Innovation cannot be delegated

Source: Management Scope (September 2014)

According to Marion Debruyne, Professor of Marketing, Strategy and Innovation at the Vlerick Business School in Flanders, companies can only innovate successfully if their marketing succeeds in building a bridge between the business and the needs of the market.

Marion Debruyne is a Chemical Engineer with a Master’s Degree in Marketing and a PhD in Applied Economics. “At first sight, this is probably not the most obvious combination of degrees, but in my book ‘Customer Innovation’, I show how marketing, economics and technical thought are inextricably linked”, Debruyne explains at our meeting in the lobby of the Radisson Blu Astrid hotel in Antwerp. “Furthermore, I know about both theory and practice. Nothing is as practical as a good theory. I enjoy building a bridge between the academic world and the world of business”.

There are already numerous publications about innovation. What motivated you to add yet another book to the pile?

“The fact that in all those books, the link between innovation and marketing is rarely made. It is no coincidence that I am a Professor of Innovation and Marketing: the two are inextricably linked. It is useful to compare the combination of the two disciplines to a Siamese twin: one cannot survive without the other, they are Yin and Yang. However, companies often see this differently. If innovation is mentioned, people’s thoughts usually go to technological and product innovation, and to how these can be marketed. In general, too little attention is paid to what the market itself is demanding. This was one of my key motivations for writing this book. Furthermore, I hear many companies say: ‘the customer should be central’. But at the same time, they fail to link this principle to a willingness to change. Any company that claims to want to listen to its customers should also be prepared to transform itself. A customer-oriented organisation should be innovative by definition, and that is impossible without first analysing the business model and if necessary, altering it. This was another message I was able to express in this book”.

Many large companies struggle with the concept of innovation. Why is it so difficult to innovate?

“One of the barriers to innovation is the creation of silos in companies. Innovation is often delegated to an innovation manager and all too often, it goes no further. But this does not solve the problem. It is better to ensure that innovation is at the heart of the organisation. It should be part of a philosophy that permeates the entire company. Innovation cannot be delegated, and particularly not if it is parked with a ‘missionary’ or responsible person within the organisation who has no real power. This simply doesn’t work. In order to innovate, you need a courageous CEO”.

So how can a company manage to innovate?

“In order to do this, a company must have three key competencies. First of all, it must be in contact with what the market wants (connect). Secondly, the company must convert the ideas and insights that it gathers in this way into change and innovation (convert). And finally, a company that wants to innovate must collaborate with both internal and external parties (collaborate). These three competencies create a coat hook on which to hang innovation.

Then there are three ‘lenses’ through which a company can look at innovation. A company that looks through the first of these lenses zooms in on day-to-day business. There is continuous contact with customers and the company asks itself how it can do better on a daily basis. The sort of innovation that emerges from this is often on a small scale, but there’s nothing wrong with that. The importance of taking small steps forward is often underestimated. When you look through the second lens, you take a slightly wider view to get an idea of what the customer wants to achieve, of which a company’s existing product is only one part. Innovation should not be product-oriented, but customer-oriented. The main thing it should be aiming to achieve is to solve a problem for its customers”.

Can you give an example?

“For example, a company that produces steel fencing products can ask itself if customers want those fencing products per se, or whether the fencing products represent a different desire. It could be that a customer chiefly wants to use the fencing to protect himself, or wants to use the partition as a gateway. If this becomes clear, a company can choose to reformulate its business and, for example, move into marketing entry badges and security systems. In this case, it is all about reviewing the basic assumptions of the business model and adjusting them where necessary”.

What does the ‘third lens’ involve?

“This is the wide-angle lens. A company looking through this lens is zooming out still further in order to pick up changes on the edges of the market. This is chiefly about total innovation of the business model, in order to give customers what they need”.

How does the latter concept work in practice? Is this type of innovation chiefly about trial and error?

“Amongst other things, yes. Anyone looking through this lens is chiefly in search of innovation that lies in the future. But of course no one knows yet what the future holds. There are therefore two possibilities. You either go down the single-bet-syndrome route, where you put all your resources into a single scenario. However, this is a dangerous approach, as no one can predict the future. It is an illusion to believe that this is possible, and we should not overestimate ourselves. Another option is to go down the strategic experimentation route, otherwise known as ‘trial and error’. This is where you allow a thousand flowers to bloom so that at the end of the process, you can judge which one has flowered most abundantly”.

