiracy:  Mr. Right asks Ms. Right questions.  He listens to her answers.  He asks more detailed questions until he finds something about her life that he shares with her.  He would then find out what Ms. Right wants to do tomorrow, next week, next month and perhaps for the rest of her life - and what might be standing in her way.
   
   For example, Ms. Right might mention that she loves music from the 1940's but never learned to swing dance.  Mr. Right realizes that there is something they have in common.
   
   He says - "You know, I've always wanted to go to one of those retro dance places with a big band, but I'm a complete klutz - how does someone learn to dance like that, anyway?"
   
   She says - "There are classes you could take."
   
   Ever so delicately, our hypothetical couple will start to learn together the different ways they might learn how to dance a Fox Trot...and there's even a chance that they might go take a lesson together...and eventually dance together.

Which of the three strategies is more likely to bring Mr. and Ms. Right together?

The Conspiracy Strategy I described is all about getting on the same side as a prospect and figuring out how to collaborate together for mutual gain. As a colleague of mine, Buckley Brinkman described it recently, instead of defining a pain point for a prospect, then describing the benefit of your solution"...it should be about conspiring with them to solve a problem."

But conspiring with someone requires a kind of direct - at times even brutal - honesty about your self, your capabilities, and the potential obstacles. People only conspire with people they trust...and people don't trust you if you talk about how great you are.

This form of conspiring, of creating alliances with customers has long worked for individual sales people.  "Rain Makers" or master sales people, whether consciously or not, have used this technique as long as there have been products and services to sell.  But can it be scaled beyond an individual sales person with an individual customer?

Yes it can.  The transformation of electoral politics in 2008 demonstrated that quite well. When President Barack Obama's campaign "advertised" through media, the Internet, and in person, the emphasis was not on the benefits, but rather on an invitation to join together or "conspire" to create a different government. In the process - constituents (or customers, if you will) began to join in the marketing of Obama - there was far more independent marketing than there was campaign marketing.

It's time for marketing and sales to innovate away from the dogma of benefits - and to move towards conspiracy and truth.

What is innovation...really?

Innovation is far more difficult, yet far less mysterious than we have been led to believe.

In a time of global warming, energy shortages, recession, conflict and war, many now believe that innovation is perhaps the only way to solve today's challenges. According to a 2009 Kauffman Foundation study, 78% of Americans believe innovation is important to our economic health. 

Innovation will allow us to build more sustainable communities. Innovation will help our countries back down from wars. Innovation will help struggling businesses thrive once again. Innovation will bring food to the hungry, opportunity and freedom, warmth and comfort to those in need.

If only we can find the best ideas, then we can solve problems, win customers and improve our world...

I don't disagree with the idea that innovation can solve our problems, but how did innovation start to be described in almost religious terms? 

Too often, innovation is described as something done only by magical geniuses. Stories dwell mostly on the flash of insight, or "Eureka" moment. How many profiles of innovative companies describe the beginning with a brilliant ideas that led to great success? Scott Berkun, in his marvelous book, The Myths of Innovation, describes this as "They myth of epiphany"

"Even if there existed an epiphany genie, granting big ideas to worthy innovators, they would still have piles of rather ordinary work to do to actualize those ideas.  It is an achievement to find a great idea, but it is a greater one to successfully use it to improve the world."

I worry that too many people are waiting for the "great idea" to solve their problems.  For every Fortune 100 company that started from a brilliant invention in a garage - there are millions of people with great ideas that never went anywhere. And yet, entire industries have been built up to serve the faith of ideas.  Consultants, executives and businesses spend money and time to brainstorm, to elicit and evaluate new ideas.  Investors often make decisions based on a valuation of an idea or business model.  Politicians are evaluated by voters based on the perceived value of their ideas. 

And yet, the success of the company or the government is only partly determined by the quality of the ideas.  Ultimately, inventors are only successful if someone is willing to pay for their invention.  Businesses become profitable not because they have a great business model, but because they persuade enough customers to pay more for something than it costs. Politicians become good leaders through competent management, sound decision making, and quite a bit of slogging back and forth in order to persuade people to work together...the ideas they sold during the election are often left behind or reworked once they enter office.

