by Robert W. Bradford
This is an introduction to a 2003 series, The Easy way to Innovate is – the Hard way! The info is still relevant, and it will be nostalgic reading the examples from 2003.
People, quite naturally, prefer to do easy things. Easy things are — well, easy. It often seems that the more things we can make easy, the more profitable the company will be. To a point, this is true. But if you are putting more effort than necessary into your product or service, it may reduce your bottom line. Recognizing this, most managers will put plenty of effort into taking effort out of your processes.
But wait — there’s a catch. Management is not just about minimizing cost — it’s also about maximizing value. Some efforts create tremendous value for your customers, and chances are you aren’t even sure where the greatest value lies.
When companies set out to innovate strategically, they often rush off in the same direction as everyone else. This often causes markets to mature quickly as unique specialty items that took great investment become “me-too” commodities. If the innovation is a compelling one that creates real, preferred value for the customer, this commoditization is almost inevitable. Only when competitors — for whatever reasons — do not copy your valuable idea will this not be true.
Let’s look at an example of this. For the past several years, AMD and Intel have been slugging it out over the microprocessor market. Intel, with deep pockets and first-mover advantage, decided to define the game in terms of core microprocessor clock speed. This is why you are told that a 2.8 Ghz CPU is better than a 1.5 Ghz CPU. Superficially, this is absolutely true — the faster clock speed on the CPU makes it process program instructions faster. AMD initially made the mistake of playing the game as defined by their competitor (almost always a bad move). Recently, however, AMD has departed from classifying their products by clock speed (which is what Intel still does). AMD now wants users to evaluate their products by effective speed rather than clock speed. And, of course, they have helped to create the means for customers to measure effective speed. Customers, of course, will benefit from this move towards real-world comparisons and away from slavish pursuit of the gigahertz. And AMD is hoping that it has the know-how to keep up with Intel in the redefined race. We are seeing two excellent competitors investing heavily in markedly different paths of innovation for the very same product.
WHY COMPETITORS MIGHT NOT COPY HIGH VALUE INNOVATION
The concept that competitors might not copy something that is strategically valuable seems absurd on its face. After all, why wouldn’t you copy a product that enables a competitor to gain valuable market share, often at higher margins? There are three main reasons why competitors do not copy innovations:
- They are unable to copy the innovation
- They choose not to copy the innovation
- They are prevented from copying the innovation
There is one other situation that occurs frequently, and that is:
4. The competitor copies the innovation weakly because they fail to focus
Each of these reasons may offer innovators ways to avoid competition and earn a substantial return on their innovations. By understanding each of these, you may be able to identify useful types of innovation for a lasting competitive advantage.
What innovations has your company developed that avoid competition? Attend the Simplified Strategic Planning Seminar for more in-depth instruction on this subject as well as all other aspects of Simplified Strategic Planning.
© Copyright 2017 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution