Innovative Companies and What We Can Learn from Them
Richard Sherman learns 4 lessons from some innovative companies.
Richard Branson, Jeff Bezos, Elon Musk, Jack Ma, Steve Jobbs, Creel Price, Larry Page, Bill Gates. The aspirations of every student of business management are embodied in this list of names. What made them household names is that they were prepared to innovate. They were prepared to take risks, to believe in themselves, to persevere and to learn from failure.
Photo by Startup Stock Photos from Pexels But innovation is all too often inaccessible for the average homo sapiens. How do you become an innovator when you’re in an industry that doesn’t like change? How do you show you’re passionate about what you do when what you do is a humdrum grudge purchase? Innovation can even become one of those buzzwords we cringe at, like when an entrepreneur wants to “collaborate” with us, or an “influencer” offers us “exposure.” Perhaps that’s because there are so many half-baked ideas online about how you can become a billionaire simply by having a clever logo. True innovation is much deeper than that and thankfully accessible to more than the world’s tech giants. Here are 4 lessons we can all learn from the most innovative companies and people, regardless of our business, market, or level of funding.
1. Mundane products or services can also be innovative
While the most obvious places to find innovation are tech companies, they don’t by any means have a monopoly on it. Mattresses are a rather mundane everyday product, but there are at least two excellent examples of innovation here.
The first is Tempur, makers of memory foam bed systems that adjust to your every whim. Those lucky enough to afford one of their products call it life changing. And it certainly is a great innovation, but like many famous innovations, it caters to the smallest sector of the market – the part with the highest spending power. Without looking further, it would make innovation seem unreachable to those serving the mainstream market.
However, the second example bucks this trend. Casper is a mattress manufacturer that markets direct to the public – you can’t buy their product in stores. Through using relatively simple online store and delivery innovation, they’ve built a $200 million business out of just 4 products.
Another possibility to innovate with everyday products is to focus on a social cause. Thinx, an underwear label, focuses on reducing menstrual leakage, and on attacking social taboos on the subject. The social cause they support isn’t a token CSR initiative – it’s inextricably linked to their brand – and using innovation as part of your brand identity brings us to the second lesson:
2. Innovation is the brand positioning of successful innovators, even if it’s not their main income stream
Red Bull is a great example of a brand identity that is built around innovation, adventure and thinking outside the box. In their excellent video, Athletic Interest
analyses how Red Bull makes money and their brand positioning. Most of their marketing has very little to do with their primary product (energy drinks). Their customers love them. They have built a community. They’ve built networks that they can leverage. They own a wide range of sports teams, and host and sponsor many fun and exciting events like their boxcar races and Flugtage. The opportunities for them to cross-promote are seemingly endless now that they’ve built a solid network around innovation, although their product formulation hasn’t changed since the early 1980s. Red Bull’s content is the driver for revenue. This content is from events, broadcast and online channels – and the brand has become aspirational, synonymous with adventure and excitement, and so much of the work of spreading it on social media is done for them by their customers.
3. Innovators use problems as opportunities to reinvent themselves
Cutting edge companies don’t stay on the cutting edge without challenges and reinvention. Serial entrepreneurs like Elon Musk are famous for reinventing themselves. Musk didn’t start out with an idea for a space company – it grew out of his many reinventions. He’s reportedly been on the verge of bankruptcy many times, each of his business ventures taking all of his resources to get off the ground (no pun intended).
Apple is widely admired for its success, but the reason for its mainstream success is an innovation that is lesser known. For their first 20 years, Apple made computers. Their computers were above average quality, but had some compatibility issues. They also made software, to deal with the compatibility issues. One of these programs was called “iTunes”. iTunes was available for computers other than Apples, and became so popular that it became the primary product of Apple. Of course it was free of charge to the user, so the company’s top product had no revenue stream. That was until the early 2000s when they launched a portable music player that worked directly with iTunes – the iPod. This was the first of Apple’s portable tech products, and it revolutionised the industry. They weren’t the first to market with a portable music player, nor were they first with watches or phones, but they did provide a seamless user experience, using the software that an entire generation had grown up on, and created a line of products that has become the epitome of status symbols.
