Published in Better Marketing on Medium, April 5, 2021
Whenever a business group comes to our strategic design office for a tour, I see their faces light up with fascination as they glance at the creative work assignments on our design staff’s desk.
But midway through the tour, someone in the business group will invariably ask me this probing question: With so many innovation projects going on, don’t you ever run out of breakthrough ideas?
There’s always a pattern and an insight for where to look for the big ideas.
Instead of putting pressure on ourselves to be innovative, I explain to the group, we start our assignments by taking our creativity hats off and pulling out our detective notepads to ask our clients three questions about their business and industry.
- Where is your company/industry most limited, constrained, and frustrated?
- Where are your customers most limited, constrained, and frustrated by what the company/industry offers?
- Where are your employees most limited, constrained, and frustrated by the company/industry?
The answers to these three questions will vary depending on who we ask in the organization. But there’s always a pattern and an insight for where to look for the big ideas.
We don’t have to be experts in our client’s industries to develop great ideas. (That would hurt our creativity.) We just have to be experts at synthesizing down the rules for how an industry competes into a set of dials and instruments we can adjust.
In the beginning, most industries start wild, disorganized, and nonaligned. But as industries evolve, they operate according to implicit industry rules and boundaries established by professional trade associations, regulatory environments, industry standards, and market forces. And these “best practices” push the players into a more comparable set of offerings, prices, features, and benefits.
Over time, the various companies that comprise an industry begin to look alike and offer similar value propositions. You can see this sort of industry alignment happen in consumer categories such as hotels, computers, cars, airlines, groceries, and cell phones.
Once this industry alignment takes hold, companies face the threat of becoming a common commodity and have to consider one of two options: maxing out efficiency gains so they can lower costs/prices, or adding more features/benefits to their value proposition.
Either of these options will provide noticeable gains in the short term, but both approaches eventually reach their upper limits.
The key to business innovation is constantly exploring and experimenting with these seemingly impossible ideas.
While maximizing efficiency, cutting costs, lowering prices, and adding more features rewards the customers, it doesn’t always benefit companies. Making better, cheaper, more convenient products/services in mature industries often leads to diminishing returns.
Companies can overcome this competitive stalemate by jumping over their industry’s fences to explore the “seemingly impossible” ideas.
THE "SEEMINGLY IMPOSSIBLE”
The most significant innovation opportunities usually come from what we call the seemingly impossible ideas. These are the solutions consumers wish they had, but companies can’t give it to them and still make their business models work.
Corporate leaders often won’t even tolerate a discussion about these seemingly impossible ideas because they assume it’s a dead-end road that wastes time and resources to explore. Executives dismiss these ideas to their detriment.
The key to business innovation is constantly exploring and experimenting with these seemingly impossible ideas. Why? Because this territory is where:
- latent opportunities lie dormant.
- competitors are reluctant to venture.
- future industry disruption will most likely happen.
WILL WORK FOR FURNITURE
Why do most disruptions come from outside players or younger startups? They don’t know the industry’s rules or care about boundaries yet, and this lack of knowledge is why they can venture so blindly into the out-of-bound territories they shouldn’t enter.
Such was the case of 17-year-old Ingvar Feodor Kamprad. He started his company in 1943 and sold small household items like picture frames, Christmas decorations, and stationery. In 1948, he entered the highly competitive industry of furniture.
There were already a plethora of well-established furniture brands in the market — and these strongholds had locked up all the best market positions/resources and focused on maxing out their efficiency gains.
Kamprad noticed an underserved customer with an unmet need. He set out to do the seemingly impossible of creating an offering that would allow a much broader market of consumers the opportunity to afford stylish, modern, Scandinavian furniture. Typically reserved for the wealthy and cultural elite, Kamprad wanted to offer this minimal design aesthetic to the masses at a fraction of the cost.
Those two ideas — the luxurious modern aesthetic and low cost/price — were contradictory and seemingly impossible. Everyone around Kamprad said his proposition wouldn’t work, and they provided him with ample industry reasons, rules, and case studies that proved it. His critics were right initially until Kamprad stumbled upon his biggest insight into the furniture industry’s future potential.
One of Kamprad’s employees was disassembling a small table’s furniture legs so he could fit it into a car to avoid damaging it. Kamprad wondered if he could develop a flat packing system and have customers do the work that high-end furniture brands typically provided as part of their value proposition — such as loading, delivering, and assembling the furniture.
Expecting customers to do this work themselves seemed impossible. But much to everyone’s surprise, customers were OK with it if it allowed them to get a piece of furniture that was previously impossible for them to afford.
That small company Kamprad started in 1943, now has 433 stores worldwide and annual revenues in the $45 billion range. Perhaps you’ve heard of this brand before — which is an abbreviation for Ingvar Kamprad (his name) from Elmtaryd, Agunnaryd (his hometown) — or simply IKEA.
THE IMPOSSIBLE IS POSSIBLE
After working with hundreds of companies on innovation strategies, I generally find the seemingly impossible ideas aren’t really that impossible. It’s just that companies have spent so long optimizing their existing business model, they’ve stopped looking for new ones.
A former powerhouse brand like Blockbuster could’ve done what Netflix did. They were so trapped by their industry’s rules and boundaries they couldn’t venture over the fence where Netflix experimented in plain sight.
The taxi industry could’ve easily done what Uber did to revolutionize how people get an upgraded ride with a touch of a button. But they were too busy maximizing, harvesting, and protecting an old business model.
Mature industries spend too much of their time and energy coming up with reasons why they can’t do something. But they forget to ask themselves one question: What would it take to solve our customers’ frustrations and give them what they want?
To save their future, many mature companies need to go through a business model reinvention — but most leaders don’t have the freedom, support, time, or stamina to survive the challenges that undertaking requires.
So my recommendation to companies is to start with the three questions presented at the beginning of this post. Then try to have at least 2–4 of these seemingly impossible explorations going on at all times.
These innovation experiments will help management leaders feel less timid about jumping industry fences and more confident exploring new market territories.
Once one of their seemingly impossible ideas hits pay dirt, executives will want to do it again and again. How do I know this? Because we help leaders do the impossible every day.