Innovate to Invigorate
It is well-known in the consumer packaged goods (CPG) industry that companies must innovate to survive, but where should they start? Werner Graf, general manager for TCS, provides some lesser-known resources for innovation including how to match your customers’ pain points with the right technology, for success.
How can CPG companies use innovation to get closer to clients?
Graf: Effective innovation lies at the intersection of 1) customer pain, 2) market expertise and 3) company culture. Most companies dwell on internal mechanisms to innovate: R&D, PLM tools, internal innovation cultures, etc. But the true catalyst for innovation is the external.
Unfortunately, imagining the unimaginable is not your customers’ forte. Asking customers what products they want will most likely yield only a description of “features”. The key is to start asking what problems need to be solved. Chances are that your most unhappy customers are your greatest source of learning. Ask, even incentivize, this treasure trove of discontent for desired outcomes, not solutions. Then use the external to invigorate the internal.
How can innovation invigorate a company?
Graf: The tremendous advances in what some people call “exponential” technologies are allowing companies, and even individuals, to do what only conglomerates and governments could do only a few decades ago. The exponential rate of development (and accompanying drop in cost) for technologies like robotics, sensory devices, nanotechnology, genetics, artificial intelligence, digitization, etc., will disrupt the entire market. Survival will depend on each company’s mindset. To fire up your firm’s imagination, merge a rigorous discipline of understanding the new capabilities generated by these exponential technologies with those problem statements from your customers and do it in the context of your company’s field of expertise.
Case in point is the origin of the disposable diaper. Victor Mills was a chemical engineer at a P&G paper plant. While caring for his grandchildren in the early 1960’s he was reminded of the tedious, unsanitary job of changing diapers. This was true pain. He internalized this pain point, merged it with cutting-edge absorbency technology (he was an expert), and one of the world’s great paper companies revolutionized child care with the invention of Pampers. A good idea is nothing if not used. Only by marrying Mills’ pain, with a thorough knowledge of technology and a culture of innovation allowed P&G to turn poop into plunder. Not only did Pampers drive P&G’s bottom line (pun intended), it improved the standard of living for the entire world.
What is the biggest risk for companies that are not in touch with clients?
Graf: The trap of incrementalism opens the field for competitors not constrained by the now. How much bigger is P&G’s paper division because of the advent of the disposable diaper, a product inconceivable to customers just years before? Companies should use this new era of social media, mobility and big data to understand customer pain points, then merge this with their inherent market strengths and a constant evaluation of all exponential technologies. Risk aversion and incrementalism will kill companies unable to cope with the coming decades of disruptive innovation. To be stagnant is to die. Once you feel the customers’ pain, invigorate your company to disrupt its own business model or you will be disrupted by others.
How can CPG companies use innovation to get closer to clients?
Graf: Effective innovation lies at the intersection of 1) customer pain, 2) market expertise and 3) company culture. Most companies dwell on internal mechanisms to innovate: R&D, PLM tools, internal innovation cultures, etc. But the true catalyst for innovation is the external.
Unfortunately, imagining the unimaginable is not your customers’ forte. Asking customers what products they want will most likely yield only a description of “features”. The key is to start asking what problems need to be solved. Chances are that your most unhappy customers are your greatest source of learning. Ask, even incentivize, this treasure trove of discontent for desired outcomes, not solutions. Then use the external to invigorate the internal.
How can innovation invigorate a company?
Graf: The tremendous advances in what some people call “exponential” technologies are allowing companies, and even individuals, to do what only conglomerates and governments could do only a few decades ago. The exponential rate of development (and accompanying drop in cost) for technologies like robotics, sensory devices, nanotechnology, genetics, artificial intelligence, digitization, etc., will disrupt the entire market. Survival will depend on each company’s mindset. To fire up your firm’s imagination, merge a rigorous discipline of understanding the new capabilities generated by these exponential technologies with those problem statements from your customers and do it in the context of your company’s field of expertise.
Case in point is the origin of the disposable diaper. Victor Mills was a chemical engineer at a P&G paper plant. While caring for his grandchildren in the early 1960’s he was reminded of the tedious, unsanitary job of changing diapers. This was true pain. He internalized this pain point, merged it with cutting-edge absorbency technology (he was an expert), and one of the world’s great paper companies revolutionized child care with the invention of Pampers. A good idea is nothing if not used. Only by marrying Mills’ pain, with a thorough knowledge of technology and a culture of innovation allowed P&G to turn poop into plunder. Not only did Pampers drive P&G’s bottom line (pun intended), it improved the standard of living for the entire world.
What is the biggest risk for companies that are not in touch with clients?
Graf: The trap of incrementalism opens the field for competitors not constrained by the now. How much bigger is P&G’s paper division because of the advent of the disposable diaper, a product inconceivable to customers just years before? Companies should use this new era of social media, mobility and big data to understand customer pain points, then merge this with their inherent market strengths and a constant evaluation of all exponential technologies. Risk aversion and incrementalism will kill companies unable to cope with the coming decades of disruptive innovation. To be stagnant is to die. Once you feel the customers’ pain, invigorate your company to disrupt its own business model or you will be disrupted by others.