Contrast that with Kodak – the film manufacturer was the big name in photography prior to the digital era. When digital cameras began proliferating, Kodak took a decision not to diverge from their core business. Their belief was that digital photography was inherently inferior to film photography and that viewing photos on a screen was a fad that would pass. They filed for Bankruptcy in 2012.
The Kodak brand has been partially revived today, and has partnered with Hasselblad to make a high-end digital camera, but they are now very much late adopters trying to find a niche in a market that’s moved on without them. Kodak didn’t innovate, and then took years to catch up to a kind of innovation, which may or may not work. Innovators fail fast. The quicker you realise you’ve gone down the wrong road, the less the damage. A company culture where its okay to experiment is healthy – it protects the organisation from this kind of catastrophe.
4. Don’t copy innovations without capability
In my days at the Branson Centre of Entrepreneurship, I often encountered start-ups who believed that nobody else had ever thought of their idea, and that the idea itself would make the business work. But ideas are not unique – execution is. What makes a business work is the systems built to facilitate an idea.
There is an interesting example in the retail space in South Africa. Makro is a retailer similar to Walmart (who now owns a controlling stake in Makro’s holding company). They have been the go-to for bulk shopping for decades. They’ve been the place to go for finding the best price for appliances, homeware and sporting goods. And of course online shopping disrupted that industry and pushed Makro out of their comfortable place at the top of the food chain.
Takealot is an exclusively online retailer that occupies a place in South Africa comparable to that of Amazon in the USA. Launched in 2011, their model is lightweight – they own relatively little inventory. By 2016 they were building warehouses to sort packages their customers had already paid for. They built a system that could turn their disadvantage around. Their disadvantage was that they had no inventory, no property, no stores, no cashiers, and no physical footprint. Makro had huge stores, billboard adverts, newspaper catalogues delivered to homes nationwide every week and a loyal customer base. Takealot didn’t try to compete with that – they didn’t have the capability, so they innovated to find a new way to compete. In 2018, their sales grew by 57%. Shopping online since the outbreak of the COVID-19 pandemic has become an even bigger thing, so their growth is likely to continue, while the crowded supermarkets may struggle even more.
Krav Maga is a martial art developed by Israeli counter-terrorists – it’s all about a smaller, weaker person defending themselves against a stronger, heavier assailant by using their weight against them. This is very much what businesses like Takealot have achieved – they’ve turned the advantages of the likes of Makro against them –so much so, that those giants have begun to copy the innovation, but tragically without the capability. The disruption to the market has reached the stage of domination, and those who didn’t innovate are struggling to catch up.
My own experience of the difference in online capability illustrates the point. Takealot is built around a smooth customer experience. They have a good range of stock, at competitive prices (though not always the lowest), an easy to use website that is properly indexed and searchable. They have a solid delivery network (a chain is only as strong as its weakest link), and you can click, pay online and get your order delivered in a day or two with very little fuss. Their support agents online are excellent, and this included support via social media. To top it off, they have quite a lenient refunds policy.
Makro has endeavoured to capture some market share in this online space. I found something I wanted cheaper in a Makro advert than it was on Takealot, and made the mistake of going for the cheaper option. Their online store is simply their catalogue, re-formatted into a website, without proper searchability. Having finally found what I wanted by trawling endlessly through obscure categories, I paid online and found that the delivery would take 2 weeks, so I opted for in-store pickup. A week later I got a text message saying my order was ready for collection, so off to the store I went. I had to ask more than one person where to find the pickup point, which is at the back of the warehouse and looks like… the back end of a warehouse. Standing around in a windy tunnel dodging forklifts with dusty boxes and litter blowing past, the staff examined my receipt, then determined the order wasn’t ready, and went into the store, collected it from the shelf like I could have done a week previously, and handed over the goods, for which I had to fill out a form in duplicate to get past security. The experience hasn’t just tainted my view of Marko online shopping – it’s tainted my view of Makro. If you’re going to copy an innovation – make sure you have the capability to go with it!
Richard Sherman is a professional marketer at Focused People and a Member of the Chartered Institute of Marketing.