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By Ellevate •
This story originally appeared on Ellevate
If you asked 10 different people for their definition of innovation, you would receive 10 different answers. Even the big consultancies can't agree. Doblin (Deloitte) touts "Ten Types of Innovation," McKinsey offers "Eight Essentials of Innovation" and Accenture's "Innovation Architecture" combines six capabilities areas. The differences in these frameworks stem from the desire to differentiate. But innovation in and of itself is not subjective. Differing definitions can cause confusion and create complexity around what should be a simple premise and attainable goal for most marketers.
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Defining innovation is as simple as meeting one of these three criteria:
- Solves the (right) problem
- Creates efficiency (faster, cheaper, better, easier), for the consumer, the business and/or both
- Creates new markets (new customer demand)
If you can check one of the above boxes -- congratulations! You've innovated. Check all three and you've created radical transformation. The two cases below highlight true innovation -- one illustrates the results of chance and stick-to-it-iveness, and the other the power of deliberate design.
A long road to a new market
Honda decided to crack the U.S. motorcycle market, inspired by the success of its small, motorized bikes, Super Cubs, introduced in Japan in 1958 and primarily used to make local deliveries in crowded, urban areas. At the time, the American market was dominated by large motorcycles used to travel great distances at prolonged high speeds (think Harley Davidson). Taking that into account, Honda's engineers designed a fast, powerful motorcycle for the American market. Then they sent three executives to Los Angeles to sell this new bike, giving each of them a Super Cub to use to get themselves around town. These executives quickly hit a brick wall with the U.S. market, as most dealers had no interest in selling Honda's motorcycles and the ones that did received complaints that they weren't sturdy enough for highway use. These complaints took a tremendous financial toll on Honda, who had to replace the problematic the bikes as they were under warranty.
At this point, one of the executives decided he needed to let off some steam and took his Super Cub out over the hills outside of Los Angeles. He enjoyed the ride and the next time he went out he took the other executives with him. People began asking where they could buy Super Cubs for themselves. This was the beginning of off-road dirt biking in the U.S.
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But the story doesn't end here, because despite the new market interest in Super Cubs, the executives continued to pursue their big bike strategy. Over time as more people wanted to use Super Cubs for dirt biking, they finally understood the opportunity of this new, unexpected market and shifted gears.
How does this case study tie back to my criteria? First, Honda created the motorbike market in the U.S. -- they created new customer demand that previously didn't exist. They created a lighter, cheaper version of a product that in the end, was more desirable than the original. The single most important thing Honda did was unknowingly tap into a problem that needed to be solved. They didn't sell a motorcycle; instead, they sold a speed and adrenaline-fueled physical challenge to people looking for a rush. But ultimately it was sheer persistence and dumb luck that enabled Honda's U.S. success. They created their own future by holding on long enough for their market to materialize.
While Honda's story is fun and inspiring story, it isn't practical for most brands to introduce a new product and sit tight until their market finds them. They need a repeatable process.
Innovation by design
Another famous example of innovation is Bank of America's "Keep the Change" program. Back in 2004, Bank of America wanted to increase the number of people opening savings accounts and decided to focus on converting existing debit card holders to savings account holders. They embarked on immersive customer research focused on Boomer women and their families. They spent months following them throughout their day and watching them shop, balance their checkbooks and conduct financial transactions. Bank of America homed in on extreme cases -- both people who were great at saving and those who struggled with it. They noted the everyday savings habits of people, including tossing loose change into a savings jar at the end of a day. This research yielded key insights that when linked, became the basis of their new offering.
First, Bank of America learned that many women really struggled to save money. Secondly, they observed that one woman would round up her checkbook entries because it was faster and easier than doing the precise math. Combining these insights led to Bank of American's "Keep the Change" offering. Debit card transactions are rounded up to the next dollar and the overcharge goes directly into a savings account. This offering was tremendously successful when it launched in 2005, gaining 2.5 million customers in the first 18 months. From an innovation standpoint, "Keep the Change" checks all the boxes of the innovation model by solving the right problem, creating efficiency and uncovering a new market.
What this means for brands
Successful innovation requires deep understanding of the problem that needs to be solved. These kinds of insights cannot be found in databases or reports or through data correlations or surveys. Gain true understanding by talking to consumers about the motivations behind their behaviors and you'll uncover needs that are unmet and unarticulated. The only way to find these opportunities are through talking to and observing consumers -- users and non-users, both extreme and mainstream This process creates produces insights that ensure you are solving the right problem and helps you predict your future.
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It takes a deep human connection, endless determination and clear vision to create your own future. Don't leave the fate of your business to chance. Start working now on getting the insights you need to succeed.
(By Katie Fiore. Katie Fiore is Head of Conversion Optimization at SYZYGY, a global digital agency based in Germany. She is passionate about creative problem solving and applying design thinking principles for business and social innovation. Follow Katie on LinkedIn or on her lifestyle blog, Brooklyn to the Catskills.)
