Can we remove the single biggest business risk?

Market risk- will our new product or service succeed in the market place is without doubt the single biggest risk in business.

Of course Innovation – “defined as change that adds value” is one way of dramatically reducing that risk by innovating existing successful products to add value. But even this will not entirely remove market risk. The famous Edsel Ford of the 1950’s is a classic example of the failure with an innovated offering.

However, some would say that such failures were not due to the product itself but more the lack of persistence of the inventors, or in the case of the Edsel Ford, the marketers.

But this too deserves to be questioned.

Try, try and try again

No doubt the reader would be familiar with posters often seen in businesses to the effect that persistence wins.

Indeed there is one saying going around these days – “A man can only be beaten in two ways, if he gives up or he dies”

This may all be very well in theory but the practice is somewhat different.

Perhaps this saying should be put more eloquently as:

- “Persistence is an important element of success
Persistence is an essential element of failure”

The entrepreneur speaks!

Without doubt the take away highlight of any successful entrepreneur’s presentation is the hardship they endured and the persistence within that drove them to success.

So true this is, but what we often fail to realise is that for every successful entrepreneur standing at the lectern heralding success, there are 1000 or more who tried just as hard and today, do not even own their own house.

Indeed one entrepreneur persisted so hard he lost his house three times, buying it back at auction twice before he was finally broke.

There is also a mindset of reciprocity, in effect that: “If I do it hard, success will necessarily follow.”

Again this is complete folly.

The key to success is to know when to stop

Blind persistence with a bad idea will not turn it into a good idea.

There is no shame in discontinuing if all the signals are saying stop. If that’s the case move on to the next opportunity. The world abounds with opportunities.

The Naysayers

No doubt with the mindset suggested people would be saying but what about Thomas Edison and his persistence with the light globe, what about the Wright brothers and the like.

It is true that these people showed enormous persistence; the difference with them is that their target was what we may call a “platform technology”, not so much a product that would appeal to one market sector but a platform that would form the basis for a whole new raft of industries. Perhaps this has less risk if the target is so big, but still there are exceptions.

The steam engine for cars comes to mind, so too the orbital engine.

What’s the message?

Be dogged be persistent, but do so within your financial reach and never invest your life or for that matter if you are an executive in a business, your job on blind persistence.

Your initiative may succeed, but if all the signals are saying stop, the odds of success are probably miniscule,

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Roger also chairs two Syndicates of the National organisation, “The CEO Institute”. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms. www.matrixthinking.com

Innovation and Marketing!

Constantly revitalising paid advertisements is one way of maintaining audience attention, but perhaps there are other ways, that may be far more cost effective, if we apply some innovation to our strategic marketing approach.

These days the classic four “P’s” of marketing are a “bit old hat” since the latter “Promotion” once seen in effect as advertising, can now be conducted in many different cost fee ways, courtesy of the internet, the ubiquitous cell phone and of course the social media.

Perhaps these days the 4 P’s should be 3 P’s and an “A” for “Awareness”

• Product
• Price
• Place
• Awareness

Building your market

Few would argue with the proposition that advertising is a somewhat hit and miss business. No doubt the reader would be aware of the old adage that 50% of your advertising spend is wasted. The problem is which 50%?

Without doubt the best way to win customers is by referral or creating a Word of Mouth (WoM) message. This approach will lead to huge customer churn to your business, indeed approaching 100%, far more than the 8% often attributed to advertising.

Developing a WoM Message

As will most things, the fundamentals are simple once you break them down to the basics.

When you service a customer request there are only three possible take away messages that can be delivered:

• Bad News – “I won’t do that again, better tell my friends”

• Indifference – neither a memorable or forgettable experience. No WoM message is created

• Good News – “I loved it and must tell my friends.”

