Stand in front of a grocery store’s cereal aisle and you may be confronted with more than 130 different boxes of flakes, Os, pops, or puffed forms of grain slathered with varying amounts of sugar. Move to the detergents and you will see a wall of powders, liquids, bleaches, softeners, stain removers, and more, stretching on for 20 feet. Move to oral care and you may encounter 42 different variants of Crest toothpaste alone. Then just try to pick out a toothbrush. Sheesh.
Yet if you were to go into virtually any of the world’s largest firms that make the items sold in that grocery store today, you would find that most of what they are cooking up are yet more such product variants and line extensions. "Surely, we will sell more if we make one in mango flavor, no? What if we make the potato chips with pink Hawaiian sea salt?" Changes like these are easy in big firms—they don’t require factories to be retooled—so they’re common.
There’s only one problem: As an innovation strategy, it’s nearly useless.
Why Product Performance Isn’t Enough
There’s nothing wrong with product performance innovation per se. In fact, depending on industry or context, such innovation may be necessary to cut through the noise of existing offerings. When a PC first gets designed with special chips for managing graphics, or includes a nice little biometric feature that starts it up securely with just your fingerprint, users value these advances. But if that’s all you use, this steady progression of new functions and features is insufficient for continued success and differentiation. Today, nearly every category is hyper-contested. Also, suppliers can only succeed if they can sell their little specialty ingredient or functional doohickey to all the market players in an ecosystem, not just one. That means any unique effect is swiftly eroded.
Remember that a firm’s overall performance inexorably erodes through the phenomenon known as the cost of complexity. Pickup truck wars illustrate this trend. For several decades, the key to marketing a pickup truck has been to assert that yours is more macho than everyone else’s. Toughness and torque are keys, with horsepower and towing power detailed in a basso profundo voiceover. To dramatize just how tough these trucks are, we see ads showing them being thrown off cliffs, driven through fiery tunnels, and molested by robots in underground bunkers. It’s certainly a relief to know that these fine vehicles will survive such ordeals, but thankfully such situations seldom arise in real life. When all the trucks are mighty macho, innovation that helps the truck driver or owner do something else is what matters.
Today, almost any design can be knocked off in record time, whether you work in textiles or technology. Launch any new gadget and an engineering deconstruction will quickly appear online showing the components used, with clear speculations about the suppliers and costs of each one. Twenty thousand products were introduced at the 2013 International Consumer Electronics Show, including dozens of new ultrabooks, OLED TVs, next-generation smartphones, and 3-D printers. There is always room for thoughtful designs in the world, but who’d like to make a bet on how many of these will be successful in the marketplace? It’s safe to say that a large percentage of them will enjoy only a short and troubled life.
Apple represents the apotheosis of gadget lust. Still, with reliable regularity, it adds to its arsenal of beautifully designed technology objects, causing the technorati to swoon on cue. Yet Apple’s products are just the tip of an innovation spear that has been carefully designed from start to finish. Even before he became CEO, Tim Cook had won praise for the way in which he drove efficiencies through every part of Apple’s supply chain. For example, many analysts believe the company has a substantial cost advantage on flash memory due to its supply chain management. The platform of iTunes and the App store has allowed it to generate enormous value from an ecosystem of developers and record labels keen to connect with Apple’s audience. That makes any of the devices that connect to that ecosystem much more valuable and appealing. 25 billion songs had been downloaded by February 2013, an indication of a lucrative business model by anyone’s standards.
So, while Apple designs beautiful products, the point is that there is much more to its success than "mere" product performance or industrial design.
It’s not that product performance is unimportant. Rather, challenge your team to add other types of innovation to achieve a bigger and more sustainable competitive advantage.
Text adapted from Ten Types of Innovation: The Discipline of Building Breakthroughs (April 2013; Wiley) by Larry Keeley, Ryan Pikkel, Brian Quinn, and Helen Walters. For more details, see www.doblin.com/tentypes
—Larry Keeley is cofounder of Doblin, an innovation strategy firm, now a unit of Deloitte Consulting LLP. He teaches innovation effectiveness at both Chicago’s Institute of Design and the Kellogg Graduate School of Management. Ryan Pikkel is a design strategist at Doblin. Brian Quinn leads client relationships and programs at Doblin. Helen Walters is the Ideas Editor at TED.
[Image: Flickr user Thebarrowboy]