Much has been said about the need to be creative and innovative. The fields of application in business range from new products and services (product innovation), to new ways of doing things within the organization (operational innovation), to new ways of creating value for the customer (business model innovation). Organizations such as IBM have done some research in this field and show that business model innovation leads to higher returns than both operational innovation and product innovation.
Attempts to be innovative go back decades. Igor Anshoff developed his grid in the 1960’s. Here he referred to the 4 elements of existing products and new products, and existing markets and new markets. By playing around with these 4 elements, one could come up with innovative issues such as the following:
- Existing products in existing markets: Play around with the P’s of marketing to gain market penetration. The basic message is to sell more to the existing market you have selected. A typical example would be a company such as Walmart in the USA or Pick ‘n Pay in South Africa who tries and grow its market share using primarily its existing business model and marketing approach, with tweaks in the marketing mix.
- New products in existing markets: Develop and sell new products to the market you have selected. The basic approach here is there to push product development. The Shoprite Group in South Africa have developed the MediRite pharmaceutical offering to increase the offering to its clients / consumers. The objective is to increase the value offering to existing consumers. It is also possible to take this point further and say that it would also help to draw in new consumers.
- Existing products in new markets: Create and or identify new market spaces in which you sell you current product range. The basic approach is there market development. Walmart is in the process of moving into South Africa through an acquisition of Massmart in South Africa. Reasons for this are numerous, but under it all is probably a need to grow turnover. SABMiller is constantly growing new markets, and are doing it with great success.
- New products in new markets: This approach entails diversification. You move into totally new market space with a new offering. In South Africa we have Bidvest who do this with great success. General Electric in the USA does it with even greater success.
This is by no means the only approach to innovation and creativity. We find people writing about strategic innovation, disruptive innovative, radical innovation, and so on. We also find people developing grids with customer centricity on the one axis, and innovation on the other. The ideal stance would be an approach where you place is described as being high or strong on both the customer centricity and the innovation axes.
In addition, one of the latest approaches to being innovative at a strategic level in an attempt has been the work of Chan and Mauborgne in their book, Blue Ocean Strategy. Here they propagate that we need to define new market space to make the competition irrelevant, by moving out of red oceans and into blue oceans. This approach does not exclude the tenets of Anshoff and others like him, but give a different angle to it.
However, how do we get innovative and creative in these relevant fields? And the answer we get is that we need to “think out of box!” We need to be creative and new – outside of the box we find ourselves in. But what does this mean?
I have in past told my MBA students that they need to think outside of the box. Typical examples I saved them would include the following:
- Determine who you serve and then look at who else you can serve. Also determine who you should stop serving.
- Determine what products and services you provide and then look at what new products and services you can provide, as well as which you should stop providing.
- Determine how you can combine products and services into unique value offerings.
- Innovate your operating model, such as has been the case for SABMiller, who is the world’s lowest cost producer of beer. Optimize the costs and expenses and ensure that your value chain is lean and mean. In addition to SABMiller, I find the Shoprite Group in the retail industry in South Africa to be equally good.
- Innovate your distribution channels to delight and thrill your customers, existing and new.
- Look at new and innovative ways of tying your customers to you, to make “evangelists” out of them and obtain competitor lockout and consumer lock-in.
- Look at unique ways of innovating your revenue model, your working capital model, and your investment model. I once came across a winery near Stellenbosch, Clos Malverne, who uses a debture to draw in investors, and rewards them with wine instead of interest. It is a wine specifically made and bottled only for the debtors holders.
- Understand what the dominant way of thinking in your industry is. What are the “industry orthodoxies” – the “way the industry works?” And then try and use this to your benefit by trying to find ways of exploiting those beliefs to your advantage.
My students have no problem buying into the need and the typical examples I present them with. However, they present me frequently with an interesting challenge: “Johan, it is all good to tell me that I need to think outside the box. of my boss! Tell that to my boss as well! ”
And this brings me to another issue, ie what do we mean when we speak of “outside the box”? What does the box entail? Are there no rules outside the box? What is allowed outside the box?
I have been thinking that the box is your current paradigm, your current worldview. It is how you see things working. When you think outside the box, you want to move outside your current paradigm and worldview. You want to look at new ways of doing things by thinking differently. First of all, this is a very difficult exercise, because, as Henry Ford so eloquently put it, “thinking is one of the hardest things to do, which is probably why so few engage in it!” Critical thinking is absolutely crucial for moving outside the box, as is a diversity of views on the same topic. It will help illuminate the issue from different angles, which should help to generate new and innovative solutions to the identified problem.
Secondly, we tend to lock into our current paradigm precisely because we are successful in it. And we lose sight of the idea that whatever bought us our current success, will be insufficient to bring us our future success. We need someone to facilitate the road ahead in new and innovative ways. Change has never been easy to bring about, and we need all the help we can get to navigate the unspecified rapids that lie ahead.
These two points allude to a culture and a set of values that would optimize thinking and the willingness to accept change and the uncertainty associated with it. And then we call culture and values the “soft” issues within the organization! Do yourself the favor and read Collins & Porras, as well as authors such as Richard Barrett, Ken Wilber, Seth Godin, Don Beck, Manfred Kets de Vries, Eckardt Tolle, Adam Kahane, and Guy Kawasaki, to name but a few!
What does this outside the box look like? The following are a few pointers that come to mind:
- Outside the box is outside YOUR box, your paradigm.
- It reflects to a market space that is beyond the boundaries of your box.
- It does not mean the space in which there are no rules.
- It does not mean the space where everything goes.
- It does not mean that you can do anything and everything you set your mind to.
Why is this the case? Because the new market space has its own rules, and everything that goes with it (distribution channels, value proposal, revenue model, etc.). It means that although these rules and customers and dynamics are different from those you currently work in and serve, they are still there and need to be understood and adhered to. Going beyond the South African market space into Africa or India or Latin America or China, tells you you need to think beyond what the South African market will end to what the new market space will end! Moving into South Africa out of the USA like Walmart is doing, might be “out of the box” in the USA, but it will need to understand the box in South Africa! To move outside the wholesale market into the retail market does entailing moving outside your box into new areas, but it does require you to understand the “rules” of the retail market. Cirque du Soleil moved out of the old sawdust circus into a totally new environment, but one that does have its own rules and paradigms.
So, what am I saying? The new box, the “outside-the-box” we so glibly think of, is a box in itself. It may be bigger and newer than the one we live in. It may be different than the one we work in. But it is still a box in that it has its own rules and orthodoxies.
Does it please help to think outside of the box? Of course it does. You live and work in a “box.” By going outside your box, by looking at creative and innovative ways of redesigning your box, by being different, you will frequently find yourself in a position to make your competitors irrelevant, by developing different customer value propositions, by serving customer needs in innovative ways , and thenby becoming the industry standard. You will than have participated in giving direction to the development of this “new” box of yours. And once you have achieved success in it, start by looking for the seeds of destruction inherent in this new box of yours. If you do not, someone else will!
Enjoy your box – paradox and all!