Win your customers – don’t punish them

What is quite amazing is the multimillion dollars businesses spend on television and print media advertising. More amazing is that these companies do not devote a single cent to providing a gift or forgiving a customer error. Sometimes even an error on the part of the business itself. Banks are a great example of companies that run multi-million dollar advertising campaigns to inform people of how wonderful they are yet banks are almost universally hated because they usually punish you with a penalty payment if you make the slightest mistake. I wonder what might happen if banks actually rewarded their customers from time to time?

But let’s not single out banks, many large organisations have become too remote from their customers and perhaps too wedded to the concept of mass advertising to consider the low cost alternative, WoM and winning customers by referral, as a formal business growth strategy.

A Systematic Approach

One of the Matrix Thinking Seeds is called Comparison, and two of the thinking catalysts are “Tracking” and “Transfer”.

Comparison means to compare yourself with others in a similar business, ideally the best; the ones people talk about. The catalysts then ask you to “track” the people using that business to learn why it is talked about. Once you have learned that, can you “transfer” it to your business?

Some examples that have generated great WoM:

1. A local supermarket has attracted a huge WoM following.
In a case when a customer has purchased a large basket of good and an item does not scan properly, rather than holding you up whilst they do a price check, they simply ask you to take it as their gift. The approach has developed a huge positive WoM message and the word is spreading. This is a unique talked about and rare customer experience, and the cost to the supermarket is trivial, especially when compared with their advertising spend.

2. A local caravan park that also have lovely two bedroom units always welcomes
their guests with fresh flowers within minutes of their arrival. On departure they always provide a small gift and thank you for staying. The cost of this is insignificant, the message it sends is overwhelming.

3. The local electrician when called always goes the extra mile when he does a job, maybe puts in a new power outlet, then says, whilst I’m here, maybe I should check your smoke detectors, as a courtesy. This costs nothing, but what a message it sends. You can be sure he will be recommended.

Divert just a small percentage of your advertising spend to a strategic WoM campaign and watch the result, the business will grow as advertising spend plummets. Further, if you are a business with a restricted budget for advertising, then there is little alternative.

Where to Now?

Workshop your business with your staff and perhaps your customers, track your customers, learn what delights them and devote some promotional spend to fulfilling that delight and watch the word spread and the business grow.

Develop and implement a systematic WoM strategy. The results may surprise you.

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Roger also chairs two Syndicates of the National organisation, “The CEO Institute”. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms. www.matrixthinking.com

© Roger La Salle
www.matrixthinking.com
Design is not all about beauty

Industrial design attempts to tread the fine line between aesthetic appeal and functionality.

Wrist watches are a good example where this line is often crossed.

Probably the ideal functional watch would have a white face with large black hands and be as thin as possible to perfectly display the time with the minimum of physical presence. However, if one looks at the plethora of watch designs, functionality is usually compromised for appearance.

Unfortunately when appearance is the main driver of design the “waters become muddied” and market risk increases significantly since one persons idea of attractive may not be another’s. Design aimed at purely aesthetic appeal means vastly increased market risk where it is virtually impossible to make a cost benefit value judgement.

Classic Innovation

Drawing on the classic definition of innovation – “Change that adds value“, design needs to ideally target improved value and functionality, something that can be measured.

The Catalyst of New Design

One of the key catalysts in the matrix thinking diagram is new design, an approach that can be applied to many products and services.

Catalyst

Seed
New Design

Change
X

Classic examples in design – both good and bad!

There are numerous products where designers have overlooked obvious opportunities.

Examples include the container for the moistened wet pull out “towelettes”. These are most often sold in a cylindrical container with a pierced top to supposedly facilitate easy dispensing. This maybe a nice idea but anybody that has used one of these has at some stage caught their finger in the pierced top dispenser. For years this has been a “finger trap”, particularly for young fingers, yet it seems no designer has had the foresight to redesign it to overcome this often painful experience.

So too the cylindrical shape of the container meaning in shipping some 25% of the volume of is fresh air since cylinders do not pack efficiently.

The sale of bees honey is an example where user insight and clever design has led to a huge boost in the sales. By observing the frustration of users of honey sold in screw top jars it became clear that using honey was a very messy business. With the re design of the container to provide squeeze packs the sale figures for honey soared.

Another classic example is the “fold back” mini tomato sauce dispenser so often provided with take away hot food. The people that developed and patented this product now “own this market”, courtesy of good and clever design.

Are services any different?

A good example still exists with the Australia Post parcel tracking web site.

The site is easy to use, but when trying to track a parcel in the past the web site asked you to please enter the “Item Number”.

Actually what they really wanted you to enter is the bar code number?

More recently Australia Post has updated its web site where they now ask you to enter the “Tracking Number” but nowhere on their documents is the term “Tracking Number actually used. Again they mean the Bar Code number but is seems the designers of the web site are still not talking to the designers of the paper document.

This classic example of poor design would seem to be underpinned by poor internal communications with little or no “blind shopper” trialling.

There are countless other examples if one cares to look.

It works for manufacturing to!

Good design means designing a product or service that can be easily produced in the manufacturing sense. Again there are countless examples where designers have developed wonderful concepts only to later find the production difficulties almost insurmountable.

What if I can’t change my product?

In many cases it is not possible or desirable to change a product for various reasons.

Power and water utilities are examples. In these cases changes cannot be made to the product but to the distribution model or other design aspects of their business.

For classic products such as Coco Cola or sweets and candies the opportunity still exists for designers to change the package to add value. The chocolate Toblerone is an example where the product comes in a classic efficient and distinctive package.

Many products these days are sold in almost impregnable “blister packs” making the task of opening the package frustrating and difficult to say the least. One wonders if new design and easy to open packages would actually increase usage of such products and thus greater sales? Toothbrushes would have to be one leading example of an almost impregnable package that may indeed hinder the turnover of old brushes for new ones, especially when the user may be in a hurry?

What’s the solution?

The best way to test a design is with a new user or “blind shopper”, what is referred to in Matrix Thinking as “Tracking”.

Track your product and you will be taking a valuable step to optimising you customer experience.

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Roger also chairs two Syndicates of the National organisation, “The CEO Institute”. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms. www.matrixthinking.com

Only a change in Government policy can save our manufacturing sector!

Despite Julia Gillard’s recent commitment to the future of manufacturing in Australia, the fact is that with current policy our manufacturing base is largely unsustainable, except in some key strategic areas where subsidies may be important to maintain some capability. Military application and the like may fall into this category, so too agriculture, if we can categorise this as the manufacturing of food which is essential to our survival.

As for the rest, the future seems bleak under the present government policy.

Innovation can be the solution

Innovation has often been cited as the saviour of Australia’s declining manufacturing base. Indeed we do need to support innovation and the development of new products, technologies, processes and systems but this alone will not sustain our manufacturing sector, as long as present government policies prevail.

Is IP Protection the answer – perhaps!

New products and innovations that are the subject of IP protection can lead to sustainable manufacturing. But ask yourself this question, “why would you manufacture any new product in Australia (or any other product for that matter) when you can make it for much less in China and import it (with little or no duty) then sell it at a much greater profit?

In short it is simply uneconomic to manufacture most items in Australia, and to do so is little more than an act of altruistic patriotism. An obvious answer is to impose duties to protect our manufacturing base, but with both the Labor and Liberal commitment to “free trade agreements” this is unlikely to happen. A different solution needs to found.

One possible solution

If the government were to offer a tax holiday, for perhaps 5 years, on inventions and innovations that are made in Australia it would have a trickle through effect. It would kickstart local manufacturing, create jobs and stimulate and support Australian innovation. The cost to the Government would be negligible and further revenue would flow to government from taxes on employees, reduction in unemployment and the activities surrounding the creation of new facilities to support these new ventures.

The incentive to develop and localise industries with new products would be profound.

Is anybody listening?

I wonder if those in the Government would consider this suggestion for without a drastic change in policy it seems likely that manufacturing in Australia will cease to exist within the next decade.

