Good morning, everyone.
The Prime Minister, Malcolm Turnbull, has declared that Australia must transition to an innovation based economy and has earmarked significant funding to encourage the ‘ideas boom’.
So what is marketing’s role in driving the transition to an innovation economy?
Firstly, I’d like to draw the distinction between Innovative Marketing and Marketing’s role in Innovation.
Semantics? I don’t believe so.
In my view, Innovative marketing generally involves leveraging the advances in marketing sciences or technology (such as the digital age) to increase the efficiency and effectiveness of marketing programs.
As marketers, we must continue to drive innovative marketing to enhance the way we reach markets, customers and drive business growth.
But (I believe) marketers have a more significant role in driving innovation.
Importantly, this must be done in working in concert with other disciplines within the business to create and deliver real innovation.
And for something to be considered truly ‘innovative’ it must drive substantial positive change.
In transitioning to an innovation economy, companies need to nurture a culture which provides the opportunity for innovation to occur, and, of course, allocate time and resources to work on new innovations.
Today’s marketers are well positioned to take a lead role in the broader realm of innovation.
Why? Because we are typically closer to the market and customers and, therefore, have a sound understanding of emerging issues, challenges and needs.
This is marketing’s role in innovation.
We have access to more data than ever before – but we need more than data analysis to achieve the insight to stimulate innovation – we need broader market intelligence and engagement with customers to underpin the foresight required if we are to really drive innovation.
So, within that context, I thought I’d spend a few moments reflecting on some observations around innovation.
Observation 1: (in broad terms) there are two types of innovation: Incremental Innovation and Absolute Innovation
Most innovation is incremental in nature, rather than absolute or ground breaking innovation – although there are, of course, ground breaking innovations.
Some of the most innovative ideas come from creatively combining existing ideas and functionality with new and interesting ‘bits and pieces’ from other products, services and ideas.
I read an interesting quote recently which said: “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while.”
Observation 2: Innovation is not (necessarily) technology.
Obviously, there is technology innovation.
But technology is more often an enabler of innovation.
Innovation itself is more about reacting and responding to the culture and behavioural shifts that occur in Society.
Innovation tends to arrive in ‘clusters’. At certain points throughout history, humanity has overflowed with new ideas - be it, literature, philosophy or technology.
And today’s digital age is one of those clusters.
Technology aside, let’s not overlook the significance of other forms of innovation. I’m particularly excited by what’s happening in social Innovation.
For instance, Orange Sky Laundry (the brainchild of two Brisbane guys who developed the first mobile laundry service for the homeless. They were recognised for their work by being named this year’s Young Australians of the Year)
And there are many more examples.
When it comes to social innovation, don’t underestimate the power of purpose.
Observation 3: The best way to find out what customers really want is to ask them!
The challenge, of course, is that customers don’t always know what they want, but they can identify a problem or need.
But, in this digital age, the customers are actively telling us what they want (but are we listening?)
Let’s not forget a key function of marketing is product and service design (dare I say, one of the 4 P’s) and how these products are taken to market. But this is no longer a push approach, but very much driven by the customer. As evidence of this, there is a strong trend towards ‘reverse engineering’ in product and service design.
Business needs to stay connected with the market- and this is where marketing plays a key role.
As I said before, we need more than data analysis to achieve the insight to stimulate innovation – we need broader market intelligence to underpin the foresight required if we are to really drive innovation.
Observation 4: Businesses need to engender an innovation culture
A common trait of all businesses with innovative cultures is that they foster risk taking and understanding that failure is a part of the game.
If you are not failing, you are not really trying.
But business needs to provide a ‘safe’ environment for individuals and teams to innovate within.
Leadership must support and drive the culture; they must be prepared to balance the risk and costs of innovation against the long term rewards.
Given this, there needs to be shift from innovation being seen as the domain of ‘innovation labs’ to where innovation is integrated and encouraged across the entire business.
I hear it argued that big business is less able to innovate than smaller business.
There are too many silos being a barrier to innovation.
A colleague recently recounted an anecdote to me about big-businesses ability to drive innovation:
“Innovation in big business is like changing an engine on an A380 aircraft in mid-flight. It simply can’t be done”.
BUT big business can drive innovation if they are willing to engender an innovative culture; which they can - but it takes more time than in a smaller business.
I should also clarify there is a distinction between those big businesses that have engendered an innovation culture from the start and those big businesses making the transition to an innovation culture.
Observation 5: Need a strategic driver for the organisation to prompt innovation.
What are the critical factors driving the need for innovation within your organisation or within your market? Do you have a clear understanding of what these are and why innovation is the way to address these drivers?
You need to consider both the internal and external driver, such as the need for financial performance of the business (internal) and the changing needs of customers and changing market dynamics.
The (late) Steve Jobs is quoted as saying:
“Innovation distinguishes between a leader and a follower.”
The question, then, is: “are you a leader or a follower when it comes to innovation?”
Observation 6: as an innovation leader, be true to yourself
Innovation is only worthwhile if it is really better for the customer - or for society.
The pressure to fake can be enormous (lets reflect on the recent VW diesel saga) – as an innovation leader, you must be true to yourself.
And remember, few people, by their very nature, are innovative – business needs to identify and keep them and encourage everyone else in the business to engage in the process and support the innovators.
This is also a major challenge for Australia as whole; we must engender an environment that encourages and rewards innovation otherwise we risk losing that capability (that is, the ‘brain drain’ risk).
To conclude: as marketers, I believe we have a key role in driving innovation.
Yes, we need to continue to find innovative ways to cut through the market clutter and more effectively reach customers. That is critical to our role.
But we are also in a strong position to drive and influence innovation in its broader sense.
The marketing cohort (marketers, sales, customer service and so on) is in a strong position to drive and influence the innovation agenda because we are typically at the front line of business connectivity with the market and customers.
As such, we are well placed to understand the current and emerging needs of customers (be it individual or corporate customers).
But we need to work collaboratively across the business to engage and encourage colleagues to devise innovative solutions to meet identified issues, needs and opportunities.
And today’s Summit provides you with the opportunity to hear from – and interact with - some of the best innovators in marketing…. So enjoy the day.
Chair, National Board of Directors, Australian Marketing Institute
Co-Founder and Director, The Customer Edge
2 June 2016