Sit inside a coffee shop and you can hear any number of brilliant ideas. But unless those ideas are turned into something real, the ideas are worth less than the coffee.

The best ideas don't win. Good ideas that are used for actions, products and new behaviors can win...sometimes.

Think about the most successful companies, the most successful leaders, the most successful countries.  Did they have the best ideas?  Or did they have good ideas that they translated into good products, services, markets, companies, laws, governments, and treaties.  If you look close enough, you can find any number of really bad ideas that those successful entities have used to succeed despite themselves.

So why do we think that ideas are so valuable? Why do otherwise rational people believe that the best ideas will save their company, their country, their family?  

Perhaps it's because ideas, brainstorming, planning are much more fun than the reality of innovation. The reality of innovation is much like the reality of scientific discovery - as exciting as it is to imagine how something works, that imagining is only part of the process.

In very broad terms, the process known as "the scientific method" can be broken down into the following steps: Observation, Hypothesis, Testing/Experiment and Evaluation. Innovation follows the same process:

First, in order to innovate, it is necessary to Observe reality as closely as you can to discover what is currently happening.  

Second, the innovator gets to have fun with ideas - (s)he forms a Hypothesis of what might work better.

Third, that hypothesis needs to be tested in an Experiment prototype or pilot, where a small form of reality is compared to the hypothesis.

Fourth, measurements from the experiment are used to Evaluate the original hypothesis - did it do what was expected?  Can that hypothesis be changed in order to affect the desired change?

Mysterious?  not really.  Both scientists and innovators follow a process, evaluate data and find new answers to old problems.  Science and innovation isn't magic, it's just a way to find the truth - about physics, about business, about politics or about how we live - and then act on that truth in a better way than before.

Easy to understand, but quite often hard to do.  And yet, innovation can become a little easier when faith in "the great idea" is put aside - and "good enough" ideas are put to the test of a scientific or innovative method.

It's time to ask better questions.

An inherent obstacle to innovation is the context, culture, history and assumptions of a current process or business. Sometimes the harder someone works on a problem, the more elusive the solution becomes. Every once in a while, the person who has the most experience can solve a problem, but only if they don't respect their own experience. Some are able to question their own past success, but they are very rare people.

Quite often, there is a need for someone with less experience to look at a problem - someone who can see it for the first time, has little knowledge of the existing orthodoxies and can blithely question the most fundamental assumptions of success. Someone needs to bump the record player when the needle is stuck, but who can do that?

1. It can be helped by an external innovation expert - usually a consultant or coach who can look at the problem from the outside, bring in new insights from customers, or help guide internal teams through a process to see a problem and solution for the first time. They can ask questions for you.
   
2. Your competitors can do it for you. Usually, innovations are developed by new and unexpected competitors that have no respect for the past - they are able to ask, "Why are things done the way they are? Can't we do it differently and make it better?"
   
3. Your own employees can come up with innovations. But they usually need good questions to answer.

In order to understand better how organizations can improve innovation, let's look at each of these three methods.

1. Innovation Consultants

There are a great number of good consultants that can help organizations innovate - each with their own areas of focus and processes for stimulating innovation and commercialization of new ideas. It would be impossible to characterize them all at this point - but there is an interesting commonality: they all ask questions.

Whether consultants are questioning employees, competitors or customers, they are working to discover key aspects of the value chain, products, services and processes that can be fixed or changed in some way. Once the opportunity is identified, they are able to recommend solutions, test and refine them with customers, then commercialize.

The innovations themselves do not occur in a vacuum. Innovation consultants don't just come up with a good idea - they come up with questions that they either answer themselves or have answered by customers and employees.

How often does a public speaker give an average or sub-par presentation followed by a question and answer session where they become interesting or even dynamic?


