HOW INNOVATION WILL BENEFIT YOUR BUSINESS

If you are conversant with the foreign exchange market in Nigeria, at least you already know that the Naira is exchanging for as much as 260 for 1 dollar. It will be so easy to blame the government for poor monetary policies, but look around you, how many ‘made in Nigeria’ goods are people buying? Nigeria spent about N1.6tn on importation alone in Q1 of 2015. At this rate, there is no reason why the naira will not continue to fall as long as Nigerian businesses give consumers reasons to patronize foreign products. For instance, to fix tiles in the house, we rely on foreigners because most Nigerian businesses do a poor job.

The problem is not just in people not patronising made in Nigeria products, but their lack of confidence regarding the quality of the product, poor creativity and occasionally, high price compared to the quality. I can make excuses for highprice, but not quality and creativity of a Nigerian product.

Many small business owners in Nigeria are yet to compete because they lack the creativity and innovation required to be successful in business. Small businesses should be the champions of innovative thinking because what they lack in terms of capital, they made through innovative ideas. As we enter the New Year, here are few benefits of managing an innovation-oriented business.

Innovation creates more value for your business

Customers buy value, not product. Innovation helps you to create and add more value to your product at a relatively lower cost. When you manage an innovation focused business, your primary assignment will always be to make available improved product or services at a cheaper price. 

Innovation helps you make a balance between quality and cost. Small business owners should devote time to producing quality products/services with additional features, and the problem of lack of patronage for locally produced goods will be taken care of. Spend more time reviewing your product/service with the aim of identifying potential values that customers will be willing to pay for.

It gives you a Competitive advantage

Innovation gives you an edge in business. Take innovation away, no small business will be able to compete effectively in the market. Innovation whether in terms of products, services or even processes distinguishes you from the lot, and gives you a unique identity and position in the market. 

While some big businesses compete based on innovation, others like Dangote group are only surviving not because there is anything innovative about their products, but they have the capital and government backing. If you don’t have the capital or government backing to compete in the market, identifying areas your product or service can provide better solution can help you gain a competitive advantage in the market, because nothing places any business above board like innovation.

It enhances your business reputation

Innovation wins your customers’ confidence. I know of people who are addicted to anything with the Apple brand on it. They don’t question it, they just buy it. This is possible because Apple Inc has built an expectation in their customers, so they don’t have to question their products. 

When customers see how innovative your business has been over time, they develop confidence in your brand, and stick to it. Your business reputation is more important and valuable than the quick profit you want to make. Innovating in business doesn’t come easy but with persistence, you are certain of a great outcome.

Embedding innovation as an integral part of your business activities is the most challenging task; however it is your only choice for growth and competitiveness in the coming year.

Business Lessons from Concorde Supersonic Aircraft

As a young man in 2003 during the last flight of Concorde aircraft from New York to London, I couldn’t wrap my head around the fuss about an aircraft that was retiring and why people were very emotional about it. “If it is retiring, why can’t they build another one?” I asked myself. While writing my last article, ‘3 Reasons Customers resist innovative product,’ Concorde Supersonic Airline was one of the failed ‘innovative products’ I considered, and I discovered that Concorde supersonic aircraft was so good that it wasn’t profitable to build another one.

Concorde Supersonic airline was designed to redefine luxurious air travel, indeed it did. It was the only commercial aircraft that was twice as fast as the speed of sound, and it was able to cut an 8 hours journey down to 3 hours. It was an engineering marvel and a delight to the eyes. Its innovative features were never in doubt, and it broke every market barrier in the aviation industry, and set a standard no other commercial airline could compete with. Its engineering feat was awesome, and technically, Concorde was ‘perfect’. By the time it was ready for the market, about 16 companies placed orders for over 70 aircrafts however, only 14 were eventually built for 2 companies.

So went wrong? Strategy wise, the business model adopted by developers of Concorde led to its resistance by potential buyers. The developers were so focused on the engineering and technical power that they neglected the business aspect of the aircraft. In fact, ‘the aircraft was built by engineers, not entrepreneurs.’ Just like the Concorde, so many businesses today have great products with bad business model. In developing the business model Concorde miss out on:

Customer Input

Customer input in the development of the Concorde was low or non existence. According to a group led by Matt Hooks, “....rather than focusing on the needs of the customers in the aviation market, the developers of the Concorde focused on creating the market itself thinking of the customers second.” The result was a total rejection by would-be customers and even the two airlines that had them in their fleet struggled to keep them profitable. Many entrepreneurs are so excited about the feat their product can perform that they believe, ‘once it is good, customers will buy.’ They are product driven, and care less about the need of the user of such product. Your customers should be an integral part of your product development process. Your business model is never complete without consideration for customers’ input.

Market Potential

The major implication of not including customers in your product design process is that you may likely misinterpret the potentials of your market. The Concorde developers believed that their innovative product will automatically translate into huge customer market. They only defined their market as those who want to fly ‘Supersonic’ without considering if those who could afford it are sufficient to capture value for the organisation. The Concorde’s market was narrowly defined, and its market potential was wrongly assessed, and this affected the value of its market. Entrepreneurs that wrongly assess their market potential will end up misinterpreting their market and losing value to less competitive businesses.