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Roger also chairs two Syndicates of the National organisation, “The CEO Institute”. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms. www.matrixthinking.com

© Roger La Salle
www.matrixthinking.com

Tie me with rope – Now ask me to be innovative!

Unfortunately many organisations that have embraced the innovation initiative have done so in an entirely predictable manner, mostly with entirely predictable results.

Almost without exception the innovation department will be bound with red tape and underpinned by a stage gate analysis tool steeped in accounting nonsense and surrounded by naysayers most of whom find it easier to kill rather than embrace new ideas. Remember, people resist change. It’s far easier and safer for people to keep their heads below the parapet and do nothing.

Bound with such encumbrances, why would anybody be interested in being “out there”? It’s just too hard.

Business Plans never do work

Believe it or not, most business plans fail to deliver what was expected. What they do achieve however is to start you on a journey of innovation and discovery where the end point is seldom the initial target.

Interestingly, the failures are usually championed by people with great tenacity but tunnel vision, people who have difficulty in refocusing their endeavours when their ideas are not working. The mindset that persistence will ultimately win is simply flawed as no amount of persistence will turn a bad idea into a good one.

Hence the suggestion that “Fast Failure” is a good mindset with which to explore new horizons.

The good entrepreneur is one who can see when things are not working and with the backing of some money and a good team can re-direct efforts to where the target really is. This is the sort of open mindedness that is essential in any good entrepreneur or innovator.

But do we give our people this freedom? Probably not!

What is your Return on Investment (ROI) in Innovation?

The above is a great question but one that is seldom asked for fear of learning the truth. Too often the ROI is near zero but “hope” still prevails.

One Australia Company has spent over $500k on an innovation department that has yet to produce a single outcome. No doubt there are many more such companies.

The initiative is to be applauded, but the failure is not.

If a full time innovation department is not producing tangible outcomes and real ROI within 18 months at the most, then it is likely the model is flawed.

The simple solution is not found in persistence, but in changing the model.

“If you wish to think differently, then start by doing it differently”.

Avoiding Risk

One risk with a radical innovation model may be that the resulting ideas and outcomes are not seen as “core business” and thus need to be discarded. Indeed so common is the practise of discarding non-core activities that there are complete businesses that do nothing more than collect and commercialise so called “Orphan Technologies” that have been discarded by larger companies as non-core.

It beggars belief that this mind set still prevails especially in the light of some classic successes.

NOKIA, the company that essentially “owned” the cell phone business before Apple, was in the lumber industry before it decided to re-invent itself and become the number one cell phone maker.

IBM, or Big Blue, the supplier of major computer systems in days when computer centres occupied entire floors, one day came to the realisation that the personal computer may be a new horizon. This was something quite new to them and their major systems engineering thinkers.

In order to implement the PC development and avoid the risk to the “mother ship” if this PC was just a “flash in the pan” fad and thus a potential threat to their brand, and to avoid the nightmare that an in-house development would have meant. IBM took a novel approach.

Rather than doing the development in-house”, a development that would have taken a decade or more with all the internal bureaucracy and inertia of IBM, instead they simply put a small team together, put them in a separate building, gave them an objective and let them at it. The outcome was the IBM PC, developed and delivered in just 12 months.

We might call this the “outrigger” model.

The “Outrigger” model has a “lot of legs”

Given the right person to lead the charge, some freedom to operate and some budget, almost without doubt the seed of an idea or opportunity will soon grow into a profitable outcome.

The key to success is to identify a new initiative, put a small team together, fund them and set them adrift to survive or succumb. Let them be an “outrigger” to your core business so they can do no harm to the “mother ship” or the brand if they fail.

The cost is probably far less than funding an innovation bureaucracy, the risk is minimal, but the likelihood of success is high.

There is a clear message here!

If you are looking to get a different outcome you need to provide a different approach. Perhaps the outrigger model presents one possibility!

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms. www.matrixthinking.com

The big question

Despite a number of years warning of the failing health of Steve Jobs, head of Apple, the company share price still fell some 5.2% when he recently announced his retirement.

