We innovate for the benefit of our competitiveness, but the concept of competition is more complex every day, and that of innovation, broader than it initially seems. It is worth dwelling, if we have not already done so, on the new meanings of these signifiers. New realities were already well visible in the late-century scenario, but change is continuous in the 21st century, and business management forces us to reflect with greater insight, in crisis and in prosperity; to raise the eye more frequently than daily management.
When we talk about competition, we are referring not only to companies in the sector that threaten to reduce our presence in the market, but also to everything that may deter our clients, including, for example, new habits, values and emerging trends in the society. Obviously, in times of crisis, we also compete with everything to which the customer focuses primarily on their purchasing power: if they can manage without our products / services, our company will suffer and we will have survival solutions.
Even if the economic situation ends up improving, we will have to take great care of our competitiveness in the global market. Porter and other authors have offered us valuable contributions on competitive strategy and differentiation, but we must all continue to reflect on our business, paying attention to the environment and anticipating the future, to nurture and maintain our strength.
And when talking about innovation, we cannot think only about technological renewal or the incorporation of best practices, but also and perhaps above all, delve into the unknown terrain of knowledge in each field (technical or business management), and generate new, valuable, attractive solutions that nobody offers yet, for those who - the clients - were waiting for them perhaps without knowing it. We also have here timely reflections from many authors -Ridderstrale told us about the temporary monopoly-, as well as very sobering cases in the generation of impact news.
Indeed, in the age of knowledge and lifelong learning, we have to learn what others already know, but also what nobody knows yet; we have to investigate, explore, discover, devise… that is, innovate, to attract the attention of the market. We do not innovate sufficiently, nor do we always succeed with the innovations that we generate; sometimes, it is out of tune with the needs or expectations of the clients, if their own identification has not already failed. Sometimes we don't identify the real emerging competition either, and we make perhaps unsuccessful decisions.
Of course, we need to know what customers value or question in our products and services, and not take almost anything for granted. A company as exemplary and innovative as Coca Cola was fully confident of the success of the new Coke in the 1980s, but the new formula proved to be a failure. Oddly enough now, this great company seemed to view its product as a gorgeous yet perfectible soft drink, and consumers seemed to go the extra mile, seeing it almost as some sort of untouchable icon. So we must study end customers well, setting even different types: maybe we can think of something special for some segment…
Coca Cola believed that it was competing with Pepsi after a more attractive flavor, and that it was time to innovate in the product; But it was not the classic formula that had to be changed, but the marketing deployed. This is a case (especially sobering) of reductionist rationalism and flawed inferences (remember that blind tastings were made…); but the company soon corrected the error and recovered the market.
In those same years (mid-80s), Amana, a division of Raytheon that had created the microwave oven in the United States, seemed to be on the verge of staying out of a market that it had opened itself some time ago: a questionable marketing had weakened its competitiveness., and, for example, the oven had penetrated much more in Japanese kitchens than in North American ones. The Japanese manufacturers (Sharp, Sanyo, Matsushita…) were soon very convincing in the value for money of the new devices, and seemed to be looking at the market with a different perspective.
Let's review, yes, with whom or what we compete in the 21st century and exactly what, and also deploy genuine innovation to conquer the market. We will talk a bit about all this, if the reader follows us in these paragraphs. These are two daily buzzwords, two fundamental concepts -competence and innovation-, which acquire special complexity and dimension in the emerging economy, and whose analysis, without losing the systemic perspective, becomes even more precise in times of crisis.
On competitiveness and competition
In effect, we must neutralize and even overcome competing companies whenever we can, and react wisely and promptly when we are overwhelmed: we want to survive. But we should no longer think only of companies that offer the best value for money to meet the expectations and needs of our customers, or that face them with innovative solutions of interest and impact; We must also interpret as competition everything that, as a consequence of changes in society, reduces or eliminates those needs or expectations, and perhaps replaces them with others.
When speaking of competition in our century, it is already insufficient to think, for example, of the legendary rivalry of Coca Cola and Pepsi, or of Helena Rubinstein and Elizabeth Arden in the first half of the 20th century, or of the big brands that are distributed every market today. Perhaps we are surrounded by too many alternatives for everything, but we also witness the sudden disappearance of some industries. In sum and in addition to considering the severe economic crisis in which we find ourselves, we can find serious threats - visible and not so visible - to our competitiveness and prosperity in:
* Companies that offer better value for money in products / services similar or alternative to ours.