It is an interesting phenomenon. No matter how little creativity or originality someone possesses or however ill-prepared they may be, when they are asked a good question, they can provide a good answer. This may be the result of an educational system that emphasizes answering questions, or it may be a more fundamental survival mechanism where human beings are hard-wired to solve immediate problems such as if there is no food, figure out how to get food.


However, if a problem is unclear, ill-defined, or not immediate - it becomes much more difficult to solve. That's why experienced speakers tend to prepare by developing un-spoken questions that they can then answer in their prepared remarks. They make the problem of: "give a good speech" more clear, defined and immediate by changing the problem to, "answer this question".


The same dynamic occurs when trying to prompt innovation. In a way, consultants are the motivational speakers of innovation. Isn't it curious that most innovation consultants are also persuasive presenters?


2. Competition


The very act of competing can force one to question the status quo, especially when the competitor is far from being the dominant player. The small competitor, in order to survive, must challenge reigning orthodoxies - otherwise they will be crushed by dominant players' resources.


No one could reasonably compete with Xerox's domination of big business copying - until Canon questioned the format, the price model, the sales channel - even the customer target and transformed the entire industry (becoming the number 1 seller of copiers in the process).


United and American Airlines defined what a commercial airline was - how to make money, how to operate their business, how to talk with their customers...until start-up Southwest Airlines questioned everything from ticketing procedures to boarding to meal service. Instead of asking themselves how to become the number 1 airline, they asked how they could get another round trip out of every airplane per day, how to better incent their employees for customer service, how to appeal to customers who rarely fly...and in the process they became the most profitable airline in the history of aviation.


The innovation advantage may very well go to the new entrant. It almost seems easier to challenge what one doesn't have in the first place. What do they have to lose? Unfortunately, small companies can lose everything if they are wrong. But if they succeed, they can often transform their industry. That's why many larger companies like GE, IBM, Microsoft and Google tend to acquire small companies and their innovative products once they have been proven successful. In effect, they've "outsourced" their innovation to smaller start ups.


As Xerox, United Airlines, General Motors and many others have discovered, however, it is somewhat risky to leave innovation to the competition.


3. Employee Innovation

When you ask a team of people the right question, it's amazing what they can come up with. An inspiring story about how teams can innovate comes from the experiences of Apollo 13. When flight director Gene Kranz needed to help the stranded astronauts build an improvised air filter, he assembled a group of engineers, presented the problem, made clear what the stakes were, presented all the items the astronauts had on board the capsule, then told them to come up with a solution. He asked a better question. He made the challenge specific.


When GE's jet engine unit asked customers about the repair of their jet engines and showed them how they were repairing those engines faster than ever - their customers told them something to the effect of, "I don't care how fast you repair the engines, I'm still not able to fly the plane until it gets back on the plane." The team of engineers at GE realized that they could probably deliver a faster turnaround if, instead of shipping the engine to the factory they brought the factory to the plane. By getting a specific challenge from their customers, they went from simply working faster to working smarter.


There are many innovation programs and initiatives going on inside organizations to encourage this kind of employee problem solving, but too often they don't deliver real innovation. They seem to ask too broad a question - something like, "how can we make our company number 1?" or "how can we reduce costs and increase revenues?", or even worse, "how can we become more innovative?" There seems to be too much of an emphasis on open brainstorming or collection of ideas and best practices. It is still possible to innovate without specific and immediate problems to solve, but it can be difficult at best. At worst, these kinds of programs either lead to small adjustments or to innovations that don't really matter to anyone beyond a very small interest group.


There is a better model to encourage innovation. Instead of asking for best practices, companies should learn to ask their employees specific questions - then reward anyone who answers them well. This process has been proven to yield incredible results.


In 1919, Raymond Orteig offered $25,000 to the first pilot who could fly non-stop between New York and Paris. There were no restrictions of how that pilot could develop his or her plane, how they flew it, or who financed them. A great number of entrepreneurs, pilots and engineers tried to answer this question. They used any number of strategies and designs, but ultimately, the innovation that helped create the $300 billion commercial aviation industry didn't come from a known organization or blue chip company. None of the airplane manufactures drove the innovation. Instead an unknown airmail pilot named Charles Lindbergh, experimenting with a simple plane design and powerful single engine, made the trip alone in 1927.


Recently, the X-Prize Foundation offered $10 million to whomever develops a production ready, reasonably priced car that gets the equivalent of 100 miles to the gallon and that can win a multi-day staged race across the country in the summer of 2010. A very specific, immediate question that will likely lead to the next blockbuster efficient car in the US. The industry has spent far more than $10 million trying to deliver this kind of innovation, but I won't be surprised if this investment will lead to a far greater breakthrough than GM or Chrysler could ever manage.

Beyond the X-Prize, there are a good number of organizations such as NASA, Google, Netflix and the Department of Defense who are asking questions and offering prizes to anyone who can answer them. They have found that asking a simple, direct and immediate question along with a financial incentive for whomever is willing and able to answer it, yields surprising innovation, productivity and speed to market all at a fraction of the cost of traditional R&D.

The impossible can become commonplace because someone asks the right question.

Therefore, a more effective innovation program inside companies would not ask for best practices or innovation ideas, it would ask simple questions and incent anyone and everyone to answer them.

No one wants to innovate - they have to.

Why would anyone want to innovate?

Despite the excitement of finding something new, despite the potential success of a breakthrough concept, despite the honor history affords to innovators like Thomas Edison, Steve Wozniak, Orville and Wilbur Wright, Madame Curie, Galileo, Henry Ford and many others, innovation remains a high-risk, difficult and painful process. Innovators routinely face mistakes, dashed hopes, financial stress, and constant uncertainty. It’s hard, painful, unpredictable, and sometimes even embarrassing. Innovations that are ahead of their time have a tendency to fail. Innovations that are too late are usually eclipsed by others. Recent history is filled with expensive and publicly known failures such as the Apple Newton, the Sony Betamax, credit default swaps, the Bush doctrine and Crystal Pepsi. Most organizations have any number of failed new projects and initiatives that no one really wants to talk about.

Most people and organizations aren’t very good at innovation. It requires them to challenge everything they know to be true, and it quite often doesn’t work.

It’s far better to continue doing things the same way you did before. It’s far more rational to keep things going as long as you can. It’s far easier to keep selling the same stuff over and over again to customers and clients. Why innovate, when you can just gradually improve? Why innovate if you can get better at what you are doing now? Why innovate when it might cannibalize your existing products and services. Why innovate if you can apply proven formulas to solve problems?

A terrific way to avoid actual innovation is to create an innovation or best practices program. Most programs ask employees to submit their innovation ideas through some kind of application process. Ideas are then collected centrally - sometimes through sophisticated database applications, sometimes through varying versions of the old suggestion box. Once collected, they are judged by a panel of some kind, to determine which ideas are awarded recognition, prizes and ultimately implementation.

Wonderful ideas are usually acquired in this kind of program, and very quickly, employees will figure out what kinds of ideas are most likely to win recognition and prizes....ideas that help reduce costs always do well, as do ideas that can easily and quickly be implemented - usually referred to as "low-hanging fruit". Employees feel like they are part of an innovative culture, managers feel like they are innovating their company, and everyone is rewarded for good ideas.

Programs like this are easy-to-do, inexpensive and a lot of fun. Unfortunately, they don't actually innovate. They can incrementally improve existing models, but they can't really create new ones.

It's a paradox of innovation and human nature: Everyone wants to innovate and wants to create breakthroughs, but they rarely do. Our governments talk up the need to innovate and our politicians note that our country's success is built upon constant innovation. Our businesses constantly claim innovation as a differentiator and as a key to success. Individuals talk about reinventing themselves, becoming better people, losing weight, becoming more enlightened or quitting smoking. Everyone wants to innovate...but unless they have to innovate, there are too many reasons not to.