Indeed so sensitive was this issue that prior to the announcement trading in Apple shares was suspended on the US stock market.

No doubt Steve Jobs is a wonderful visionary, innovator and entrepreneur, but a company so dependent on the skill of a single individual is a company that perhaps has failed to properly embed innovation and opportunity capture skills into its business.

So whose job is it?

It’s the task of the chief of a company to set the agenda and provide leadership. It’s the job of the staff to do the work in implementing the strategy and plans laid out before them. No business should be too reliant on the skills of a single individual.

Precisely the same can be said of innovation. Any organisation wishing to embrace change or innovation initiative needs to involve its entire staff to get the benefit of their combined knowledge and insights. Further, it is often the lower level staff that has the real and often unharvested insights into the business.

For example, imagine if you wished to take a “big stick” to an airline to innovate its offering to bring new value and new ways of doing business to its customers. Would you speak with the pilots and top management or instead the passengers check in staff, the ticket sales staff, the refuelers and the baggage handlers.

The answer is obvious, but have you ever asked the question.

What about the Customers?

How could we forget the customers!

As they say, the customer is king.

Whilst it may be difficult to have a permanent ongoing arrangement with customers to assist in “innovating” the business, we can instead teach our staff, the ones with the customer interface to observe, to actively listen to customers and to actively look for opportunities. From this we can glean all the information we require, all free of charge. This of course is possibly the most valuable information of all.

Staff Engagement is clearly the answer

Engaging people across all levels of the company has many advantages including:

• Greater involvement in the business and a willingness to follow through on new initiatives – this works to build enthusiasm and ownership
• Inspiring people to be searching for new and better ways, knowing they will be listened to
• Collecting real information from the interface with the customer.
• Building a sense of team within the business
• Taking some of the pressure from the top management.

Making it happen

The CEO of one of the most innovative businesses in the services sector in Asia has a KPI on all divisional mangers that 10% of each successive year’s revenue shall come from new and innovated products. Such is this company’s commitment to innovation, and it works. They achieve this by leveraging staff knowledge through the formation of cross functional innovation teams spread throughout the business.

These teams have a mandate to work using the proven tools of “Innovation” and “Opportunity Capture” to forever create and explore new ideas, pass these through a first evaluation filter, (referred to as the “Technology Diffusion”) then package and present them to senior management.

This process works, is systematic and simple so long as the staff have the right tools, a strong mandate and the ear of management.

What now!

The Steve Jobs approach worked for Apple but it is a risky model. Without doubt a far better approach is to unburden yourself of the task and let the people in your business all be engaged in the journey.

This is the right approach. But have you ever explored this issue? More importantly, implemented the solution?

Finally – remember this simple message

“Those organisations that fail to innovate will ultimately fail to exist and the extinction horizon these days is approaching just five years and narrowing!”

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to one of the world’s largest consulting firms. www.matrixthinking.com

Innovation Minister makes a statement – but is he well informed?

In a recent statement on innovation in Australia Federal Minister Kim Carr commented that in Australia we are convertors, we are not creators.

Subsequently a journalist took that even further stating that if this is our approach to innovation we will never have a Microsoft or a Google.

How wrong and ill informed these people are, though it’s hard to blame the Minister, he simply takes his advice from his staffers and advisers. Perhaps it’s these people that need some advice?

What is research?

The definition of research within pretty much all governments worldwide is “work of a technical nature that entails some risk”. In other word, there is no certainly of achieving the goal.

This definition forms the basis of grants that fund research work where the private sector would be reluctant to invest and it works well to assist in filtering true research from development activities.

Notwithstanding that research entails some risk, it needs to be understood that in terms of innovation or invention the real aim, certainly from a government investment perspective, is to achieve economic returns and growth in the economy. To suggest that research investment is to simply expand the boundaries of science is pure nonsense, unless perhaps for pure academics.

Consequently with this in mind it is useful to explore the real risks in business.

