[Book review] 'Purple Cow' & 'Free prize inside'

The two books 'Purple Cow' and 'Free prize inside' by Seth Godin deals about marketing. The underlying presumption of both books is that the traditional way of marketing was based on the old TV-industrial complex. New products and services were created for the masses and then marketed on TV to the masses in order to increase sales and profits. In modern days, consumers stopped listening. Of course this is also because of the increase in number of channels on TV and other media (internet) people spent time on, but it is also a new consumer who actually decides on whether he wants or does not want to listen. The second presumption is that most of people's needs are satisfied, so products and services have to cater to what people want, not what they need. Other people might call this to create a market need/demand.

To overcome this problem, there is only one solution according to Seth Godin: be remarkable. It takes new and innovative products and services to be noticed by people. To be noticed means being worth talking about, which leads to more sales. But the only way this happens if the product/service is remarkable. And what is remarkable today, might be common and boring tomorrow, so to continue having remarkable products and services means to innovate.

Seth Godin suggests marketing companies to stop making remarkable advertisements, but ask their clients if they can be involved in the very design of their products and services, just like the type of companies I talked about in my previous blog post.

When talking about innovation, Seth Godin notes that although most people think about advancement in science and technology, this strategy is risky and expensive. What is cheap (free prize) in contrast is the design of 'soft innovation'. The strategy is to make your product/service remarkable not through new technology but 'to go to the edge'. Do something else than others do and make it remarkable: be cheaper, or more exclusive, or put extra packaging, or remove all packaging, be open 24/7 or be open only on Tuesdays afternoon, etc.

Furthermore he notes (like others have noted) that the only thing that all innovators have in common is that they have nothing in common. They are unique in their sector and doing something remarkable that no one has done before. And to follow them means to be a follower: not innovative and not remarkable. So his message is: be remarkable.

During the Ford industrial complex, blue collar workers were expected to do as they where told. White collar workers nowadays have on the other hand to come up with new ideas and do things different, since they have to work with their minds and cannot be instructed what to do. Therefore it is your job to be remarkable. 'Free prize inside' discusses different strategies and methods for how to be remarkable.

New services arise

Over the last decade, I have seen the birth and growth of a completely new industry sector that hardly existed before. A new service firm that takes (partly) over the responsibility from their client for the organisation of their eco-system and their innovation process. Traditionally there are consultants who will tell you what you should do, what choices to make and how to adapt your strategy. Sometimes this was followed by an interim-manager who would execute this new strategy, mostly in times of crises. The new type of service firm not only suggests new strategies, it also partners in the implementation of the new strategy by taking over share and part in the design and execution of the innovation strategy. Sometimes this include conducting applied research together, developing prototypes and doing the market-introduction together. In other cases it is limited to the finding, selecting and linking to new global partners to include in the new innovation eco-system. This last service is not the generic match-making services as run by many private and public bodies but includes a very specific in-depth knowledge of a typical sector/technology to be able to find and link to partners that can offer true value added.

Both of these services existed only very limited before and probably only available and affordable for large firms. Nowadays with new innovative methods for sharing costs and profits these new services are available for all companies. It will be interesting to see where this development will go in the future...

The rise of the NGO

In the book Microtrends by Mark Penn, one of the identified micro trends is that more and more people in the USA are employed in in the non-profit sector. Although the average salary in the non-profit sector still lags behind both government and profit sector, the share of population that is employed by these NGOs is growing every years. First of all, this is because of a growing number and amount of donations. But another argument is that both government and profit sector have a low credibility and are therefore less and less able to attract new (talented) people.
Together with this new development is the growing role for non-profit organisations to contribute to solve societal problems, which before was considered to be the domain of the government using innovation and dedication that before belonged to the private sector. Furthermore, the trend (also recognised in the book) is that all three sectors government, private and non-private increasingly collaborate together and therefore contribute to the breaking down of the strong barriers that defined and separated the three sectors. Non-profit organisation also deal with business plans, innovations and advanced monitoring and evaluative tools. New venture philanthropy has emerged and as non-profit organisations grow they have to focus more and more on traditional business topics as human resource, organisation structure, management etc. This means for innovation that the traditional focus on business or on 'tripple helix' has to be rethought and has to include non-profit organisations as well. In the far future the whole distinction between profit and non-profit might as well disappear, with successful leaders and organisation being able to address societal issues in ways that also generate profit.

Crowd sourcing for NGOs

One of my main messages about innovation is that it is not only for companies. NGO's have done many innovative things lately. From showing the real size of the BP oil spill in comparison to your own region, to KIVA that created a direct market for micro-loans between loaners and lenders.

Furthermore NGOs have started to specialise. They focus more and more on finding local partners in developing countries and have their own specialiaation in fundraising and communicating with the donors. They find new ways of fundraising (using SMS) and new ways in communicating with the general public (using social media)

The next talk introduces the idea of crowd sourcing for NGOs:

It's people, you stupid!

What is the most crucial factor that determines whether a potential innovation will make it or not? Many policy makers think they know, and they try to support their favourite factor, being it focussing on high-technologies, spend more money on research, support for intellectual property rights, better access to finance, more entrepreneurship or better cooperation between science and industry.