* Innovative companies that offer new and advanced solutions for the same needs, or for a set of needs.
* Bold companies that outperform us in advertising campaigns or distribution channels, that is, in marketing.
* Social changes (new habits and values, new laws, demographic trends…), which can detract from the potential, solidity, of our traditional offer.
* The global market, which can be seen as the arrival of new competitors, and new products, but also as an opportunity to internationalize.
Well then, we must be the ones who offer the best value for money in effective solutions; we must be the genuinely innovative ones; we must also be bold and accurate in marketing; we must be the ones who adapt to social changes before, and finally we must be the ones who best take advantage of the opportunities of the global market.
If, instead of professionally nurturing our competitiveness, we installed ourselves in the practice of capturing and loyalty to our clients through incentives (or commissions) to buy from us, then other risks and threats would appear. Here the casuistry is very diverse, and this practice may end up incorporating sensitive entropy into organizations as well. Peter Drucker argued 20 years ago that buying from customers does not work, and would surely continue to do so today. (And, by the way, entropy is also very sensitive when, perhaps because you want to sell the company, you put more effort into pretending than being.)
Observing the five points pointed out, it seems evident that we must aim at innovation as a continuous process; to impact innovation, and not only in products and services, but in everything that allows the company to generate better results with less effort (be more productive); to innovation derived from social changes, and this before other companies do it; to radical quantum leap innovation, beyond continuous improvement. It could be said that in this way we nurture competitiveness and become strong in the market, as the opposite weakens us and perhaps leads us from bad to worse.
Consider, for example, the progressive disappearance of domestic sewing machines (those of our grandmothers or mothers). Companies like Singer saw their sales drop, but they were not fighting decades ago against other manufacturers, but against the rise of the textile industry, against the incorporation of women into the labor market, and against the growing alternatives offered to them for their free time (if they had any left): the life of the domestic sewing machine expired. The move from mechanical technology to electronics delayed the end, but the market was going to fade…
The manufacturers of carbon copy paper were determined to improve their characteristics, when the end was already seen, the result of the arrival of small photocopiers in the offices. And the typewriters themselves also disappeared with the arrival of personal computers, as tobacco consumption has also been reduced, for example, for health reasons. (It may seem like a digression, but although I was very young, I remember that tobacco use increased in the first half of the 19th century, with the appearance of matches).
When asking ourselves what or who we compete with, we must answer ourselves with sufficient perspective and breadth of vision; otherwise the future will catch us on the wrong foot. The reader will think that he does not need these "theorists", and I remind you that I am only trying to provoke your reflections, surely more focused and effective, on competitiveness and innovation.
How to take the lead? Soon it will perhaps be thought: "creating innovations inspired or supported by technological advance". But let's remember that not all technology is ICT, nor is all innovation technological (there seems to be an obsession in linking innovation with ICT). We can also be inspired, as we suggested, in demographic evolution, in changes in values, habits, concerns…, in the new laws, in globalization… In any case, we must ensure harmony with the customer-user of our products or services, and remember that we must introduce suitable and valuable novelties, both in what we put on the market and in internal processes and methods: the latter also makes us more competitive and we know it well.
Yes, the surest key to competitiveness seems to be the most genuine innovation, whether it is inspired by rapid technological evolution, demographic, social / cultural, new regulations or globalization; But you need expert people who think wisely and deeply for the benefit of your creativity, and also bold and capable companies that materialize the new initiatives quickly and properly. Creativity in people (managers and skilled workers) on the one hand, and boldness and diligence in business management on the other: this seems to be the way; But we must insist on it, in case they are still pending issues in some organizations.
Innovating is something more
Unfolding its most genuine meaning, innovating is, in the company, something more than materializing continuous improvement, or incorporating new technologies and emerging practices. It targets processes, products, and services, but not just that. It is associated with creativity, but it is a more ambitious concept. It may require the existence of formal R&D areas, but especially an ad hoc culture that catalyzes the expression of human capital. In the company, innovation (such as training) must be a process and not an event, but each initiative must be analyzed with a systemic perspective and breadth / depth of vision, focusing well on the expectations and needs of traditional and potential clients / users.
