CMOs are truly to be growth champions for their corporations, they
can't simply rely on traditional marketing and brand-building
To Achieve Top-Line Growth, CMOs Must Design New Businesses
In nearly a decade of research, my colleagues and I have found that established companies increasingly are successfully building new businesses on a repeated basis, a process we call corporate entrepreneurship. Marketing -- true marketing, not just selling the story but helping create it -- must play a central role. True marketing is about understanding current and potential customers better than anyone else, translating those insights into powerful new offerings and experiences, and creating ever more effective and efficient paths to market.
In other words, marketers must design new businesses, rather than just launch new products.
Business design is the essence of marketing. It is also the most vital component for successful, game-changing innovation. Apple understands this. It doesn't just create new products. Marketing prowess played a much greater role in the iPod and iPhone's success than technology, and I don't just mean great ad campaigns. With the iPod, Apple showed it understood better than competitors what customers would demand. It created an exceptional (and legal!) music-downloading experience and built the marketplace infrastructure, such as iTunes and Apple retail locations.
Our research shows that innovation can apply to any aspect of how a company does business. While that's not surprising, what should be most impressive to marketing professionals is the range of factors marketing organizations can affect when it comes to creating new businesses.
Obviously one of the most commonly thought of types of innovation is a breakthrough new product or service. P&G's Crest SpinBrush was introduced in 2001 and became the world's best-selling electric toothbrush by 2002 based on its ease of use, portability and affordability. New products and services are still fundamental.
But there are other, perhaps more subtle and equally powerful ways companies can create new value. Starbucks, of course, convinced Americans to pay $4 for coffee, and it didn't invent anything, at least not in terms of technology. Its innovation was about an exceptional customer experience, for which customers paid a premium. It was a whole new mission that changed American culture.
Here are types of innovation where marketing should play a central role:
Customer-experience innovation isn't limited to consumer companies. If you have customers, you have a customer experience, whether you know it or not. Global cement behemoth Cemex created a satellite GPS dispatch system to radically enhance its responsiveness to customer orders, taking the industry standard from more than 24 hours down to 30 minutes in many markets.
Customer innovation involves discovering new customer segments and/or uncovering unmet or unarticulated needs. Virgin Mobile became a successful late entrant into the U.S. cellular market by focusing on the underserved segment of Americans under 30. Within three years of its launch, it had attracted more than 4 million subscribers in very competitive markets.
Value-capture innovation involves discovering new revenue streams, innovative pricing mechanisms and new ways to get paid by customers or partners. Google's paid search and Allstate's accident-forgiveness feature on auto-insurance policies are innovative ways in which companies have captured value in unique ways. (Allstate charges more for the original policy, while consumers no longer feel victimized when accidents send their rates skyward.)
Presence innovation creates new distribution channels or innovative points of presence. Health clinics in Walmarts and pop-up retail stores are current examples of innovating presence.
Networking innovation entails the enhancement of intelligence, flexibility or effectiveness through technology-supported networking. McDonald's Moms' Quality Correspondents community offers selected mothers the opportunity to communicate with the fast-food giant and each other both online and in person.
Brand innovation leverages or extends the brand in creative ways. Virgin is probably the most-recognized example.
Robert C. Wolcott is the founder and executive director of the Kellogg Innovation Network at the Kellogg School of Management, where he teaches innovation management and strategy. His book, with Michael J. Lippitz, "Grow From Within: Mastering Corporate Entrepreneurship and Innovation" (McGraw-Hill), will be available this fall.
This is only an excerpt. Read Robert C. Wolcott's full article here.Published in Advertising Age / CMOStrategy : September 02, 2009