STEP #1: Balancing Innovation & Familiarity

(expanded from “5 STEPS TO GROW AN INSURGENT BUSINESS“)

Most people, when faced with a purchasing decision:

• Do what they did last time, and / or 
• Do what most other people do

These psychologically ingrained behaviours bias the outcome towards maintaining the status quo, helping the incumbent but hindering the insurgent. Put simply, whether you are operating in a B2B or B2C environment, changing human behaviour is tough.

Consequently, if you are the new kids on the block, seeking to overcome this inertia, you better have a solution that is not just a little bit better than what is already available, but one that is much, much better, a truly worthwhile step forward.

So we need to engineer the most innovative solution possible, right? Not quite. As we start to innovate, we encounter a dilemma; the more value we add, the more disruptive is our solution, the greater peoples’ behaviours need to change to take full advantage, meaning fewer people will be prepared to take the risk. 

Furthermore, assuming we are not offering a completely standalone proposition, the more our new way of working strays from common practice, the more we risk that the supporting infrastructure required for mainstream adoption is missing, or at least insufficiently rolled out. Think of the importance of the charging network to the adoption of electric vehicles, for example.

So, we are faced with a fine balancing act; how do we create a solution sufficiently differentiated from what’s available today to generate interest & excitement, without making it so radical that it risks never securing meaningful adoption? 

This is a much larger challenge for a start-up than an established player. When you’re the 800lb gorilla in your market, many existing customers will explore your latest offering as soon as it’s launched, even if it is quite revolutionary. Whilst some customers will have policies that demand multiple sources for reasons of price competitiveness and / or supply chain security, it is often assumed that competitors will follow the market leader within a reasonable time period and so it is safe to continue. 

This is one of the reasons why market leaders in one sector often find it difficult to diversify into areas where they are the newcomer. Culturally and organisationally, they are set up to be incumbents and expect customers to behave accordingly. However, to address the new space, they need to fight for attention just like insurgents. Simultaneously trying to act as an incumbent and an insurgent across the same organisation can cause all sorts of friction.

In my experience, the key to finding the best balance of innovation and familiarity is to bring your technology and marketing experts together. Imagine you are all huddled around an “innovation cauldron”, pouring in technology roadmaps (the art of the possible) and forecasted commercial realities (the art of the saleable). The team is charged with stirring the pot, trading off product performance & functionality, development costs, product costs, time-to-market concerns, project delivery risks, customer acceptance risks and other factors, until they conclude on what they believe is the optimum combination.  

In pursuing this approach, there are some important points to keep in mind:

• Try not to formalise the process too early. Navigating the necessary give-and-take through the rigid structure of Customer Requirements Specifications and similar is difficult. Better to keep stirring the cauldron, play some what-if games and pressure test the resulting scenarios within the team and beyond. Only move to detailed documentation once the target product proposition is agreed.
• Notice that our cauldron ingredients are technology roadmaps and forecasted commercial realities, i.e. future-oriented. It will take a finite amount of time to develop your products so you have to target, not where the market is today, but where it will be when you are ready. Again, this is an interactive discussion; are you better to launch later with a more advanced / cheaper / less risky solution, or will you have missed the best opportunities by then?
• Being future looking means that you need realistic expectations of how long it takes to get things done, both in terms of product development and sales cycles. Ensure the team includes some members with first-hand experience of such timelines.
• There is, of course, a role for the voice of the customer in this process. However, insurgent companies start on the back foot in this repsect. Firstly, on a practical level, start-ups don’t have the customer reach of establsihed organisations, either in terms of the number & diversity of companies to ask, or the seniority of the contacts. Thus, the insight available is relatively limited. Secondly, the insurgent is looking to bring forward something new. As Henry Ford put it, “If I had asked people what they wanted, they would have said faster horses”. This doesn’t mean you shouldn’t ask customers what they want but don’t be surprised to hear, “What we have now… just smaller, faster & cheaper”. The goal is to listen, interpret and project their pain points into the future. As Karolien François comments, “Innovation doesn’t come from asking users what to build. It comes from deeply understanding what it feels like to be them”.
• If the team is struggling to come to a conclusion, consider a narrower target market in the first instance. You are looking for areas where the strength of your solution is so compelling that it outweighs all the risks of going with a newcomer. Sometimes described as a “bowling pin” strategy, where you target the lead pin which in turn knocks over others, you need to give yourself the opportunity to secure that first win, which in turn will increase confidence and lead to others. Success, as they say, breeds success!
• For anyone interested in this topic, I highly recommend reading, “Crossing the Chasm – Marketing & Selling Disruptive Products to Mainstream Customers” by Geoffrey A. Moore. This is the de rigueur text on this subject and my favourite business book of all time. I give copies out whenever new members join my team.

Having a winning proposition is just the starting point. In the next post, we’ll talk about generating some noise in the market.