In the history of business innovation there are successes and failures, both sobering, which we can relate to formally orchestrated research (R&D areas), but also to the boldness of the entrepreneur, to the creativity of an individual or a team, with seized chance (serendipity), with genuine intuition, with connective, groundbreaking, lateral, exploratory, inferential, analytical, systemic, abstractive thinking…
The emergence of a valuable idea is an achievement, but it is only the beginning of an innovation project; in any case, the market will finally sanction the value of each innovative initiative. Ray Kroc struggled a lot, and finally got it: He had more faith in McDonald's than brothers Dick and Mac themselves.
Without a doubt, all workers can be more creative, and we should be in the knowledge and innovation economy: knowledge worker, thinking worker, learning worker, creative worker… But, in the company, innovation must be understood with a corporate and systemic dimension. To put it another way, we can all do creativity courses, but there are fundamental aspects of innovation -catalysis, evaluation of initiatives, major decisions or materialization- that correspond to the Directorate, depending on its strategy, its resources, its objectives, its perception of the market
The Directorate would also have to practice lifelong learning, and an innovation course will typically target managers and entrepreneurs.
Indeed, lifelong & lifewide learning is also aimed at entrepreneurs and managers, and, as reinforcement of their always perfectible professional profiles, they can always learn something from the experiences of the most innovative companies; perhaps, above all, how a catalytic culture (read Robinson-Stern, Ekvall, Rydz…) of innovation in the company unfolds.
We can be great professionals, but we all always have something to learn. We must be aware that there will be successes and failures, because not all the news end up being really valuable for the business. We know failures due to a wrong idea, and also failures due to mismanagement of a good idea.
(I don't know where I read that a level A person, with a level B idea, has more possibilities of materialization than a level B individual, with a level A idea; but this reflection, fueled by the fact that It is hard for us to accept as good a foreign idea, it would open a digression and therefore close the parenthesis)
There are times when we believe we have a new impact product, groundbreaking, superior to what exists, and yet the market rejects it: it will have happened to us sometime, perhaps the consequence of an incomplete or erroneous analysis of customer expectations. On other occasions we develop a product, perhaps the result of technological progress, and we ourselves reject its commercialization for economic reasons…, but the competition sees new clients that we had not contemplated, and it takes over the prosperous business. Or sometimes we also distort the original idea, perhaps subordinating it to spurious interests.
Let's talk about the fax, which is an example that Peter Drucker used to refer to. This device became familiar to us as early as the 80s of the 20th century, when telephone networks began to be digitized, on the way to the so-called Integrated Services Digital Network. So we found fax as an additional service of digital telephone networks, along with the dataphone or videotelephony. But why do I bring you this story?
The fax seems to be a case of invention based on technical possibilities, the origin of which we must place in the 19th century and whose development accelerated in the second half of the 20th. The technologies that support the fax were mainly developed in the United States, but the fact is that the market was soon flooded, in the early 1990s, with terminals manufactured by Japanese companies. It would seem that, in seeing business in the fax, the Japanese came forward and that was because they not only saw this new machine as an economically debatable complement to telephone service, but, above all, as an alternative to postal mail and the emerging business messaging.
The Japanese were also the architects of miniaturization (1950s) derived from the appearance of transistors in the United States. It was, yes, the founders of Totsuko (later called Sony), Morita and Ibuka, who bet more decisively on the new devices, called to replace the vacuum valves of the first radio and television sets. Despite the aforementioned successes of the intuitive Japanese managers, Americans (also remarkably intuitive: apparently more than Europeans) did not miss out on business… Let's talk now, for example, about color television.
The development of color television (mid-20th century) is equally sobering and has a singular protagonist in David Sarnoff, RCA's chief executive, as authors such as John S. Rydz or Watts S. Humphrey reminded us. In the United States, CBS had come up with a rotating disc system that had to incorporate both TV cameras and home appliances; but the General (that is how Sarnoff was known) was determined that RCA would lead the market, and he deployed a suitable strategy, the memory of which is timely.
It can be said that there were two major details in which Sarnoff seemed to surpass CBS executive William Paley: First, he decided that the color system should be compatible with black-and-white receivers so that everyone could receive the programs.: some spectators in color and others in B / W; and second, RCA opted for a bold and fully electronic technology that could evolve to the benefit of image quality. (Detail this last important one: we must foresee the evolution of each new product or service, which, as we know, begins to become obsolete from its very birth).
Although CBS achieved approval of its system by the Federal Communications Commission (FCC), Sarnoff appealed the decision and managed to convince everyone of the strength and scale of the RCA project. He was aware that he had three types of clients: the FCC itself, whom it had to convince of the superiority of its color system; the TV broadcasting industry, whose productions would reach both color and existing B / W devices; and, of course, the users of the new devices themselves, equipped with a tube that worked with three new basic colors (red, green, blue). The three clients had to be convinced, and after this objective RCA deployed its forces.
All areas of RCA had to stop thinking influenced by their beliefs and interests, to put themselves in the shoes of the clients. For example, RCA engineers apparently thought that the size of the screen should be reduced (10 inches) because otherwise the depth of the device would be excessive for the dimensions of the typical living room; But marketers learned that buyers preferred larger appliances, and technical difficulties were eventually overcome. In other words, all the departments of the company had to give priority to the expectations and needs of the clients.
In the case of Coca Cola, it was assumed that consumers expected a new flavor, more attractive than that of Pepsi. "The problem with Coca Cola - in the words of the consultant Darrel Rhea - was that the laboratory technicians took power." Those in charge of marketing, then surpassed by those of Pepsi and perhaps questioned, had to make sure that consumers really wanted a flavor change. Innovation (in products / services) is very risky when it is done behind the market, or when runaway inferences are deployed (of which Argyris, for example, alerted us).
They seem like common sense lessons, but even today, in 2009, we sometimes fail to identify customers, and their expectations and needs: something quite risky when we propose to offer them a valuable novelty. Already Ted Levitt warned us that, often, the function of selling could be responding not so much to the need of the buyer, but to that of the seller himself. This writer always talks here (take me the analogy) about the screw and the hammer: the customer has a screw and is looking for a screwdriver, and the supplier has a hammer, and everything looks like nails to him. I must not generalize, but I fear that it is more frequent than it seems.
One case (which I could follow closely) of questionable customer identification is perhaps that of the arrival of e-learning with the accelerated development of ICT in the late-century landscape, and especially with the expansion of the Internet. In reality, computer learning came to us in the 80s, in the off-line stage, when teachers used author tools to bring something similar to the programmed printed teaching that we had previously known to the PC; but it is true that the online stage brought the appearance of virtual campuses and the assumption by technologists of the production of multimedia and interactive courses. In my opinion, the advantage between a production carried out by teachers for students, compared to that carried out by production technicians for clients (perhaps responsible for the training areas of companies),is that teachers handle meanings, and technicians, signifiers and special effects.
Already in the neosecular scenario, e-learning providers partnered in Madrid (APeL) and Barcelona (Aefol) to promote the role of ICT in continuous training (perhaps there was some other initiative, such as the so-called Circle of Training Consultants). Since then, the truth is that it has been admitted that the platforms, multimedia and interactive e-learning courses have not generated significant enough learning, and today a good part of this training activity is orchestrated in public money, with a quality- generally modest effectiveness.
I have brought this example to underline, as experts do, the importance of the end user in innovation efforts. We had also talked about Singer and household sewing machines; Well, improvements were made in the manufactured models, not because the users demanded them (housewives, in this case), but because, apparently, the sellers asked for them to show off the possibilities offered, in the product presentations.
This did not improve sales, and Singer had to make the quantum leap from mechanics to electronics to keep the business going. In the corporate e-learning sector, the professional learner does not need vain technological displays, but rather ideal information in depth and form, easy to translate into valuable and applicable knowledge.
In its decision-making, the Management of innovative companies cannot, as a rule, consider the information that comes from its distributors, sellers, engineers and intermediaries in general to be good, but must access users as directly as possible or end consumers to identify and meet their expectations, explicit or implicit. When the case requires it, in these innovative companies each department involved (R&D, marketing, production, engineering, after-sales…) has to be directly related to the client or end user, to ensure the right decisions.
