In today’s economic environment, developing new products and services requires adaptive Innovation – that is, the ability of the company to adapt to rapidly changing market needs. For this reason, it starts at the edge of a business with those closest to customers or anyone else who receives value from the firm.
Yes, customers are an influential audience, but they are not the only ones who deserve attention. Your stakeholders, including employees, value-chain participants, investors, and the media, will see value coming from your company. They will all need to be invited to participate in creating this value.
Your company needs relationship-centricity embedded into its very DNA to adapt to a dynamic market’s demands. The ability to adjust is driven by strategic relationships that are both internal and external.
Adaptive Innovation is not a one-time event; it’s never “one-and-done.” It’s a continuous process of creating new norms by disrupting the status quo creatively. In consulting with clients, I’ve seen that disruption is often caused by an unknown or underestimated competitor. Marriott will not be disrupted in the future by Hyatt. It will be disrupted instead by three college dropouts renting out an air bed from their apartment. Look at the market cap of Airbnb.
Three fundamental steps are required to support value co-creation through adaptive Innovation.
Listen louder
Increase your organization’s ability to scan the environment to find relevant information and to prioritize it. This will help you with strategic planning, marketing, Innovation, and other aspects of your business.
Others might mistakenly think I am using “listening more loudly” as a substitute for market intelligence or environmental scanning. It’s not true; none of these activities have a pulse. They all produce the information necessary to support strategic planning, and they each contribute to the process of listening more. Still, they don’t emphasize the role of the entities you listen to.
Listening louder helps organizations transform their customers, partners, and employees (all strategic relationships) into active cocreators of value rather than passive consumers.
Listening more to your strategic relationships can also help you uncover information you may not have been aware of or that your data mining algorithm was not set up to detect. Or, you might discover something the media you follow isn’t interested in. Listening louder casts an even wider net than just scanning the environment. You will be taken outside your industry, geography, and the echo chambers within your relationships.
What is the brilliant professor doing at this lesser-known University?
What does the process consultant do in this other, smaller market?
Why does a JP Morgan Chase executive with deep domain knowledge and passion think about negative yields?
What does the incubator startup do with Watson?
Find faint market signals
These emerging bits of information allow organizations to detect changes or trends in environmental factors early, giving them a competitive advantage regarding adaptive Innovation.
Imagine a faint sign as a unique need or a pain point randomly mentioned by a large, often unrelated group. A customer or employee may disguise it as an interesting viewpoint. You might hear a partner company comment about what they have observed in your organization, or you may listen to it at several conferences.
The most important signals for strategic purposes are the subtlest ones, such as slight changes in animal behavior that precede an earthquake. Here’s the problem: many of these faint signals are irrelevant to your company. You need to use a litmus test to determine which signs are relevant for you, your market dynamics, and the strategic path that will lead you from your current situation to your aspirational future.
Listen carefully if you hear something only once. It could be a mistake. Listen carefully if you hear something repeated. Your strategic relationships will act as signal scouts if you hear that rumble from someone you respect and trust. They help you detect faint signals in your marketplace.
Deploy prototypes and pilots
After filtering out 50 weak market signals and selecting ten relevant ones, you can perform the due diligence necessary to validate, verify, or invalidate that set. You will now be left with a few, maybe two, potential innovations.
Next, the question is, “What now?” Now is the time for a startup to be hungry, agile, and thrifty. I advise my clients and mentees to follow the path of prototypes and pilots as early as possible in the innovation cycle.
Create a version that clearly shows the value of your Innovation. It’s not necessary to have a perfect model. It would be best if you had something that shows how the creation alleviates pain or provides a benefit and how those who receive it are better off. It takes a particular mentality to do this: If you are not ashamed of it, you’re already too late. Move when you are 80% ready; the final 20% does not matter.
Focus groups are co-created conversations around a prototype. This prototyping will go through several iterations. Each one will benefit from the reactions and insights of the previous prototype. Guy Kawasaki once said: Forget about PowerPoints and focus on prototypes.
How can you quickly prototype and present an idea to your target audience? Friends and family aren’t going to pay for your opinion. They may love you, but it won’t be because they want to.
For a big idea to be launched, you must show a prototype to a target audience who will care about it, know the difference, and appreciate the value of what you’re trying to create.