Developing future-proof innovation born in culture is becoming more important to unlock growth. And getting innovation right is paramount – we know that one in three new products are dead or dying by the end of year two[1].
Innovation can often be about two different things: driving efficiency in your existing business or pivoting for growth in uncomfortable places. Either way, innovation ‘born of culture’ is where your brand can make a more powerful impact and be more commercially successful. And this lies in creating meaningfully different innovation.
[1] Long-term survival rates, Kantar Worldpanel 2022
Conventional innovation processes work ‘business out’ and typically falls into three core areas:
- Category opportunity – ‘white space’ identification defines the opportunity and it often the remit of commercial teams
- Product differentiation – differentiated product is developed to meet opportunity, and this is often the remit of R&D
- Innovation or ‘selling’ relevance – go-to-market offer emphasises product point of difference and, which is often, the remit of marketing and insights.
Innovation classically plays out across three scenarios:
- Optimisation: Incremental innovation delivered within current market and uses existing operational structures/processes to better deliver to existing needs and occasions.
- Evolution: Strategic innovations that change how the market works and challenges current consumer perceptions and operational structures and assets to access adjacent categories or adjacent consumer cohorts.
- Revolution: Innovations that change the game, creating new markets and requires a dedicated team with new skillsets and capabilities, but creates new markets or new consumer needs.
But ‘business out’ creates a focus on optimisation opportunities, and over time, this has resulted in mature categories and limited ‘white space’.
Finding relevance to unlock real growth requires a ‘culture in’ approach to innovation, and this offers two alternative core areas for business to think about innovation:
- Cultural opportunities – opportunities are found through identifying something that is ‘missing’ from culture and often the remit of Insights, this is where innovation needs to be meaningfully different and this needs to be your north star to growth via innovation
- Relevance definition – where relevance is found through ‘hacking’ the functional and emotional utilities people seek and is a remit of innovation. This is where marketers need to fuel their imagination to find new spaces for growth.
Let’s unpack these three areas further…
Cultural opportunities
The key here is to find white space in culture not category. Successful innovation seeks to find white space in culture, not the category. This makes insight central to successful innovation, and a future-focus a mandatory for this insight. Through identifying barriers to people’s aspirations in emergent culture, businesses can anticipate opportunities that have not yet been met. This is powerful because the best competitor strategy is, simply, to have no competition. A great example of this is BrewDog spearheaded an unorthodox and underdog identity a “post-punk, apocalyptic, craft brewery” (as described by its founders). It engaged in publicity stunts that tapped into highly salient cultural issues, like printing Vladimir Putin’s face on its beers in retaliation to the country’s anti-LGTBQ laws.
Relevance definition
Seek relevance in what people want, not what you sell. Successful innovation focuses first on defining what will deliver to the opportunity. This means defining the emotional and functional utilities that people want more of in their lives. This is powerful because it defines clear, unequivocal guardrails for delivering to an opportunity, based on the opportunity itself, not existing production capabilities of the business. It may not sound that exiting, but IKEA is good example of a brand that does this, one way is via their Co-Create IKEA platform bringing consumers into the innovation process or running IKEA Bootcamps to work with entrepreneurs. Both processes look at hacking the status quo to make product more relevant to the consumer’s needs.
This ‘culture in’ approach offers two major advantages over conventional approaches to innovation. First, it de-risks innovation in that it has a focus on what is relevant to people in culture and gives a clear target for success at the beginning of an innovation process. Secondly, it future-proofs businesses, in that it enables them to forecast what is relevant to people, and why, it gives a business the ability to anticipate how internal capabilities will need to adapt into the future.
The components of a culture-led innovation approach can be broken down into three key aspects:
- Where to play is about ‘demand definition’ – understanding what people are looking for in life and what is in short supply in culture and ‘cultural landscaping’ – mapping the cultural landscape to understand where and how demand is met in culture and the drivers behind it.
Ask yourself: What future shifts will create opportunities and threats for my business?
- How to win is about ‘innovation benchmarking’ – identifying best-in-class categories and brands, how they meet the consumer demand and what we can learn from them, and ‘size and speed’ – understanding the opportunity today and forecasting their speed of development for the future.
Ask yourself: How can I build innovations inspired by the edges of culture?
- Innovation Imperatives is about ‘developing difference’ – defining how you focus innovation (which of the 5Ws) and execute from a functional, emotional and cultural lens.
Ask yourself: What provocations and in-depth knowledge can push my view of opportunity to a new level?
As Kantar’s Initiative for Real Growth published in the Harvard Business Review in May 2019 points out: “94% of the barriers to growth are internal, not market-related”. Maybe applying this culture in approach could help you and your business overcome some of those barriers?
Colin MacArthur, Managing Partner – Consulting, Kantar Australia