Innovation of Business

and the
Business of Innovation™
 
Seven Principles of Innovation


Seven Principles of Innovation

We know this concept is true, yet in the rush to market, we might forget.

No one ever buys a compass.
They buy a sense of direction.
Not a drill bit, but round holes.
Not loudspeakers, but sound.
Not pest traps but fewer pests.
 

We don’t buy products, we buy the value of products. We buy the sum of benefits that products deliver. The same is true everywhere in business. No one ever invests in a new venture. They invest in returns on investment. Not funding for a project, but potential competitive advantage. Not a salary, but excellent performance. 

Our relationship with customers is a value exchange. Product for payment. Over and over 

What if we have no inherent value
as suppliers of products and services.
We are all strategies.
 

”From the customer perspective, we are sources of valuable products, not the value itself. Though they rarely use this language, customers see us as strategies – ways to get desired products. If they can find a distinctly better way (strategy) to meet their needs, they’ll eventually use that alternative. 

”Only one aspect of business can overcome the strategy constraint. That is relationships. We can choose to see ourselves as servants that meet customer needs. We can put the relationship first, developing precious loyalty that delivers returns far in excess of mere sales. 

”Seven formal principles then guide performance excellence. 

The Principle of Value 

Consciously structure, lead, and manage
to consistently increase the win-win value
of relationships with customers 
and other stakeholders.
 

Axioms set context. This principle is explicit. Our job is always to develop and sustain durable win-win relationships. Products and payment define the classic win-win. Salary for performance is another. Investment for profits. Everywhere we look, we see win-win relationships as the core of success. 

Of course, applying the Principle of Value requires consciously structuring, leading, and managing. The remaining six principles all implement the Principle of Value. 

The Principle of Focus 

Make conscious informed, proactive choices about 
who we want to be, 
where we want to go, 
how we intend to get there, and 
how we intend to behave.
 

“Who’ is about identity. “ Where’ about goals and objectives. “How“ about strategies. “Behavior“ about culture. All of this is about leadership. To make those choices, ask and answer lots of questions. Synthesize answers into powerful, durable, detailed, marketable visions at levels of businesses, business functions, projects, products, services, and even embryonic ideas. Visions, in turn, drive every aspect of business, especially performance. 

Identity includes the value promise to stakeholders. Building loyalty requires making value promises very visible, then honoring them with performance over time. 

Visioning processes logically precede planning. Pre-planning improves and accelerates planning by making decisions in advance with formal, proven, robust decision processes. Planning then drives performance. The better the vision, the better the performance. 

Principal of Strategy 

View every action as a strategy to achieve goals, 
then carefully choose the best strategies.
 

Businesses need strategic direction. Goals are long term results we want to achieve. Goals thus set durable directions for the business, and may last many years. Objectives are measurable near term results we want to achieve. Objectives typically change with each plan period. 

Strategies are methods for reaching objectives. Once we see R&D, manufacturing, marketing, etc. as strategies, we realize that choosing strategies structures the business. Choice of marketing strategies then structures the marketing function. Note that strategies imply costs. Learn how to balance choice of strategies against resource limitations, including time, expertise, facilities, funding, and investor support. 

Of course, your most important objective is ever increasing loyalty from ever larger numbers of customers. Leaders and strategists put relationships first. They start with goals and choose actions carefully. Tacticians may start with actions, spending resources on efforts that don’t help reach goals. 

Principle of Need Satisfaction 

Conceive, develop, and deliver value to customers 
better, faster, and more profitably 
than any competition.
 

With business focus set, need satisfaction turns products and services into sources of relationships. Begin by realizing that features have no value in themselves. Features are strategies (or tactics) for delivering value to customers. Amazing features manufactured with ultimate quality have no value if they meet no needs. 

Need satisfaction defines performance excellence in products. Getting there means knowing customers better than they know themselves. It means being able to conceive of products that customers will want, just as soon as they know such a thing is possible. 

Principle of Perception Management 

Manage everything done and said
to consistently reinforce
desired marketplace perceptions.
 