By rereading these paragraphs before publication, I have recalled another curious case. 30 years ago Masaru Ibuka convinced Akio Morita of the possibilities of the Walkman, one of the most striking successful innovations in the field of electronics; however, Sony engineers did not show the slightest confidence in the success of the initiative. Even today, in the company it would seem that we all find it hard to give up for good ideas or other people's intuitions; to managers, those of subordinates, and to these, those of the former.
Studying certain cases of business innovation is certainly sobering, because the conclusions are very valuable and diverse: Diebold, Inditex-Zara, Raytheon-Amana, Totsuko-Sony, Coca Cola, Velcro, RCA, Singer, Helena Rubinstein, McDonald´s, Eisai Ikea… Let me dedicate a few lines to that singular woman, Chaja (Helena), born on Christmas Day 1870 to a Jewish family in Krakow.
At that time there were not even special products for personal hygiene, but her mother, Gusta, took care of her skin and that of her daughters with a facial cream: the one used by a famous family-friendly actress, H. Modjeska. When her parents sought a husband for the young Chaja, she refused to marry him (much older than her, who was 18 at the time), which led her to live with her aunt Rosalie. Soon she would move to Vienna, with another aunt, where she became interested in dermatology, and a few years later she decided to travel to Australia, to live with her cousin Eva.
It may be thought that circumstances led Helena Rubinstein to dedicate herself to cosmetics in Australia, a discipline to which she applied herself with determination to create doctrine and modify beliefs; But only her personal strengths, including intuition, explain the success achieved, especially in Europe and America. A pioneer in clinical-inspired skincare, such as anti-aging treatments, she brought cosmetics to the upper and middle classes. She was the first to distinguish three types of skin: normal, dry and oily. Helena Rubinstein changed habits in the personal care of women.
The rivalry between Helena Rubinstein and Elizabeth Arden was even fiercer than the also legendary one between Joan Crawford and Bette Davis (Hollywood stars of singular talent). Perhaps the result was a competition in the cosmetics business from which the market benefited, but it does not appear that they were very happy in their personal lives, despite reaching immense economic success from poverty. They hated each other, apparently, intensely throughout their lives, certainly quite "parallel", and avoided seeing each other despite settling down very close, in New York. Other rivalries were perhaps less personal but also very stimulating professionally: Goizueta and Enrico, Sarnoff and Paley… We avoid examples from our days and our environment.
What to highlight about the case of Zara in our country? Decades ago, clothing fashion was a problem for customers (high quality and price, but limited validity), and was also a serious constraint for businessmen in the sector. Customers with enough purchasing power bought their clothes at first, and other customers waited for them, already with a small margin for the stores. Then Zara appeared to change the rules.
The first Zara store opened in 1975, in La Coruña. Today, some 200 designers are in charge of creating fashion so that the company's careful logistics system can bring it to stores in a short time. Zara sells fashion in clothing at an affordable price, and it is constantly renewed. The brand's strategy is to encourage compulsive shopping and let the customer know that when she returns there will be new things. Zara is more concerned with creating customer value than reducing costs, and half of its production comes from its own factories in Spain, Portugal and Morocco. Yes, rules and beliefs are often consolidated in the markets, which we must question.
Innovation areas
I will finish shortly, but we must also underline the existence of other areas of innovation, in addition to products and services. Together, Vadim Kotelnikov invites us to innovate in areas such as:
* The products and services offered.
* Functional processes.
* Customer relationship.
* The management of own innovation.
* The quality assurance system.
* The business management system.
* Production techniques.
* The management of information and knowledge.
* Organizational culture.
* The use of human capital.
And, of course, the reconsideration of the business or company strategy may also bring new features that make us stronger in our capacity as competitors; that make us different and especially attractive for a market segment. Ikea is different, Zara is different… We must be functionally optimal, based on the strategy and the goals formulated; but it is also worth periodically reviewing how to be different and attract the attention of the market.
I must have exhausted the patience of the reader, if he has come this far. It is not that the end point can already be made, but all this can be talked about a lot, and employers will do it more rigorously, together with their closest collaborators. This writer has learned something by studying revealing cases, the analysis of which should not remain on the surface; but he has become aware that there is always much more to learn….
