Earlier we kicked off the series on creativity and innovation – the latest “next big thing” for companies.
Enough companies are touting the need for innovation that there must be some good reasons for it. And there are.
How we got this way.
Industries go through various stages of development. When something is new and different, companies in the industry will charge a premium for the product or service and have little competition.
Then other companies see how much money is being made (the current high-flyer is Google) and start to enter into the business. Rarely do they offer something very different then the leader, so they do what they can – they compete on price. “We’re just as good,” they say, “just a lot less expensive.”
Later on in the cycle, the product or service is commoditized so much that there is nothing except price on something that is now so standard it merits no premium. Would you pay more for windshield wipers that operate with programmed pauses? Not today. But you might have when they first came out.
Well, the world has become a commoditized place. And in commodity-land, there is no differentiation except price. The US, for example, can’t compete on price alone – there will always be someplace cheaper that is willing to produce the product or service for fewer dollars.
If a company can constantly innovate, it will always be ahead of the curve to all those who discount – and at the sweet-spot end of the profit curve.
Think about it. Constantly innovate with speed to market and discounters can never catch up. By the time they do, the Next Big Thing is already out there through innovation.
But there is a limited window for innovation. Motorola can sell a Razr – but only so long until Nokia catches up.
So the key is to constantly produce a “new” Razr so that competitors lose the leading position in the marketplace and then they try and catch up with YOU. Innovation is a market leader game-changing function. To win in the marketplace, your company — and you — need the game-changing innovation value to succeed.
Creativity and innovation has become the new differentiator in American business for good reason. Next, we’ll take a look at how you can tell if your company has the right stuff for innovation.