The implication of focusing on performance at the expense of customers’ input and market potential in your business model is the likelihood of wrongly pricing your products. For Concorde, the price was too high that the customers were not ready for the cost that came with it. Innovative products must provide a tradeoff between value and price, product performance is not enough to keep you going in business for long.

3 Reasons Customers Resist Innovative Products (2)

Innovation in business is very important, but most important is developing a product/service consumers are willing to buy. Over the years, many products with innovative features have failed, not because they are not good, in fact, most times, they bring more to the market than existing products. Unfortunately, consumers end up avoiding them leading to over 70-90% of innovation failures and eventual withdrawal of such product from the market. Examples like Microsoft Windows Vista, Apple’s Newton PDA, the Concorde supersonic airplane etc reminds us that not everything innovative finds a market. Some of them actually came into the market when consumers were not ready for such innovation.

Entrepreneurs with new products or services want customers to adopt it and get maximum satisfaction from using them. However, entrepreneurs often face the challenge of convincing customers to move from an existing product where they derive satisfaction, to a new one which its utility is not certain.

Here are some reasons customers may resist your new offerings.

1.      Your products bring too much change

Change is good, but customers don’t always appreciate it when a product is bringing too much change to their lifestyle. For instance, Coca Cola’s attempt to change the original taste of coke was met with resistance. When consumers feel very comfortable with an existing product, they can go to any length to resist any attempt to change it especially when such a change will affect other areas of their lives. This resistance comes as a result of consumers being satisfied with their current situation, and see no reason to change. Habits that have been developed while using a particular product are difficult to do away with. Any product that requires a change in behaviour will likely experience resistance.

2.      Innovations with the wrong technology

Many businesses apply the wrong technology in their market. In Nigeria, when it comes to telecoms, GSM is the way to go. Over 90% of subscribers use it, and it is the preferred network in the world. For companies that came into Nigeria with CDMA technology - Starcomms, Multi-links etc, it wasn’t a favourable market for them. Technology has seasons and regions where they are most appreciated. E-retailers in Nigeria observed that insisting on shoppers buying and paying online alone may not give them the desired result; they decided to introduce ‘Pay-on-delivery.’ This act is building confidence in people to use the technology. The right technology must be one that fits into a people’s lifestyle, values and norms. Every technology introduced into a business must be compatible with the desires of the consumers.

3.      Innovations that are too complex

Keep it simple. Innovation is all about simplifying life. Innovative products are those that are useful to consumers, and are easy to use. Years back, the long process of registering on a website puts off many people, but today, with your social media accounts, it looks seamless. Consumers are always reluctant to go for innovative products that are complex to use, complicated and confusing. If you can’t keep it simple, it’s not good enough.

Consumers’ resistance of a product doesn’t mean a failure, but it points out the need for entrepreneurs to pay more attention to the needs of the market. Bringing a technology that consumers are not familiar with, and the risk level cannot easily be ascertained will create an air of doubt in the consumers. If the resistance is allowed to prolong, it leads to rejection and eventual product failure.

3 Challenges of converting your Ideas to New Product Development

Businesses are always in constant search for new ideas that will sustain them in the market, and deciding on a particular idea is usually very challenging for entrepreneurs. As an entrepreneur, various things can slow down the rate at which you convert your ideas to eventual new product.

For every successful new product development, dozens of promising ideas have been considered by an organisation. The essence of the consideration is to determine which of the ideas is good enough to be introduced into the market at the right time. Timing is key in business decisions, and every idea must be considered along this line. Businesses prefer a business idea that can move into the market faster before that of the competitors.

However, there are delays entrepreneurs will likely encounter before they make that decision to create a new product.

Too many disjointed ideas:

It is good to have a pool of ideas on the table before making a decision, but the more ideas you have for consideration, the slower you will be at picking one. When you have a large number of promising ideas that you are considering at a time, it becomes more difficult to pay attention to any particular one. Each business idea is a process with its own chain of activities, so it is important to consider early which of the ideas is more promising/important, at what cost, and what experience do I have to execute it? The fewer the promising ideas you have, the better your chances of converting one into a finished product.

Capacity of resources:

Every business idea requires resources to make it achievable. Resources help bring ideas to fruition however; when these resources are shared among various promising ideas, it weakens the speed at which you come up with new products. You must understand the capacity of your resources to sustain an idea or group of ideas per time. Taking all ideas with your limited resources will only lead to a crash even before you develop any product

Lack of Experience:

When exploring ideas, it’s important we focus on ideas around our areas of competence. It’s easier to develop ideas around website/App design if you have knowledge in programming than if you don’t have at all. We have alot of aspiring entrepreneurs who go into an industry where they don’t have the needed experience and capacity to breed ideas that can lead to new products hence; they remain stuck in existing products. If you want to convert ideas into new products, begin by considering ideas in your field of experience.