Ford said: “If I had asked people what they wanted, they would have said faster horses”. In other words, companies can also be successful if they do not per se listen to their customers.

“It is wrong to think that listening to customers simply means listening to their obvious needs. Anyone who listens to customers closely should also be capable of uncovering their latent needs. And that is exactly what Ford did. What the quote is really saying is that people want to be fast and mobile. Whether they achieve this by means of a horse or a car is actually irrelevant”.

How can these radical transformations best be shaped in an organisation?

“A company must innovate based on a vision, and that innovation should then be shaped top-down and isolated from the rest of the business. Indeed, innovation should be in the entire organisation’s genes, but to truly give the transformation of the business model a chance, companies also have to isolate strategic experiments and give those involved the freedom to operate. If an organisation fails to do this, the danger is that the innovation has no chance of succeeding because internally, priority is always given to existing business. Innovation often suffers from existing business. For example, the sales department prefers to sell things with which it is familiar”.

In the past, innovation was largely the result of vision and intuition. Today, data analytics play a significant role in it. Has innovation therefore become better and simpler?

“Not all kinds of innovation. Statistical models can be very powerful in predicting behaviour. But they often fail to show why particular behaviour arises. Data models can be useful when innovation is based on the first lens, but they are less useful when strategic choices need to be made about the nature of the business”.

It seems that there are more successful, young, innovative companies in the United States than in the Netherlands. Why is that?

“There are three reasons for this. Firstly, America is an environment in which it is easy to innovate. Not only because there are fewer rules, but also because there is more capital and knowledge available. Also, American culture is one in which failure is not stigmatised. Anyone who fails simply starts afresh and people respect that. Finally—and this is also a big advantage—America offers a homogenous market of some three hundred million people”.

You suggest that companies that chiefly want to do what they are good at cannot be successful. Can you explain that?

“I am against exclusively thinking in terms of core competencies. There are many companies that believe that they should stick to what they are good at. But this is at odds with market-oriented thinking. With this approach, a company bases everything on its own skills and sticks to this, regardless of whether the market demands it or not. This is a sign of inside-out thinking, whilst outside-in thinking can lead to much greater successes, because it also takes customers’ wishes and problems into account”.

Can you give an example of this?

“Of course. When Netflix started up in 1997, people could choose the DVDs they wanted to rent online, and Netflix would then send them by post. If Netflix had continued to cling to the model of sending DVDs by post, then it would never have grown into the successful company it is today. They let go of this concept and now offer subscriptions to view films and series online”.

So the key is to ‘stretch’ your core competencies and place them within a wider framework?

“Yes. By standing back and carefully analysing what customers are looking for, you can stretch or even expand core competencies”.

The marketing profession has now been in existence for sixty years. Has it now reached maturity? Or is it still in its infancy?

“I both hope and see evidence that companies are now actually beginning to implement genuinely marketing-oriented thinking, in which all the different disciplines listen to the customer’s requirements, and in which the slogan ‘customer-centric’ is not simply a hollow phrase. But I still find it strange that many companies claim to be all about the customer, whilst mainly regarding marketing as a tactical segment that is largely concerned with advertising. If there is one department that understands both the market and the customer, then it is the marketing department. Therefore it is also the marketeers that have to build a bridge between the company and the market”.

Should marketeers demand more vociferously that they carry out this role?

“Absolutely. Far more than they currently do, they must emphasise their added value for the organisation, and it goes much further than the latest advertisement”.

The Netherlands wants to be one of the world’s top knowledge-based economies, but it lags behind in terms of innovation. How hopeful are you about the innovative strength of Dutch companies?

“I am an eternal optimist. I always tell myself that optimism is a moral duty. In any case, it is clear that in the majority of companies, the ‘customer-centric’ theme is finally on the agenda. And now that the financial crisis has prompted cost-cutting right down to the bone in many companies, and there is little more that can be done in this respect, people will have to look for other ways to survive and ultimately be successful. Listening carefully to the customer is a good place to start. And when companies really listen to what the market wants, innovation is inevitable. As I said before: anyone who is customer-oriented has to be prepared to change and innovate”.

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