The innovation ceiling: data-driven innovation versus human-centred innovation

room44 Ltd

19th July 2020

Established brands, with overhead management and ’growth’ as performance metrics aren’t likely to innovate for the right reasons, if at all. The innovation ceiling gets in the way.

Do you work with a brand that has market share?

Is your KPI to increase it?

Welcome to a world of change. With human-centred design, you have a great past ahead of you.

Let’s look at an example and reflect on how it matches your experience. Take any well-known soft drinks brand.

The brand has evolved over time to include a number of variants in its range with taste, sugar levels and packaging options. The original move away from the ‘classic’ recipe was probably because sales were slowing and the market didn’t want more of the same.

Other ideas were adopted; flavours, international distribution, segmentation, pack sizes…

All these tools have been developed over years because the brand has to find new users to increase volumes year on year. The only way an established brand can keep growing is to sell more.

Introducing data
Data are the product manager’s best friend. Line up some compelling numbers in the right way and any idea can be substantiated.

How likely does this scenario sound?

Brand executive: we need to increase our sales year on year by X% to maintain our EBITDA in the face of increased currency exchange costs, higher logistics costs, less global travel, increased competition…

Brand manager: to sell more product we need to find a new consumers as we’re present in all world markets and sales volume of our product and competitor products have saturated all segments.

But it’s OK. World population is increasing exponentially and we have new consumers entering markets at the highest rate in history. If we can maintain market shares, our sales volumes will increase and our costs can be managed.

This is often what passes for a strategic rationale. It’s simplified here to exclude the acronyms you use at your company but, broadly, this is a conversation you’ll hear, or something like it, in budget meetings across all industries.

What brands sell vs what people want
Innovation in the scenario above is unlikely. Sure, a brand may introduce regional variants that appeal to a local audience and they may tinker with flavours or swap out sugar for sweeteners, but they don’t innovate.

Have a look at any soft drinks brand you can think of and consider what they have actually done in recent years beyond responding to changes in regulation. It doesn’t amount to much.

Innovation disruption
From a cursory examination of current affairs, it’s possible to see some disparity in what a drinks brand needs to do versus what consumers need – not necessarily want, but need. This is what we think of as an innovation ceiling.

Data around rising populations, global obesity, sugar addiction etc etc reveal innovation opportunities that, with the best will in the world, global brands are avoiding, reminiscent of tobacco companies, for decades.

Single use plastics are known to contribute to the disastrous state of world pollution and global drinks brands have been talking about changing for decades too – but without meaningful reductions in their practices. Here’s a policy statement:

“Our plastic bottles and cans are already 100% recyclable, including the caps and labels. We’ve also reduced plastics use by doing things like reducing the plastic per bottle. We’ve also made a nationwide switch to biodegradable paper drinking straws.”

Awesome, a development that responds to policy but which fails to make any effort to help consumers actually recycle the single use plastics it pumps into markets every day.

The message here is that, while innovation is talked up in companies, actual innovation is a rarity in its true sense.

Innovation responsibility
If you’re an innovation manager, what your company needs to do may be different from what it wants to do. Similarly, what a consumer wants may not be what they need and you need to be able to differentiate to help to break through the innovation ceiling.

We want you to deliver the effect your consumers want or need.

As practitioners of the Design Thinking / Human-centred Design methodology, we have lived your life and know how to win innovation-based arguments in the face of corporate resistance.

We’d be happy to talk it through.

Future thinking. Future-proofing. It’s what we do.

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