Do you have an innovative product in a mature market? That isn’t an oxymoron -- most innovations are improvements on existing products or services, and need to be differentiated from what is currently available. Otherwise, they risk becoming, as a former IBM colleague put it, “just another flavor of vanilla”.
So, how do you go about avoiding the Vanilla ParadoxTM? I believe that the answer lies in combining the lessons in Geoffrey Moore’s “Crossing the Chasm”/“Inside the Tornado” books with the ideas in W. Chan Kim and Renée Mauborgne’s “Blue Ocean Strategy”.
The main lesson from Moore is that to penetrate the mass market (aka “cross the chasm”), you should identify a niche, or market segment, and provide a “whole product” to it. A “whole product” is defined as “the minimum set of product and services necessary to ensure that the target customer will achieve his or her compelling reason to buy”. (Click on the image to see a larger version.)
In other words, a complete solution to a real problem.
That may appear to be obvious, but the key words are “complete” and “real”. In many innovations, the entrepreneur will offer a new capability, but not a solution. The customer must still perform some integration-type work to make the innovation into a success. (These customers are the “early adopters” on the other side of the chasm.) The “whole product” concept is key.
The other challenge is the “real” problem. If you have improved an existing product or service, whether it is a light bulb, trailer hitch, asthma inhaler, or invoicing service (etc.), there are a great number of existing customers who are perfectly content to stick with the status quo.
What you want to do is make these customers think differently about the product or service in a way that makes them predisposed to consider buying your innovation. The message from “Blue Ocean Strategy” is that you need to reinvent the “value curve”. The objective is to create a “blue ocean” (i.e. uncontested market space) vs. a “red ocean” (a hyper-competitive market space).
The value curve is the relative weight that customers assign to various factors in the purchase decision. Very often price is the most important factor in the value curve, but there are usually others.
Let’s take ice cream. Store brands will win on price, but Häagen-Dazs, Edy’s and other premium brands have differentiated based on purity of flavor, fat content, texture, and so on. And that’s just for vanilla! Ben & Jerry’s has all sorts of funky names for their flavors and a mystique that customers buy into as part of the brand.
Chan and Mauborgne show that the innovator has four strategy options in reshaping the value curve (click on the image to see a larger version of the chart):
- REDUCE certain factors below the industry standard
- CREATE new factors that the industry does not offer
- RAISE certain factors above the industry standard, and
- ELIMINATE certain factors altogether.
Sometimes, the best way to do this is “create” a new way of looking at the product or service -- ask customers to think about their product usage in a new way. Are they wasting time using existing products? Is there a safety problem with the current way of doing things? Is there a new capability that your innovation would enable? If so, bring that to your customers attention, and you know have a “complete solution” to a “real problem”.
And you’ve crossed the blue ocean!
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