What Makes a Formidable Innovator?

Does an unstoppable innovation company simply sell ahead-of-the-herd products that give customers exactly what they want? No doubt, Apple is one of the most innovative companies of the century. Their superior products command premium prices from the stickiest customers imaginable. But head-of-the-curve products regularly appear in the market, only to be one or several-hit wonders.

So what makes a company a formidable innovator capable of transforming industries and consumer behavior? I can think of several things, largely invisible to the naked eye.

1.  A company’s strategy successfully moves the business and consumer to another place and gets people to think and act differently.

Steve Jobs made Apple great by moving beyond computers and deciding that Apple would sell the public something they didn’t know they wanted. The parc gonflable innovative thinking behind the new devices allowed Apple to invent new markets and up-end industries.

The combined iPod, phone and Internet connector called the iPhone changed consumer behavior and captured the attention of the business world. I remember watching the traders on CNBC’s Fast Money ridicule the new phone on its launch day, 2007.  These same market strategists soon became believers.

Then with the iPad, Apple penetrated the barriers of established markets, including stodgy law firms and financial institutions. This newest device intrigued the business world by engaging entirely new consumer segments, educators, the medical community, Gen Y – even the parents of children with severe forms of autism (see 60 Minutes). Consumers discovered they could do things they never did before, and marketers jumped to make digital media part of their consumer and in-store strategies.

Bloomberg Businessweek said in late March, “The iPad was at once familiar [to iPhone users] and radically new to consumers – an instant hit.” It was a huge game-changer. Tech observers predict that the tablet could overcome the PC “as consumer tech’s center of gravity” as competitors rushed to redefine their offerings, add features, and create new partnerships.

Apple proves it’s a formidable innovator every time its products strengthen or build the capabilities and competencies of consumers, businesses and universities. Its specialists have worked with prominent media companies to develop marketing innovations to support their franchises. Independent developers (a burgeoning industry) have created over 600,000 apps for the iPhone (plus another 500,000 for Android phones). “Boundary-less” has moved beyond theory to the real world as silos, language barriers and technical hurdles are torn away.

2.  The business’ culture bolsters and sustains innovation.

So-called innovative companies are everywhere, though many can’t sustain their markets and ultimately go away or play a diminished role. The business culture needs to drive innovation if a company wants to be a formidable innovator – and that starts with the mindset and behaviors of the business’ leaders. Apple came up with the iPod, not Sony.

In 2005, Motorola took the market by storm with the RAZR, but couldn’t duplicate its success in a quickly changing market. They stopped innovating following the sudden death of CMO Geoffrey Frost, [called the father of the RAZR and an iconic marketer], and failed to invest in the next big wave of groundbreaking consumer devices. CEO Ed Zander is said to have abandoned Frost’s mission and his distinct culture for growth in which the marketing and technical development teams thrived.

That hasn’t happened to Apple – not yet. CEO Tim Cook acknowledges that Innovation is their focus and their culture fuels it. For Cook, his company’s culture is “so unique and special” that he’s committed to work hard and keep it that way.

3.  Leaders have big ambitions for change even when their markets look challenged or sleepy.

There are leaders who can find a different angle, a way to create a more unique customer experience, to rethink what’s possible amid the most entrenched or difficult environments. Look at Kohler and Ikea, for example, when each was confronted with the Great Recession.

In 2008, Kohler moved quickly to counter a declining U.S. market – they cut production at domestic factories by 30% to build the export business and altered the product line to capture the Chinese market, especially the top end. A priority product was the Numi, a robotic toilet that sells for $6,400 to consumers who are obviously looking for more than utility in a plumbing fixture. Expensive but luxurious, the consumer enjoys leg-warming porcelain, music, special lighting, motion detectors and three bidets. In March, the Wall Street Journal reported that half the revenues came from China.

But Ikea took a different course – to restructure the way the business is run with the goal of continuing to improve the lives of customers while giving them lower prices each year. Managers would separate good and bad costs and use every cost reduction to build up the essentials of the business or turn the savings back to the customer in lower prices. The results were noteworthy –10% top line annual growth and stable margins in a severely challenged economy.

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A formidable innovator commands admiration, respect and wonder in the marketplace – formidable means a powerful contender, but not always the biggest. These companies sustain their position over long periods of time. At the opposite end of the innovation continuum is what John Bell, former CEO of Jacobs Suchard, calls the Hustlers: companies that make incremental changes – tweak after tweak, easy to copy.

Figure out what’s right for your business. But weigh the costs and benefits of the path you choose.

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