When you ask a successful entrepreneur who has started and grown many innovative businesses during their working life time what for them was the most crucial factor in making innovation happen, you always get the same answer: innovation starts and ends with people. You need a group of talented and skilled people who can make it happen. These people, according to the successful entrepreneur are the most important assets of the firm. Companies that don’t innovate often claim that lack of finance is their main reason for not innovating, while companies that are successful innovators claim it is due to their skilled and competent employees. According to these successful and innovative firms, money will always be attracted by good ideas. It is the good ideas themselves and knowing how to execute them which determines if innovation will become a success or not.
For any process of innovation, you need talented people. First of all you need people with different skills and competences, in order to reach all the different topics that relate to innovation: technology, marketing, design, fashion, culture, business, finance, law etc. For this you need people with good education, with experience in their job and they need to be free to give their input in the process. Besides the need for skilled people, any innovation process starts with the collaboration between a group of people, individuals. A CEO might decide that innovation is important for the strategy of the firm, it’s the employees that have to make this a reality. And with more international trade, globalization, open innovation and further increase in the complexity of products and services, the people that make innovation happen are not exclusively working in the same firm, but create collaboration between different firms and organisations, both public and private.

To innovate is therefore also to create a network of people that collaborate and exchange knowledge and experience based on trust, creating consensus, be open to good ideas and suggestions for everybody. What is even more important work teams working on innovation, is that the activity goes beyond the normal business activities and tries to establish something new what has never been tried before by the same firm or firms. More creativity and more problem solving, trial & error and anticipating and responding to unexpected events are essential in the process of innovation. This required the full commitment of the group engaged in the innovation activity and is not a standard process that can be managed from high in the hierarchy in the firm.
In a more globalised world, innovation not only takes place between different organisations locally, the collaboration often takes place at a global level. Different inputs into the innovation process, like knowledge, design, technology, marketing could be provided from anywhere in the world by any partner. The open collaboration between individual that takes place is more and more a cross-firm and cross-cultural event. Management literature of innovation and policy makers dealing with innovation often neglect this individual perspective. More attention should be paid to the role of people in the innovation process, the importance of trust building, and how to transform our companies into flatter, adaptable and learning organisations in which employees get more responsibilities and the to be more self-managing, how to deal with the need for less barriers between organisations and between countries that now hinder collaboration and open innovation. These barriers include cultural, psychological and social barriers, inherited by a historic culture and need to be dealt with.

For any country, this means that to foster innovation in the country, first more attention should be paid to establish real high quality education. When people receive good education, they have the knowledge to come up with new innovative ideas. In order for them to try out these ideas and translate them into projects, it is important that there is an environment (in the country and in the company) in which people feel free to suggest new ideas, feel responsible for the wellbeing of the company and are not afraid that they will be criticized and worked against, because the idea seems to strange, unrealistic and nothing that has ever been done inside the company. Foreign investor and national policy makers should start paying attention to the role of individual people in business and innovation and create and maintain an environment in which trust can be build, people have the means as well as the responsibility to share, collaborate and engage in innovative activities. To create such an environment means more attention to social, cultural conditions and a shift in focus towards individual people. The new Finnish strategy for innovation includes a shift from investing in companies towards investing in people. Also innovative global competitive companies such as Google focus on a creating a working atmosphere in which employees feel valued and responsible to participate. Such examples deserve to be followed by others.

[An adapted version of this article has been submitted to the magazine 'Invest in Lithuania']

See also this video Where Richard Floriday speaks about economic development, I just found several days after I wrote this article.

Francis Bacon (1561-1626) 'Of Innovation'

AS THE births of living creatures, at first are illshapen, so are all innovations, which are the births of time. Yet notwithstanding, as those that first bring honor into their family, are commonly more worthy than most that succeed, so the first precedent (if it be good) is seldom attained by imitation. For ill, to man’s nature, as it stands perverted, hath a natural motion, strongest in continuance; but good, as a forced motion, strongest at first. Surely every medicine is an innovation; and he that will not apply new remedies, must expect new evils; for time is the greatest innovator; and if time of course alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end? It is true, that what is settled by custom, though it be not good, yet at least it is fit; and those things which have long gone together, are, as it were, confederate within themselves; whereas new things piece not so well; but though they help by their utility, yet they trouble by their inconformity. Besides, they are like strangers; more admired, and less favored. All this is true, if time stood still; which contrariwise moveth so round, that a froward retention of custom, is as turbulent a thing as an innovation; and they that reverence too much old times, are but a scorn to the new. It were good, therefore, that men in their innovations would follow the example of time itself; which indeed innovateth greatly, but quietly, by degrees scarce to be perceived. For otherwise, whatsoever is new is unlooked for; and ever it mends some, and pairs others; and he that is holpen, takes it for a fortune, and thanks the time; and he that is hurt, for a wrong, and imputeth it to the author. It is good also, not to try experiments in states, except the necessity be urgent, or the utility evident; and well to beware, that it be the reformation, that draweth on the change, and not the desire of change, that pretendeth the reformation. And lastly, that the novelty, though it be not rejected, yet be held for a suspect; and, as the Scripture saith, that we make a stand upon the ancient way, and then look about us, and discover what is the straight and right way, and so to walk in it.

Tom Peters: Innovation is Actually Easy

This speech holds for anybody who wants to be (market) leaders. In truth, many companies stay alive by following. The question here is innovation means new. New for who? New for the world, your sector, your country or only new for your company?