Few business topics garner as much ongoing attention as innovation. No one disputes that it's critical to success and bottom-line results. Yet, in today's highly disruptive and fast-changing business environment, it's also apparent that most organizations, and CMOs, struggle mightily with innovation--as well as how to transform the somewhat vague concept into tangible results.
Indeed, great ideas sputter while mediocre ideas flourish, fear of failure blots out opportunities, and what passes as innovation often is not. It's simply a different way to do the same thing--and achieve the same unimpressive results.
Too often, said Jennifer Garvey Berger, a partner at Cultivating Leadership, business leaders and marketing executives should "look at the edges of a complex problem rather than at the center." Moreover, many organizations have little or no appetite for failure. Instead of viewing mistakes and disappointments as a natural process and a "core learning" opportunity, they shoot down one idea after another and play it safe.
The key to success? Rethinking, reframing, and rewiring things in order to "innovate around the way an organization innovates," Berger told CMO.com
Navigating this wild frontier is challenging. In a world that's increasingly filled with massive data sets, complex models, and heavy-duty number crunching, CMOs must toss aside myths, misconceptions, and conventional approaches to marketing. Berger argues that innovation means moving from "managing the probable" to "leading the possible." Said Jeff Jacobs, a partner at McKinsey & Company: "A lot of people think about innovation as a product or service, but it’s really about looking at the whole business model and how you deliver experiences that delight customers."
To be sure, innovation can revolve around the big things--an entirely new product or service that allows consumers to behave in a fundamentally different way. Business such as Airbnb, OpenTable, and Uber demonstrate what's possible.
But it's also about changing seemingly small or basic things--such as the way a consumer receives a promotion or places an order. For instance, Starbucks, Panera, Chipotle, Subway, and other food and beverage firms now offer "order ahead" capabilities through mobile apps. Some tie purchases directly into loyalty programs and send marketing messages and promotions through their apps. "Innovation is all about introducing some level of disruption and creating greater value for customers and a business," said Daniel Benton, global lead for technology strategy at Accenture.
Beyond The Ordinary
It's no secret that people--and businesses--often gravitate toward certainty and predictability. When Berger and Zafer Achi, director emeritus of McKinsey's Dubai office, examined innovation in a March 2015 McKinsey Quarterly article, “Delighting in the Possible,” they offered some perspective on the matter: "Long ago, shamans performed intricate dances to summon rain. It didn’t matter that any success they enjoyed was random, as long as the tribe felt that its water supply was in capable hands. Nowadays, late nights of number crunching, feasts of modeling, and the familiar rituals of presentations have replaced the rain dances of old. But, often, the odds of generating reliable insights are not much better."
Moreover, they noted, the anxiety that arises from various business problems is fundamentally misdirected. When situations get too stressful, people typically fall back on the familiar--essentially standard operating procedures. Berger and Achi referred to this as "managing the probable," and it often leads organizations--as well as marketing executives--down a path of predictable questions: What is the expected return on this investment? What is the three-year plan for this venture? How can I achieve a high conversion rate on this promotion?
Unfortunately, an excessively simple and restrictive model doesn't account for the broadness of complex situations--or, in the case of marketing--the entire consumer life cycle. The result? "We operate with an excessively simple model in enormously messy circumstances. We fail to perceive how different pieces of reality interact and how to foster better outcomes," Berger and Achi noted.
To be sure, there's a need to view problems and challenges in a fundamentally different way. In most instances, this translates into moving away from a mind-set that there's a single approach or perspective that's valid. In their article, Berger and Achi argued that the conventional "fact-based view" or "maximizing key stakeholder alignment" tact can be dangerous--and instead suggested using a broader range of questions, data points, and issues.
Likewise, Peter Krasilovsky, vice president and chief analyst for BIA/Kelsey, said that it's critical to apply the same thinking to tools, technologies, and overall strategies. "Many CMOs continue to focus on a heavy diet of advertising, but today’s marketing solutions require campaigns that are integrated with social media and other channels, such as transaction-based analytics," he told CMO.com.
Understanding the connection points across technologies--how they overlap and interconnect--is critical. "Today's technology is truly disruptive and significantly impacts the way organizations interact with customers and make money. It's important to look at things not just through a technology lens, but, instead, through a lens of how technology is changing behavior and the way people interact with businesses," Accenture’s Benton told CMO.com.
In marketing, this means moving beyond silos and the tendency to think about tools as discreet entities--including social media, mobility, cloud computing, and data analytics, for example--and learning how to connect the digital dots in a way that creates new and more efficient interaction points with consumers. Speed, convenience, value, and simplicity are at the center of this equation. The ability to combine tools, technologies, and data in the right way across channels introduces a level of synergy that wasn't imaginable only a few years ago. Said Yvonne Genovese, group vice president at Gartner for Marketing Leaders: "There are huge opportunities for organizations that get things right."
A starting point for constructing a more innovative marketing organization and finding ways to "delight in the possible" is to understand how to put the concept into motion. McKinsey’s Jacobs told CMO.com that he believes opportunities exist everywhere. "It could be creating new products or services,” he said. “It could be creating entirely new experiences. It could be finding clever ways to deliver experiences."
