January 28, 2010
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Business Forecasting 2012
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This emotional statement is what all marketers dream of hearing. When someone “wants” something, they consider comparative “wants” - this choice versus that. But when they believe, and say, they “need it.” Rational or not, they are “hooked.” In this case, price is often of little consequence. They just “gotta have it.” This is a sign that innovation has been truly effective in creating a demand on an emotional level, where none existed before. Emotional need is compelling. It “hangs around” until fulfilled, even if that takes weeks or months.
Technological need has different roots, a better way, or an easier or faster way, or sometimes, a “cooler” more fashionable way of doing something. How could productivity in the U. S. have increased at an unprecedented 8.1% rate in the past two quarters? A large factor was that these were two technologically innovative and entrepreneurial quarters - times when people “needed” new and better ways to do things. They often turned to technologically better solutions, some of which led to totally new ways of doing business. Why? Because they “needed it!”
“Innovation always takes us by surprise. When the first Motorola brick-sized cell phones were introduced in 1983, the most ambitious projections were for 50 million phones in use in the year 2008. However, in 2008, more than 3.3 billion cell phones are in use around the globe. How could we consistently be so wrong about the future?” - Tom Koulopoulos in Innovation Zone.
Meeting Unrecognized Needs is the Big Win
Innovation usually aims to meet “unmet needs.” The most powerful innovation meets needs that had previously been “unrecognized needs.” Asking consumers or buyers what they want usually leads a recitation of improved versions of current solutions. When a whole new solution, to a previously unrecognized need is discovered, a big hit can result.
The classic example is the old FedEx story. Nobody knew they needed to “absolutely positively get things there the next morning.” Why? Because no one had ever done it, and few people knew it was possible. Swiffer met an unrecognized need a different way. Who would think of making a disposable and better version of a dust cloth or floor mop? No more “rearranging” the dust. Collect it “electro-statically” and then throw away the cloth with the dust clinging to it.
Then there is the explosive growth of bagged, chopped lettuce at many times the price of regular lettuce. Who dreamed people would pay so much for convenience of “salad in a bag?” Surprisingly, even during an economic downturn, the habit of buying a “salad in a bag” often trumps the savings of buying bulk ingredients like lettuce and vegetables.
Innovation Improves Performance or Enjoyment
There are thousands of examples to illustrate how innovation generates “need” by enhancing performance or enjoyment of a product. Want to play a music video on a 1.5-inch screen? The new iPod can do that—it just took someone to remind people that would be fun and worth the price.
Few areas offer richer examples than sports equipment. The erratic weekend golfer will pay $200 for a putter that is perceived to make them a better putter. Does it? Probably not. But the factual outcome doesn’t matter. The greatest innovations play to emotions and perceptions, not reality. “They need it.”
Golf clubs that hit the ball straighter or further is one of those “I need that,” items. Golf balls all seem to be very much alike, yet golf ball makers like Titleist have innovated balls that actually do perform better—for golfers skillful enough to use them. For the weekend golfer, it matters little if the great performing golf ball is part fact and part fantasy. If the pros play it, “I need it.” The same applies for tennis racquets, composite baseball bats, hockey sticks, skis, and many other kinds of sporting equipment. These are not simply unmet needs. They are powerful unrecognized needs.
Reality Is Better Than Illusion & Endorsements Are Better Yet
Athletic shoemakers have actually created better performing shoes. The improvement is measurable, recognizable, and often bears little relation to the price. When a leading athlete endorses a shoe (such as Michael Jordan did), the combination of performance and endorsement adds to the aura of Air Jordan shoes. “I need them!” Runners can actually detect this advantage in less wear and tear on their feet and legs, or perhaps lighter weight or better support. They actually do “need them.”
Combining a celebrity athlete endorsement with a performance improvement and unique cosmetic appearance is a winning innovation that pays off in big profits. That’s why the star athletes can command huge endorsement fees. A great performing product, absent the professional endorsement must gain its success through the arduous use and word of mouth process. This is a slower and much less certain path.
“They can steal our ideas but they can’t steal our mind, so they’ll be sweating and straining and a season behind.” - H. M. “Huffy” Huffman, former Chairman of Huffy Bicycles
Beware of Product Life Cycles & Knockoffs
All innovations breed knockoffs if they are truly successful. The knockoffs may actually perform much like the real thing—or they may not, and simply be cosmetic copies. In fields like golf equipment, whole industries have sprung up to replicate successful golf club designs under anonymous, non-endorsed brand names. Ping was an early golf club innovator that spawn a whole industry of “look alike” knockoffs.
The most well-known “knock offs” of innovations occur in premium price areas like high-end watches, ladies purses, and other highly brand-conscious, fashion differentiated items like the ubiquitous Burberry plaid. The classic Rolex “fluted bezel” design now shows up on watches in all price ranges. Most are clearly branded by the makers, and do not pretend to Rolex’s vaunted prestige and quality. However, a short trip to the Internet will find “replicas” of most designer watches, handbags, etc. at a small fraction of the price of the real thing. For someone who believes “I need that,” these are substitutes until, if ever, they can afford the real thing. Such items do not steal sales one for one, but they do dilute the market demand.
Innovate to Stay in the Lead
Does this mean innovation is not worth the effort for Rolex, Gucci, Louis Vuitton or Burberry? Not at all. Innovation is what keeps leaders ahead of the pack and allows them to define the fashion trends. Around the time that the knockoff artists have copied the most popular models, new ones come out and set new product life cycles in motion. Some people feel “I need that” about the prestige of the genuine article and will not consider a lower quality replica.
Price premiums and low price knockoffs get in the way of innovation, but eventually, the “need” wins out, and the innovator has the advantage of being first. Matching creativity to solutions that never existed - or were never imagined - is at the heart of successful innovation. Then comes the hard part: implementing and commercializing the idea. But that’s another story. When you find one of those “I need that” ideas, everything else becomes easier. Always remember the words of German philosopher Arthur Schopenauer: “Talent hits a target no one else can hit; genius hits a target no one else can see.”
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John L. Mariotti is President and CEO of The Enterprise Group. He was President of Huffy Bicycles, Group President of Rubbermaid Office Products Group, and now serves as a Director on several corporate boards. He has written eight business books. His electronic newsletter THE ENTERPRISE is published weekly. His Web site is Mariotti.net.
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TJ McCue 1 year 13 months and 0 days ago
Terrific examples and stories. Thanks, John. I like Mr. Huffy's thoughts -- just keep moving faster and thinking smarter...