Innovation sometimes reminds me of dance. When anyone witnesses a great dancer such as Fred Astaire, Margo Fonteyn, Mikhail Baryshnikov, Martha Graham, or Cyd Charisse, it is likely that they want to dance as well. Who wouldn't want to tap accross the dance floor like Fred Astaire with Ginger Rogers on your arm? Who wouldn't want to glide through the air as elegantly and beautifully as Cyd Charisse? Everyone wants to dance - just like everyone wants to innovate.

Professional dancing, however, is an incredibly difficult profession. It takes years to learn how to perform most dances even adequately. Dancers endure brutal days of practice, constant exhaustion, little time for intellectual or social pursuits, permanently damaged feet and destructive diets all for the chance to make little money in a short career that is over before they reach 35 years of age.

Although everyone may want to dance, very few actually go through the difficulties and sacrifices in order to become a dancer. This was very well understood by the choreographer George Balanchine who said, "I don't want people who want to dance, I want people who have to dance."

Innovation, like dance, doesn’t happen because we want it to happen. It happens when we have to do it...when there is no other choice.

Innovative people and organizations tend to become innovative for one of three reasons:

1. They are unable to function, compete or thrive within the existing model - so they change the model to suit themselves.

Individual innovators find themselves inventing new products, new ideas and new ways of doing things because they are incapable of thriving with the old ways. Even if they wanted to conform, it might not be possible for them to do so. Most innovators find it very difficult if not impossible to follow directions – instead, they find it easier to innovate. How well for example, would Richard Branson do if he applied for a job at an established Fortune 50 company? Could Steve Jobs fit in well as a manager at IBM? How often do entrepreneurs continue to serve as a manager when they are acquired by another company?

I recently spoke with a colleague that consults companies on innovation projects, and he confessed to me, "It would be so much easier if I could just do things the way everyone expects. I would probably make more money, I would have more time off, and I wouldn't be so stressed out all the time...but I don't know how to do that. I have to innovate, there's no other choice for me."

2. They are new to a market, organization or game, and can't hope to compete with the existing leaders - so they change the rules of the game to favor themselves.

Xerox dominated the copying business for decades. Whenever a new competitor like IBM tried to gain a foothold in that market, Xerox always won. They were just too big, had too strong a relationship with their customers, and had too much of a head start. But then came a camera company called Canon. They didn't bother to play at the Xerox game of selling large photocopiers to large businesses - instead they came up with a small, less productive, less expensive copier that small businesses could buy and put on top of a desk.

In a few years, the small business market became the small and mid-sized business market - then large companies realized that they would do better with a larger number of small photocopiers vs. a few large Xerox copiers. Canon is now the giant in photocopying, and Xerox is playing catch up.

Canon's innovation changed the rules of the game so they could win. Without innovating, they couldn't even enter the market - so they had to do it.

3. The environment has changed so much that an individual or organization can't thrive anymore, so they change to adapt to a new reality.

This is where almost everyone finds themselves today. The economy has fundamentally changed, and only those who innovate will survive, much less thrive. The current downturn reflects two fundamental assumptions that everyone depended on and built their organizations upon whether they realized it or not.

In the 1990's and into the new century, business models assumed, conciously or not, that there was an unlimited and reliable supply of energy. With oil easily available and less than the cost of bottled water, everything from manufacturing to professional services could do more in a larger geographic footprint at a lower price than ever before. Now, without a consistent supply and price, it is difficult to make those business models work as well as they did only a few years ago. Without cheap and plentiful energy, we have to innovate alternatives.

Also in the 1990's, equity and debt financing became so easy to obtain and so inexpensive that companies could create much higher margins from almost any activity. Whether we realized it or not, much of our activities were based on different forms of leverage. Now that capital is difficult to source and ultimately more expensive, we have no choice, we have to innovate what we do and how we do it.

Innovation only happens when there is no other choice. With the changing of our economy, many more companies and individuals have to innovate for the first time. In the past, a few individuals and companies innovated to make things better for themselves, to allow themselves to win when they didn't have all the cards in their favor. Now, everyone is in a position where they must innovate if they wish to survive.

Why would anyone want to innovate? They don't.

But they must innovate if they want to succeed.

Don't just throw money at it - innovate it.

