By Jeffrey Baumgartner
Not only is your company innovating, but your competitors are surely doing the same. This affects your innovation, particularly in terms of how it is viewed − and bought − by your customers. Do you consider this in your innovation activities? If you do not, you probably should.
Your Organisation's Ideas
When your innovation team comes up with a bold new idea, do not merely think about it in terms of your company, but also in terms of how your competitors might respond. Consider these questions:
How much of an advantage does the new idea give you over the competition? If an idea could readily be copied by the competition, then you need to push that idea further. Particularly if your competitors are better at marketing than you are. Otherwise, they will have a sexy variation of your product out before you know it.
How much of a head start does your new idea give you? You have a great new idea to implement on your widgets. However, it is clear that the competitors could implement a similar idea within 12 months. That means you need to improve upon your original innovation within 12 months in order to retain a lead over the competition. The faster you improve, the greater you lead.
How long will it take you to implement your new idea? The implementation period leaves a window during which the competition could launch a similar implementation (either because they learned about your idea or, more likely, because they had a similar idea themselves). What options do you have during the implementation period? For example, consider an innovative series of product modifications. Is it better to take more time and implement all of the modifications in one go; or is it better to implement a few of the modifications at a time and launch a series of improved products? In the first scenario you have the advantage of surprise and perception of greater innovation. In the second scenario, you give the impression of continuous innovation and give less time for the competition to launch their own innovative improvements.
At what time do you announce your innovation? Traditionally, innovations are announced after they are implemented. The theory is that this prevents the competition from copying your idea. But what if the competition has a similar new product idea and announces their innovation before you have launched your new product? What if you believe this to be the case, but do not know for sure?
In some cases it might be better to announce your new product first – before you launch it – in order to get the first mover's advantage (ie: being identified as the innovator behind a new idea or new product). If you run a good marketing machine, announcing the product to gain first mover's advantage may be worth it – even if it gives your competitors forewarning of your innovative ideas.
How do you market and promote an innovative new product or product improvement? If you use the same marketing communications tools, themes and approaches you have used for years – there is a danger that your customers will not recognise the value your innovative new product offers. Hence it is critical to be as innovative in marketing your new product as you were in developing your new product.
The Competition's Ideas
Of course, in your sector, your company is not the only one innovating. You competitors are too! How do you respond to a bold new idea announced or launched by one of your competitors?
Consider these questions:
How do you react to your competitor's innovative new product ideas? You have three choices:
a) Try to copy their idea. This is not an innovative approach. Market leaders do not copy. They lead! And being a copycat does not give you first mover's advantage – unless you have an awesome and less than honest marketing communications team.
b) Ignore their idea and argue that your existing product is better. Sometimes, telling clients that the new idea is untested, probably not viable and that your more established product is a better buy can be a safe bet. However, this can also backfire, particularly if used more than once or twice. If your customers see that your competitor is consistently being more innovative than you, they will eventually take a close look at the competition's offering. And will probably buy into that offering.
c) Innovate an even better product. This is the most challenging, but probably best option. If your competitors develop a better product than what you offer, update your product to make it even better than theirs. Of course, this means you need to get serious about innovation, if you are not already!
How do you react to your competitors' reaction to your idea? This may sound convoluted. But think about it. You launch an innovative new product. Your competitors could take any of the actions described above. Have you got a plan to react to their reactions? An innovative plan, of course, is the best solution. If you have not got a plan, it is worth considering your competitor's options and devise plans for each. For example, if your competitor tells customers that your innovative new product is a poorly conceived, unreliable piece of rubbish, your marketing people should be ready to respond creatively, especially if that competitor is bigger or better established in the field.
ow will you react if your competitor has a disruptive idea, an idea so innovative it transforms the industry and leaves you looking obsolete? This happens. Digital photography has been disastrous to film firms like Kodak and Fuji.
The added challenge to this scenario is that the disruptive idea often comes from outside the established markets. The hotel industry saw other hotel chains as competition, not IT start-ups. But, AirBnB has had a profound effect on the industry. Clearly, you need to be watching other industries, especially Tech, as well as your own in order to monitor the marketplace.
One way to deal with this eventuality is occasionally to do a creative thinking exercise around the questions:
- What innovative new product might our competitors launch tomorrow that would be our worst nightmare?
- Devise a mobile phone app completely change our industry?
- How might Google, Amazon or Facebook offer an alternative to your product – either free or at a much reduced cost?
Not only can such questions help you prepare for disruptive innovation, they might give you an idea for a disruptive innovation. Be prepared for that and be willing to explore radical ideas, even if your established product is better. One of the first digital cameras was developed in Kodak's research and development division. The idea was roundly rejected. Had Kodak's CEO of the time been more visionary, the company might have thrived. Instead, it has gone bankrupt.
Three Things You Should Do
There are three things to take away from this. Firstly, if your competitors are innovating − and they probably are − you need to keep innovating to retain (or gain) the market lead. Secondly, approve ideas with potential as soon as possible. The more time you let an idea sit, the more time you give your competitors to launch a similar and possibly better product. Thirdly, keep an eye not only on your competitors, but other industries as well − especially the tech industry.
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