Business innovation should be closely connected to revenue. But often marketing myopia gets between needed business innovation and profitable growth. Let me explain.
Your success is dependent on revenue. Of course. How else can you pay the bills and be profitable? Unless you’re Twitter, you can’t.
In the short term revenue is essential. It fuels your activities, and it’s the result of your activities, but it’s not your business. Solving customers’ problems is. And business innovation is key to finding new solutions for their problems as they see them.
Consider an example from the famous 1960 HBR case, Marketing Myopia, by Theodore Levitt. For buggy whip manufactures, early in the 20th Century, revenue depended on selling buggy whips. They thought that this, the manufacture and sale of buggy whips, was the business they were in. Well they weren’t. They were in the motivation business.
Consider a more recent example. Rolodex is a well known brand. So well known it became generic for contact list.
“She has a killer Rolodex.”
Their success was built on the manufacture and sale of address storage products. So they thought, “We are in the address storage and organization business.” Or perhaps it’s the office supply business, or perhaps … it’s a little hard to tell, from their web site, exactly what business they think they are in. Rolodex needs to innovate and extend their powerful brand into the new emerging channels. But the tyranny of revenue, the constant scramble for more sales from current products, doesn’t allow them to see that they were in the connection business. The result, they’ve been eclipsed by LinkedIn and Plaxo.
Hip Shots
- Understand your products from your customers point of view. What’s their problem? How are you solving it? Use business innovation to develop new products and business models to solve their problems.
- Embrace emerging channels and technology. Don’t bet the farm but don’t ignore them either. Watch them carefully, put a toe in early and often, and objectively consider how you could use what’s new to do a better job solving your customers’ problems.
- Ask your most creative managers, or go outside and ask a creative consultant how they would break your existing model. What would they do if they wanted to attack your base business. Then launch the attack yourself.
- Carve out a budget that isn’t revenue dependent and use it to fund innovation efforts. Treat this money like it’s a fixed or capital expense that must be spent. Because it does.
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