One of the more exciting movies in 1978 was a film about Vietnam called "The Deer Hunter" directed by Michael Cimino.  It won five Academy awards that year, including best picture and best director.  Vincent Canby of the New York Times wrote:

"Michael Cimino's "The Deer Hunter" is a big, awkward, crazily ambitious, sometimes breathtaking motion picture that comes as close to being a popular epic as any movie about this country since "the Godfather."'

It seemed that this was the first time that a popular, mainstream Hollywood movie captured the national anguish of the Vietnam War in a way that many people could relate to and understand. Although Mr. Cimino had directed a successful film before, "Thunderbolt and Lightfoot", this was his first film that made everyone take notice.  It was a breakthrough for American popular culture as well as for Mr. Cimino.

The film cost about $15 million to make and grossed over $50 million. 

In 1980, Mr. Cimino's next film was released, Heaven's Gate. It was a breakthrough of another kind - one that almost destroyed his career as well as United Artists.  Vincent Canby's review from the New York Times included the quote:

"...an unqualified disaster..."

The film cost about $40 million to make and grossed less than $3.5 million.

Although there are many reasons why one film was successful and the other was not, (most of which I am not qualified to comment on), there is something instructive here for innovation:

New projects may not always do well when too much money is thrown at them.  

Although an investment is required - paradoxically, too much money can have a stifling effect. Innovation and problem solving on a movie set (or with a product or a company) is difficult and risky. When there is ample money involved, the tendency is not to risk it. One can always buy a solution if you have plenty of money to spare. Conversely, when money is scarce and resources hard to find, it is easier to take chances, to experiment and to innovate.  

Interestingly, there is a footnote to "Heaven's Gate".  Even though the initial release was not very successful, it spawned innovation anyway.  Jerry Harvey of the Z Channel (a cable pay TV channel) released a revised "Director's Cut" of the film that was reasonably successful with their subscribers as well as on VHS and DVD releases.  It may have been one of the first "Director's Cut" releases - and since then, "Director's Cut" VHS and DVD releases have enjoyed brisk sales for other notable films.  "Heaven's Gate, the Director's Cut" was a video marketing innovation.

My guess is that Mr. Harvey felt there wasn't that much money at stake to try something new with a movie that wasn't successful.  The risk was relatively low and the reward was high enough to make it worth while.

Innovation, whether it is in movies, in science, or in business, is a difficult, risky, dirty and often painful process.  If a situation is too easy - it might not be worth the trouble to innovate.  Most of the big innovations of the computer age seemed to have started in garages.  Some of the best ideas inside companies come from those pilot projects that few people even know about.  The most effective marketing can come from companies short on cash but long on need to reach out to new customers.

Here's a simple example that I came across recently that shows how a lack of money can encourage innovation:

Recently, my dentist of the last dozen years, (Dr. Shawn Post) handed me a stack of business cards.  Business in the current recession is challenging, as many patients are putting off their regular visits in order to save money.  He is the best dentist I have ever worked with and most of his other clients are as fiercely loyal as I am.  Over the years, I have referred a number of friends and associates to his care.

Like most small medical practices, he has limited resources for marketing his services, and no sales force to help find new clients.  Instead he decided to outsource his sales and marketing to his clients.  

On the back of each business card is a $50 gift certificate.  Any new client who brings the card in for a dental visit, will get $50 off.  Plus, anyone who gives this card to that new client will also get $50 off.  My dentist is paying his clients $50 for each new client they bring in!

The simplicity as well as the sophistication of this tactic is striking.  It is measurable, it leverages the fierce loyalty of his clients, and it undoubtedly will lead to new business.  All of this for the up-front cost of a box of business cards.

Of course, this kind of tactic wouldn't work for a successful Fortune 500 company...or would it?

Now that resources are tight and the need for new business more imperative than ever, all the right conditions are in place.  No more throwing money at a problem - now it's time to innovate.

