Where do great ideas come from?

Volume 4 Letter 1

When it comes to generating new product ideas, rarely do they come from senior executives – nor should they. Senior managements’ job isn’t to create new product and service ideas but rather to create an environment where new ideas can bubble to the surface and then catch them.

Although the mobile telephone was first developed by a scientist at Bell Labs and Motorola was the first company to commercialize and mass produce the technology, the first round of the mobile phone market battle has to go to a previously little known company called Nokia. This is quite something given Motorola’s expertise in radio communication equipment, access to stable high tech suppliers and channels to market. Motorola was clearly the early leader in the market place.

Nokia was an upstart competitor from Finland known in Scandinavia as a supplier of household electronics. Not content to be the market follower Nokia aggressively looked for ways to improve their telephones. Nokia tenaciously searched for improvements in two areas: telephone functionality (new technology and systems) and style & form (shape of the phone and customer interaction with the product).

Motorola in the meantime became complacent in their product development. The company appeared to view the mobile phone as a functional tool for the USA market and their telephones reflected this thinking. Due to their lack of focus on key market trends Motorola allowed Nokia to pull away.

Nokia actively surveyed different parts of the world to better understand how mobile technology was being used and how it could be improved. For example in India, Africa and China Nokia discovered that mobile phones could be used to bring telephony to the country bypassing the infrastructure needed for land based line services. In Scandinavia Nokia discovered that digital technology could be used to greatly enhance the functionality of the mobile phone. Then in Asia they observed trendy customers who wanted their phone to be a fashion accessory and thus different styles and interchangeable face plates were developed.

In an article called Marketing Myopia Revisited* the authors argue that in order to find new product innovations companies need to look to other markets outside of their normal industry interactions. Motorola had a very USA focus. All of their market research and product development was based on USA requirements and thus they missed many of the emerging trends in the mobile phone market. Poor design hurt them with the young trendy set, and poor connectivity (especially for international travelers) hurt Motorola in the business segment. Slow adoption of digital technology, allowing the cell phone to perform other functions, hurt Motorola with the innovative crowd who wanted their telephone to be a digital appliance. Motorola’s failure to look to the customer needs beyond their own back door prevented them from spotting new market trends.

To spot new trends and forecast customer needs one must actively seek information:

1. Key Customers: Relationships with key customers give one insight into the true benefits a product or service brings and insights into the problems and frustrations they still face. Customers’ insights (interchangeable face plates on the phones for example) can become huge business wins.

2. Suppliers: Partnering with suppliers can bring innovative methods to ordering, shipping, invoicing, storage etc. Solutions used in one market can have an application in another.

3. Distributors: Changes in one’s distribution methods can create a new business opportunity. Overnight shipping freed up millions of dollars in inventory holding costs for some companies.

4. Universities and Research Centers: Collaborations can provide broader thinking on specific materials, molecules, processes etc. Many harmful chemicals (bleaches etc) used in industry have been replaced by enzymes drawing on research initially done for the food industry.

No one can predict where ideas for new products and services will come from, but one thing is for certain – one will never find what one doesn’t look for. Today new trends in the mobile phone industry are coming from the computer games industry (play games on your phone), the photographic industry (take pictures with your phone), and the contact relationship software industry (keep your agenda on your phone). Who knows, one day your mobile phone may double as your bank card and MP3 player. I’m sure Nokia is looking into it – what’s your business looking into?

*For the full story see Marketing Myopia Revisited, Yves Dos, Jose Santos, Peter Williamson; Ivey Business Journal Jan / Feb 04

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