Every communication both conveys information and creates perceptions. Perceptions change with every new interaction. Your audiences (customers, media, analysts, etc.) can’t stop developing opinions, approvals, biases, etc. Thus communication excellence requires proactive choices desired perceptions, then grow relationships based on congruence between what we do and what we want customers to believe. 

Every communication has a center. Self-centered communications focus on the author/speaker and their product’s features. Customer-centered communications focus on audiences and their needs, before introducing products and features as solutions. Teams can do perfect work in focus and need satisfaction, delivering essential value desired by customers, yet foul it all up with self center and weak messages. 

Business success depends on positive perceptions. Customer loyalty is a relationship built on trust based on consistent performance in congruent agreement with what teams say and how they behavior. 

Principle of Leveraged Strengths 

Discover and leverage 
the full nature and power of 
every key entity and process in the business.
 

People, teams, and processes of all sizes, in all functions, are strategies for performance. All can be focused on value, strategy, need satisfaction, and perception management. 

Beyond that, teams can discover strengths not yet recognized. A product, for instance, can be completely described by its features, yet customers don’t buy features. They buy value. Teams can also describe products in terms of capabilities (what one can do with it), benefits (the value of using it), and intangibles (the reputation and image it carries). Development and marketing focused only on features will miss both ways to deliver value and ways to persuade purchase. 

Then there are underlying systems. The most obvious is win-win, product for payment. So long as both sides are satisfied, the system will continue. The business itself is a system that can be diagrammed to explicitly show internal loops for focus, need satisfaction, perception management, and ongoing change. Each of those loops contains elements (processes) that are systems. Systems theory is a rich source of tools for leveraging strengths for performance excellence. 

Strategic Pre-Planning discovers the full range of potential strengths in entities and processes, thus enabling powerful advantage. 

Principle of Change 

The only way to stay in control of the business
is to proactively lead into change.
 

Change accelerates. Indeed, change will never, ever again be as slow as it is today. Concepts of value are changed by all sorts of market forces, not the least of which is new product introduction. (We didn’t know we needed that, but now that it’s here, could we have it in silver… and smaller… and … and …) Change in perceived value forces changes in everything else in business. 

To lead into change, develop knowledge of customers, team own performance, and the impact of market forces. Market research, product research, basic research, and knowledge management thus become strategies for leading into change. In turn, all of those contribute to re-visioning organizations and their multi-level strategies. 

Leaders hold responsibilities for helping the whole organization adapt to changing realities. For corporate cultures built around the Seven Principles, adapting to accelerating change is as natural as breathing. 

To summarize, performance excellence is nothing less than consistent increase in the win-win value of relationships with customers and other stakeholders. To achieve performance excellence, apply seven principles. 

  • Value
  • Focus
  • Focus
  • Strategy
  • Need Satisfactionip
  • Perception Management
  • Strengths
  • Change

Value-driven innovation is rare. Few businesses set their sights as high as customer loyalty, yet over time, customer loyalty is our only durable source of wealth. Everything else changes. Products, people, facilities, investors. Only relationships survive change, and only if every team member pays close attention. 

Change challenges every aspect of business. Hesitate and lose your edge, yet making great decisions isn’t easy. You knew that long before economic meltdowns turned the heat up. 

Mistakes are expensive: inefficiency, waste, lost confidence, low revenues, weak market image, and eventual failure to survive. 

Innovation is the solution, yet few teams manage. Common errors stall projects and kill return on investment. 

? Businesses see innovation as evolution of products – the business of innovation. In truth, businesses must evolve just as much as their products – the innovation of business. 

? Businesses think customers buy products. Not so. Customers buy what they think the product will do for them. 

? Businesses think brands are owned, names tagged onto products. A crucial mistake. Brands are value promises. Businesses cannot own their brands. Their markets do. 

Success depends on relationships developed by consistently delivering desired value better than any competition. Brand equity is the single most valuable asset of any business. Mistakes seriously compromise our potential. 

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