Time to Ignore the Competition

One of the first questions businesses ask- especially when sales are down, when the markets are tough, when customers are lost - is, "what is the competition doing?"  Many innovation projects start with researchers and consultants probing the market to understand what competitors are up to. Marketing is analyzed, products are investigated and former employees are often questioned - all in an effort to understand what the competition is up to, and what should be done to compete with them.

It's almost as if companies are trying to innovate by asking what was done in the past.

Unfortunately, this kind of research never leads to innovation.  When the focus is on what a competitor is doing, one is condemned to follow what a competitor does. Even if one improves on something that a competitor is doing, only small increments of change are possible. Innovation that changes markets, creates new customers, and delivers high margins and profitability does not come from the competition.

Would Edison have created a business around electic lights and electric distribution if he had paid too much attention to the gas light competition?  Could telegraphs have been developed by trying to innovate a better horse and rider?  The personal computer was developed - not as a competing super computer to the mainframes - but as a completely new path, use and user for a smaller, cheaper, more flexible computer.

Instead of listening too much to competition, perhaps it's time to listen more to customers. Customers may not always know what they want, but they can tell you what bugs them, what they want to do with their lives, with their businesses, with their families.  Customers can give you opportunities, challenges, and new ideas - but only if you are willing to listen to them.

And by listening, I don't mean researching them...that's what the competition is doing right now. Instead, try sitting down and talking with them.  Throw out some ideas and see how they react. Ask them why they disagree with you. Try to find out what makes them laugh.  

The competition always has the same old ideas.  Customers have all sorts of new ones - if you sit down and talk with them. 

If you want to innovate, try ignoring the competition for a little while.

Can you afford to innovate now?

During difficult economic times,  many ask, "can't innovation wait?" It seems a reasonable question - companies are facing catastrophic losses, reduction in demand for their products and services, and uncertainty in debt markets, legislation, and fuel prices.  Why engage in the risky practice of innovation - or change what you are doing - when there is so much danger, uncertainty and change in the world around you?

Isn't it better just to hold on and wait for this storm to pass?

No.

Consider the following list of companies:

General Electric

Hewlett-Packard

Jim Henson Company (the Muppets)

Hyatt Corporation

Fed Ex

Microsoft

Apple

CNN

What do they have in common?  

When they began they all challenged the accepted business model of their time.  They were all innovators. 

They also all started during recessions. 

General Electric created entire industries that didn't exist before - even though it started during the financial panic of 1873.  Hewlett-Packard started during the great depression, but created technology that helped to win wars and build entire industries.  During a recession in the late fifties, Jim Henson transformed puppetry and in the process created a massive global entertainment platform while Hyatt Hotels  began to build a global portfolio of hotels.  Microsoft and Apple were started during a time (the 1970's) when multiple recessions had convinced most experts that American business was no longer able to grow. Fortunately, those experts were wrong - in great part, thanks to the innovations of personal computers and the Internet.

How is that possible?

There are many reasons for a recession to happen, but whenever an economy is in one, the rules for success change dramatically.  Capital becomes scarce, raw materials unreliable, customers reluctant to buy.  What was easy before suddenly becomes more complicated.  Products that everyone had to have at any price before, suddenly lose their value.  But as long as there are still people living their lives, there are ways to create something they need, want and will pay for - it just might be a little different than it was before.

As an example, during the year-long recession in 2008, innovative on-line retailer Amazon had a 28% increase in net income. At the same time, retailers that did not innovate such as Circuit City are facing diminished market share, lost sales and even bankruptcy.

Companies that perceive and understand the new rules in a recession are able to innovate and thrive, while those that continue as they did before risk losing everything.  

Most people's natural inclination is to continue doing what they did before - even when it doesn't work as well as it used to.  Innovators change what they are doing, how they are doing it and even why they are doing it in order to succeed in a new environment.

Strangely then, the most dangerous strategy is to avoid innovation during a downturn.

It's times like these that the imperative for every company, every leader, every manager must be to challenge all assumptions based on a rising market.  Every process, every service, every product must be looked at from a fresh perspective - and changed to fit the new reality of a down market.

In a recession, can you afford not to innovate?