Leap from "What If" to "What Is" to strive in Asia post crisis

Sure, your company might have invented
many, many things in its 100-year history, but innovation is not about
being creative, or having lots of ideas. “I would say it’s the
transformation of ‘What If’ to ‘What Is’, and in a business context,
this means you must attach a ROI value to it. Basically,  it’s a
transformation of ideas to shareholder value.
Shareholder value? Yes, even innovation should be scrutinized and held
accountable to a dollars and cents argument, especially during
difficult economic times. After all, this approach will help separate
the men from the boys, and find out if your company is truly making giant strides in innovation or just incremental steps.

Google is one obvious example of how innovation has, in six or seven
years, not twenty, turned  the company into a multibillion dollar firm
which literally owns the space it’s in. But such quantum leaps in
innovation are not restricted to global MNCs, as Singapore brand
BreadTalk has demonstrated. By taking the very European concept of
eating bread (and in a market where Delifrance had already established
itself) the company simply added an Asian element to its offering and
is further proof that being innovative has little to do with inventing
something new.

“It doesn’t look Asian… and its not in your face like a curry puff,
but it tastes Asian. Did they invent anything? No. But did they create
value?  Did they go from an idea to shareholder value?  Yes. In seven
years they’ve created a 80 million dollar business… Need more proof ?
What about Eu Yan Sang ?  The Traditional Chinese Medicine (TCM) group
did not invent anything new.  TCMs have been around for centuries, but
till Eu Yan Sang changed the paradigm, the industry was built around
old, dusty scary and un-welcoming dry sea horses powder pots. In less
than a decade, Eu Yan Sang has transformed the industry and capture the
TCM market like no other company. Its clean, modern welcoming, zen-like
stores and  its soothing piped music clinics are simple attributes (but
not the only ones) enabling Eu Yan Sang to capture new clients, beyond
its traditional customer base. It is a successful and thriving business
offering attractive shareholder value. Few, if any, will now be able to
enter the same TCM market and steal market share away.  But once again
Eu Yan Sang, did not invent anything- though its R&D department
might argue differently! The concept of TCM retail had been around for
centuries but the company looked at a problem in a different way and
created a golden opportunity for its shareholders.

Alright, but there’s still a multi-billion dollar question which we
need to answer. Why aren’t all good ideas worth a lot of money?   I
could have 25 great ideas per day but its just wind…its just air and it
goes nowhere.  Innovation is taking the idea from ‘What If’  to ‘What
Is’. It’s a painful process. Along the way some people just disappear
because they can’t sustain their idea. Innovation is very Darwinian… Only the strongest and the fittest survive.

Innovative companies look at problems in a different way.

Okay, so consumer feedback then, perhaps?  I am afraid not.
Consumers know  little.  Human nature mostly churns negative feedback.
If you ask someone who has used a product for three years what they
think about it, naturally they will say, “I don’t like it,  it’s too
small, too big, too red, too noisy”.  There’s always something wrong…
If we were to change a button or a colour a consumer said they didn’t
like,  would we really change the marketplace? Would we push the
paradigm of how we do business?  The answer is no, of course not. We’ve
done nothing then – what we’ve done is make humble increments and
everyone can do that. It improves the consumer experience by a bit but
it hasn’t created a whole new market for yourself.

Right. So if being innovative doesn’t mean spending a fortune on
R&D then how do we innovate for our consumers? What you have to do,
and the Japanese and Koreans do this well, is observe consumers and how
they behave. Then you will see their real needs as opposed to what they
think they need.  Use the old business adage: answer to a want and you
are a commodity. Answer to a need and you are creating value.

Another mistake companies make is recruiting within the comfort
zone. “I am going to recruit someone who is like me because if he’s
like me, he will like me, and I will like him. And I will never feel
challenged. Hence my job is safe and my job is enjoyable” would
subconsciously think most senior executives. In Asia we’re probably
even more guilty of doing this, and if you feel comfortable you will
never innovate.

Look at some of the big French multinationals, the top three guys
are all from the same country, and from the same school. They think
alike, vote for the same party, go to the same vacation spot and
practice the same sports. Some even look the same!   A nation that was
once at the forefront of innovation has been castrated of its potential
by its own aristocratic establishment. Clans, clubs and semi official
societies and the anti Christ of innovation. They exist to perpetuate 
a semi-fantasy like heritage, blinding members from the fast changing
environment and comforting those who turn down diversity. The exact
same can be said about Japan. Where is Japan Inc. those days ?

Innovation comes from the positive clash of ideas. No one will say ‘What If’
if we all think the same.  In stark contrast to this, leading soft
drinks and snack company, PepsiCo announced in September 2006 that
Indian-born Indra Nooyi would take over from Chairman and CEO Steve
Reinemund to become the first woman to hold the post. Seeing as there
aren’t too many ethnic women CEOs in corporate America, the appointment
could be viewed as something of a shock but I reckons it was exactly
her different background and thinking which made her promotion at an
innovative company like PepsiCo a smart move.

Of course, the appointment of a so-called innovative thinker as CEO
is just a secondary step for the company to actually head in the
direction of innovation. But for a company to walk the walk, you need
to have a CEO who’s engaged and communicates within the firm why it has
to be innovative, and how it’s going to be innovative. Innovation
actually does not come from the CEO.  He’s busy on his Blackberry, on a
plane and he may indeed have two or three good ideas but if he’s
running a multi million-dollar business, the likelihood is that he is
currently focusing on keeping the business afloat and probably cutting
costs.  He is not the ultimate in-house driver of innovation.
Innovation will come from your own people, the guys who work late – Mr
Joe (no relationship with the 2008 US Elections infamous Joe the
Plumber).  He will have a great idea one day but if the processes in
the firm are not in place to recognize, drive and reward innovation
then mature Mr Joe might trash his idea and be a side-man for the rest
of his life; or he is young, ambitious and angry and he creates the
next Google. A lot of innovation comes from rogue employees. Be aware
or beware.

Damien Duhamel

Managing Director Asia Pacific

www.solidiance.com