But it doesn't stop there. "It could also involve finding new ways to communicate with customers,” Jacobs added. “It could tie into new ways or places to distribute a product." The common denominator, he said, is that innovation requires a break from a business-as-usual mind-set and a willingness to look for "new and fresh ways to gain insights."
A critical issue, said Karl Isaac, director of brand strategy and innovation at Adobe (CMO.com's parent' company), is to build a culture of innovators rather than focusing on only innovation. It's paramount to align with a vision and purpose.
"It's not so much about technology; it's about the mind-set and the approach to problem solving: testing, learning, and focusing on how you can delight customers rather than becoming overly fascinated by any of the latest tech," he told CMO.com. "This requires a more open-minded approach--it means evolving beyond a defensive approach to branding to an offensive one. The hallmark of branding has traditionally been around control, consistency, and protecting intellectual property. In this era, it's more about embracing an optimistic and open-minded mind-set that capitalizes on real-time opportunities across channels."
For example, the old model would result in activities, such as putting ads on Facebook or radio. "But marketing is no longer a funnel," Isaac added. "It's a loop, and achieving great results requires communication and collaboration with customers, partners, and sometimes even competitors. In the process, you begin to redefine your products, spark new movements that are aligned with your brand, and create new brand experiences."
Companies that succeed, Isaac said, introduce "new models that customers and partners can build on and extend rather than walled gardens that protect and defend." Today, this means developing more open products, platforms, and solutions that fit into a larger ecosystem.
Asking new and different questions is a crucial component, Berger said. As a result, there's a need to see issues from multiple perspectives, embrace different opinions and viewpoints, shift core assumptions, and run meetings in entirely different ways. "You can't simply dismiss an idea because it sounds strange or doesn't seem to make sense," Jacobs said.
In fact, organizations, and marketing executives, must stretch beyond the comfort zone and veer off the rails at times. As Berger and Achi put it: "It takes new habits of mind to lead the possible." Because no one can predict when or where the next vital idea will emerge, it's essential to take an expansive view. This may translate, for example, into using social business tools and crowdsourcing both internally and externally. In some cases, this means ceding the janitor or secretary the same power as the CEO.
Breaking away from a conventional orbit may also require pushback from the belief that data in hand represents the entire picture--or even an accurate picture of events. As the Internet of Things takes shape and data sources grow, the challenge isn't so much about gathering data but, rather, assembling the right data in the right way. This requires human oversight and new skills from data scientists and business analysts who can reframe and recast things--and see outside departmental or companywide myopia. Berger said that business leaders must avoid the natural tendency to seek alignment and tidy closure on issues. In some cases, there may be a need to role play and explore frustrating, unappealing, or completely oppositional viewpoints.
Innovation also requires leaders to establish an environment where it's acceptable to fail while learning iteratively and building on knowledge. Organizations or business units that operate in fear generally do not innovate; they stay on safe ground and ultimately risk leaking market share and revenues. Berger said that rather than adopting a single approach, campaign, or solution to address a challenge, it's wise to select several options and test them in small and controlled situations. Through analytics and other tools, patterns--and opportunities--become visible. It's suddenly possible to identify specific factors that lead to failure and success, examine the edges of the issue, and arrange things in a way that unleashes real breakthroughs--and better results.
Of course, a culture of innovation requires a different type of leader than in time's past. Not only must CMOs and others lead within a flatter and more egalitarian structure, there's a need to think about business and technology in a fundamentally different way. "It's not just about making the transition to a digital business or marketing department. There's a need for innovation in how marketers communicate with customers," Jacobs said.
In addition, marketers can benefit by moving away from isolated processes—say, buying digital impressions in a vacuum, and toward a more comprehensive and holistic engagement model that spans technology tools and channels. "Innovation in marketing isn't about chasing the next big technology. There's a need to understand the underlying processes and what key factors contribute to success," he explained.
Best-practice organizations frequently take a 70/20/10 approach to innovation, Jacobs said. About 70% of the marketing budget is directed to "tried and true" methods, about 20% is allocated to newer and more innovative things, and about 10% goes to experimental concepts, which might include beacons for delivering contextual promotions to customers via mobile phones or more advanced analytics techniques that tie into fluctuating demand and load patterns to produce dynamic pricing and promotion models.
The takeaway? It's important to have an appetite and a budget for some experimentation. "When there's too much adversity to risk and failure or people are criticized, things get shut down very quickly and innovation winds up completely stifled," Jacobs said.
Isaac added that seeding or funding ideas, projects, and initiatives can pay huge dividends. Adobe's KickBox provides $1,000 to anyone in the company to develop an idea. Google and other companies take a similar tact by providing money and time for employees to search the wild blue yonder. Said Isaac: "Sometimes a lot of bad ideas lead to a few great ones."
In the end, Jacobs said he believes that innovation is too important to ignore. It's a "tremendously exciting time for marketers and companies--but it's also a bit scary," he added. CMOs must resist the temptation to constantly chase the next big thing and spread resources too thin or wind up on the bleeding edge. They must focus on deeply understanding consumers and building insights that create real value.
"It’s not necessary to innovate across the board and in every situation. It's possible to excel in specialized areas and build from a foundation based on innovation,” Jacobs said. “Businesses and marketing departments that are the most innovative have a bold leader that understands there's a need for entirely different thinking and they adopt a broader approach that spans technologies, channels, and conventional ways of tackling work."
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