Saturday, December 11, 2010

Innovation and product development

Investment generation and strategic investments driven by government and innovation in product development driven by industry are the gaping holes in our competitive capabilities? Clearly we need to ramp up our response in order to close these gaps. And we can take a confident posture if we live in the present and call upon our spirit, instead of living in the past? Not easy given our tendency to look back as opposed to forward?

The good news is President Aquino is pushing investments – and hopefully stepping up execution of strategic-industries initiatives in partnership with the private sector – and so we can then turn to the challenge of product development in industry? It is something we need to embrace fast – in order to confidently compete regionally if not globally? And we have to move beyond Filipino ‘abilidad’?

A financial channel profiles the Ford Motor Company and talks about an ‘aha moment’ for the rejuvenated company . . . The new CEO hauls the leadership team to a ‘reality session’ with a third-party product reviewer and rater. And as expected (of humans) the leadership team is in absolute, total and unequivocal denial as they’re presented a point-by-point review and rating of their products. But the CEO demonstrates no-nonsense leadership and gets the team to take the first step in their journey into reality. Happily, following great efforts, it appears that even without a bailout from US taxpayers Ford is now a much stronger and confident enterprise.

What about our reality? Do we recognize, for instance, that beyond inadequate investments we have yet to develop a product-development skill set? We may have a well-developed advertising industry but don’t have a track record in product development? Advertising agencies talk about ‘brand architecture’, which is geared to develop a communication campaign; while manufacturers talk about ‘product architecture’, or how the product can generate its inherent power – although both require visualization and lateral and creative thinking.

For example, when admiring an accessory-jewelry a friend could say, ‘lovely’, ‘charming’, ‘beautiful’. But when she’s describing a gemstone like a diamond would focus on its 4Cs: cut, color, clarity and carat weight. Product development is about the attributes of the product – rational, emotional and experiential. Net, a great product drives the communication or advertising while a marginal product has to rely on the communication campaign. Which one is the more competitive and sustainable is obvious? But we need to go beyond our ‘bida’ culture and develop our ‘IQ’ or innovation quotient?

Innovation is not about ‘materiales fuertes’ of ‘the good old days’ – it is dynamic not static. Yet it does not have to be a breakthrough idea all time – not even Steve Jobs can do that. But what he is . . . is dynamic. He is able to visualize the 21st century lifestyle and create products for that lifestyle, which is changing all the time – e.g., people like free music downloads yet will pay if it’s simple and easy. For Jobs it’s visualize the simple and easy; for Michael Jordan it’s visualize the movements of the players on the court no matter how fluid and fast-paced the game is. Visualization is how we learned high school geometry and physics, for example – and used by Da Vinci (Mr. Simplicity!) and Einstein.

Likewise, we need to move beyond pricing; it has narrowed our playing field and our perspective – and why lateral or creative thinking does not allow itself to be held hostage by such narrowness. And it works beyond gemstones: P&G and J&J’s day-to-day consumer products are simply that, day-to-day products. Yet both have market capitalization greater than our GDP. To drive revenues their portfolios are constructed to distinguish and optimize the dynamics between: price-, communication- and product-driven power. And their product architecture goes across the value chain, say, from cleaning to brightening to protection to bundling all benefits, with liberal variants for each; and has 3 tiers of the same structure: entry-, mid- and upper-level price points to ensure global reach, economies of scale and healthy margins.

Bottom line: we need to rapidly internalize the imperatives of competition – investment, technology, talent, innovation, product and market. These aren’t the ‘good ole days’; it’s the 21st century – it’s about the present not the past?

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