When selecting business ideas, focus on the ones with technical and commercial values, and that has the capacity to keep you motivated into a new product development. New product development is all about speed – getting into the market faster. No business wants to introduce an obsolete product into the market; they make effort on minimizing delays from ideas to new products.

From Company-made to Customer-made

“There are always more smart people outside your company than within it.” - Bill Joy

Imagine having a customer as the head of your next new product development project! Odd? Well, businesses are learning to be proactive in their strategies by finding better ways to make the customer own a product and become part of your business. Handling complaints very well and meeting customers' expectations wouldn’t guarantee loyalty, after all every business ensures that. Businesses have moved from handling complaints and meeting expectations to co-creating a product or service with customers; putting the power of innovation in the hands of the customers - If they will use it, let them create it.

In the past, everything about product development was done within an organisation and then given to customers to buy. Today that orientation is changing. Companies now want to get the customers involved in product development by allowing their creative instincts to guide the design process of any product or service. This makes the companies and customers business partners and a winning team.

It is important to note that co-creation is not 'being consumer centric' or 'consumer engagement' or inclusion - All these only incorporate consumers concerns into an existing product. However co-creation allows your customers to play the lead role in designing products hence driving innovation in your business. This strategy is not about asking what the customers want and then creating it for them - NO! It is about allowing customers create the product or service that they truly want in partnership with your business.

Co-creation is changing the way organisations respond to innovation and development. The orientation of value creation has always been dominated by company's creative minds. However, in business today, open innovation has shown that customers are creative as well, and they can drive innovation. Hence, giving them an opportunity to explore their creativity will move your Products and services from company-made to customer-made. Are you giving your customers the opportunity to lead innovation in your business?

3 Components of Interactive Advertising Campaigns on SNS

 

Social networking sites (SNS) have proved to be a veritable tool for organisations and advertising agencies to narrow their campaigns to the most relevant audience. Aside from the personal feelings, it can be used to promote brands, products and services. This platform creates more opportunities for brand engagement as well as provides opportunity for advertisers to gather personal information of their audience for use in future campaigns. . Research has shown that some interactive elements in an SNS campaign can be used to elicit self-disclosure from consumers.

Guda van Noort of Amsterdam school of communication research and colleagues discussed 3 major components of interactive advertising campaigns.

      

     1.     Advertising: This is used to generate traffic for the campaign, and it serves as the door leading to the action page of SNS campaign. The come in form of banners or advertorial on the brand’s website.

     2.      The Campaign: When consumers log in into a social network site, they are presented with an interactive campaign in a quiz or battle game format, some also come in form of text or video of product. Here, the user is expected to perform an action. If the user finds it interesting and enjoyable, there is a higher chance that it will lead to the next component.

    3.      Viral or Tell a Friend: This third component allows users to share the campaign with friends. One of the unique features of a social media platform is the ability to share content with those within their network.

Social media campaigns are gradually taking over traditional methods of advertising, and many corporations are taking advantage of it. Though it doesn’t always guaranty success, but if properly done, the returns are great. Small businesses must begin to take their social media platforms more seriously than before

Starting a Business: Between Desirability and Financial Resources

In both developed and developing countries, entrepreneurship has been advocated as a means of bridging the gap between the poor and the rich. It been the driving force for economic development especially in capitalist countries. However, the rates of growth of entrepreneurship between developing and developed nations have raised some concerns that seem to suggest that poverty prevents people from starting a business. The implication of this is that poor people who are predominant in developing nations lack the financial resources to engage in entrepreneurial activities. Again, from studies done especially in Nigeria, most people believe that the reason they can't be entrepreneurs is because they lack the financial resources to do so.

For obvious reasons, this argument/believe is faulty. First, starting a business or being entrepreneurial is more of an attitude than it is of financial resources. Those who engage in entrepreneurial activities are driven either by the strong desire to succeed or to meet needs within the society. Secondly, there is no empirical evidence yet to suggest that being rich or having a rich background guarantees success in entrepreneurial activities. Moreover, many entrepreneurs in Nigeria succeeded through determination and hard work, although this two factors seems to be fueled by the desire not to be poor.

No doubt financial capital is important for starting any business, but the desire to go into business and the attractiveness of the business opportunity that exist is more important hence, aspiring entrepreneurs must focus on their psychological needs rather than their financial needs. Entrepreneurs need to have the right mindset, ask the right questions, develop a business plan, and implement a strict business strategy in order to start and succeed in business.

When a good opportunity is identified, it paves the way for financial resources. With the right perception, attitudes, and beliefs an entrepreneur is set to launch out. 

The Briefcase: Changing a Winning Strategy

Sustaining a winning strategy in business is good, however, a time comes when dropping such strategy becomes a necessity even when it is still profitable to the business and the reason is simple – every stage of business growth requires a new strategy, and when a business gets to maturity, it’s an indication that a new strategy is required to sustain the organization in business.

An entrepreneur can reinvent a business by employing deliberate and conscious strategies that will help the organisation compete effectively, and the only way an organisation can maintain its growth is by launching new growth business strategies when the core units are still strong.

Don’t stay too long on a business strategy, you must learn to adjust in a dynamic business world.