Without any doubt the single biggest risk with any new endeavour is “market risk”. In other words will the idea once developed have a market, if not, unless it’s for purely academic outcomes, why bother?

Reducing Market Risk

Undoubtedly the single and most effective way to reduce market risk is to find something that everybody is buying or doing and do it better. This is what innovation is all about, Changing things to add value. Doing so to items in high demand virtually eliminates market risk.

First Mover Advantage – forget it!

The winners are the followers or the “convertors” as Minister Carr might say.

Neither Microsoft nor Google nor Twitter were firsts, neither was Henry Ford with the motor car or Nokia and then Apple with a better cell phone.

All of these big winners simply rode on the back of burgeoning success stories. If this is what being a convertor is about, let’s embrace that with enthusiasm and the tried and tested method for “conversion”.

This innovation game is simple if we look at it with the right mindset!

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to one of the world’s largest consulting firms. www.matrixthinking.com

Getting Started in Business

Getting started in business is tough. Winning the confidence of your customer and essentially creating a brand that positions you as a reliable supplier is where we all aspire to be.

But once the hard work is done, the rest is not so difficult.

The Channel

The common name for the means by which a product or service gets from your business to your customer is the “channel”. Unfortunately many of us fail to recognise the real value of this channel and our customer relationship.

In both the product and services innovation matrices one of the “Seeds” (or fundamentals of building a business) is referred to as “Channel Enhancement”. This “Seed” asks you to leverage your channel to the fullest and take advantage of the trusted relationship you have with your customer.

Indeed in many businesses the real value lies in the channel, not the products being sold.

Corporate Takeovers

There are numerous examples of larger companies taking over smaller ones that have developed a valuable channel, not because these larger companies want the products of the targets. What they want is access to the channel, the customers and the database.

This is a smart low risk corporate play we see time and again where corporate giants essentially purchase a market. Buying a market or a business that owns a channel is a measurable cost that can be assessed well in advance of a purchase. Compare that with the risk of trying to create a market from scratch. The uncertainties are really impossible to forecast, so too the cost and even the likelihood of success or failure.

SME’s with a narrow offering are ideally positioned

SME’s are in the ideal position to develop “channel enhanced” products and services as a low risk means of expansion and perhaps even to position themselves as takeover targets.

A simple example

Let us suppose we have built our business making hardware products such as hinges for cupboard doors. Once we have established that as an ongoing self sufficient business it’s time to turn your attention to other needs your customer may have.

To best do this you need to find products that:

• Fit well with your core competency and thus are not technically a “stretch” to introduce
• Have synergies with your present market offering and thus give your customer confidence you can deliver because you are familiar with the “space”
• Allows your customer to reduce the number of individual vendors they have
to work with
• Can provide real value to both your business and that of your customer.

For example in the case of door hinges, what is the opportunity to also sell screws, then door catches and door handles and so on?

All these add on products are ones your customer can relate to and since you are already a trusted supplier, introducing these channel enhancements may be a lot easier than you think.

A Brand is also a Channel

The company “Chanel” started life as haute couture business and developed a high profile brand and a relationship with customers wanting their sought after products, or perhaps their brand.

It does not require much of a leap of imagination to explore the terrain of opportunities that could ride on the brand of the original Chanel offering, again appealing to the high value customers it originally serviced with its apparel range.

Louis Viutton now with watches and clothing and Porsche now lending the brand to all manner of products are other examples. The list is endless if one cares to search.

Capturing your Customer

Petrol service stations are a good example where a customer is literally captured by the supplier and where there is no means of short term escape.

When filling your car with petrol you are captive at the petrol pump. What an opportunity this is to be selling you other things? This is being done to a small extent with petrol pump advertising, but one wonders where this could ultimately go?

Imagine if there was a snack vending machine associated with the petrol pump, or perhaps a cold drink dispenser, what a bonanza this would be and all because you have been held captive by the channel for a few minutes with no escape.

But for petrol stations it even gets even better!

When you have filled you car you then go into the shop to pay. What a great opportunity this is for further exploiting your presence with up sells and some products sold at many times supermarket prices. And we often buy them, either from impulse or convenience.

What now?

Put a small team together and explore the opportunity for “Channel Enhancement”. It’s a great way to build a business!

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to one of the world’s largest consulting firms. www.matrixthinking.com

Making the simple seem complex

How many who are motivated to build their business on the back of innovation have come across the so called “Open Innovation” model?

It seems quite amazing that such an endeavour could even lay claim to its own title, but then again there are many that revel in making the simple seem complex and representing this old and widespread practice as a breakthrough in thinking with a shiny new label.

Promulgating widespread problems in search of solutions, especially in medicine has been around for centuries and in the case of mathematics and physics, some of the classic problems have been around for 1,000’s of years. This concept is by no means new.

Just to mention a few of the “innovation plays” these days we have at least the following:
• Open innovation
• Closed innovation
• Fast failure innovation
• Front end innovation
• Incremental innovation
• Radical innovation
• Disruptive innovation; and no doubt many more.

In reality, it does not matter what label you put on your innovation endeavours, it’s the outcome that is all important. Let us put this unnecessary labelling to rest and keep it simple. Now there’s an innovation in itself!

Put simply, the word innovation means “change”, and the best definition of innovation is “Change that Adds Value”.

This definition is founded on the simple basis of removing the single biggest risk in business, market risk, and innovation properly done achieves just that.

Enough said!

Open Innovation – The alarm bells are ringing

The idea with open innovation (one that would appear obvious) is that if you don’t have the internal skills to solve a problem then look outside the organisation. That’s Open Innovation, as distinct from “Closed Innovation” which asks you to look inside the organisation.

However, there are some proponents of this open innovation model that suggest that we should tell the world our problems and let people come forth with solutions. This is a concept perhaps more applicable to philanthropy than business. In a business sense how can the IP and ownership issues be managed? One can only ponder!

You can be sure the discoverers of new drugs, such as cures for widespread diseases such as TB, Cancer and the recently reported bio hazard associated with vegetable ingredients in Europe will not be freely forthcoming with solutions, though they revel in the knowledge of the problem.

Drug empires are built on solving these problems.

What many people fail to realise is that it’s the identification of a problem worth solving that is the real “gold”.

Problems are the reciprocal of opportunities

When we see a problem worth solving, keep it in house and only if you do not have the internal skills then by all means look outside, but do it carefully and systematically.

Further, if you find a potential solution provider develop a contracted relationship to work the solution with you in the box seat and you owning any resulting IP.

Where to now for Open Innovation!

Perhaps the best chance for this so called “Open Innovation” is when a business possesses what may best be described as a “platform technology” that is a gateway for millions to develop applications that make use of the platform, with the creator of the platform being locked into the value chain.

The new smart phones are a good example with applications coming on stream at an amazing rate and the phone providers “clipping the ticket” at every turn.

This is a wonderful business model, but is this a new approach?

Is this a new Idea?

Platform technologies are not new, but perhaps were not developed with the platform concept in mind.

The wheel is a platform or foundation technology with an endless variety of uses stemming from its creation. So too were the inventions of the ratchet, the gear box, the internal combustion engine and even the electric motor.

Unlike the new smart phones that have intrinsic value in themselves these old stand alone technologies have none. Stand alone, the wheel, the ratchet, the internal combustion engine and the electric motor have no purpose but are simply building blocks for others to employ in their innovations.

Can I have one?

Many businesses are in fact in possession of “platform technologies” but many fail to realise it and thus have not embraced appropriate opportunity search and capture methodologies to leverage their position.

The starting point is to identify your platform then develop an opportunity search model, the rest will quickly fall in to place.

In short, if you wish to embrace the so called open innovation model do so with great care, but better still, identify a “platform innovation”, own the IP, tell the world and let the market do the rest.

**** END ****

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to one of the world’s largest consulting firms. www.matrixthinking.com