Innovate or die: A cautionary tale
Dell was at one time one of the world’s most fearsome marketing machines.
They had perfected their approach to a fine art. Using rigorous multivariate testing, the most profitable combinations of products, price-points and creative executions were constantly being tested and refined across insert sheets, emailers and banner ads. Analysts crunched through eCommerce storefront data to find the best addons to upsell.
The rigour of this Darwinian process was fantastic, except for one small detail.
Marketers at Dell were constrained to work with one particular approach. You could call it a Box, and there was no thinking outside of it.
A/B testing is fantastic at working out whether a button should be red or green. But what if the landing page has itself has become irrelevant?
In the early 2000’s, earthquakes were shaking the tech world. Dell was a direct marketing pioneering, but, surprisingly, got caught flat-footed by the rise of social media. If you haven’t come across Dell Hell before, then take a moment to Google how kack-handed attempts to ignore or stifle online critics snowballed into a company wide existential crisis.
But an even bigger change was afoot. The introduction of the iPhone was initially pooh-poohed by the PC community. Consumers didn’t agree. PC and laptop sales started to stall, while smartphones and then tablets shot to dominance.
Marketing should be the department that first senses these changes, but in reality, the internal structure doesn’t support it. Ironically, Dell’s bitter battle to become top dog in PCs led ultimately to a pyrrhic victory.
This is the classic frog-in-boiling-water problem, and it afflicts most marketing departments today.
We can get so heads down in executing on our plans, so busy running and fighting our way through the jungle, that we don’t realise we are in the wrong jungle.
The customer has fundamentally and irrevocably changed, and that change is not an aberration. The velocity of change is, in fact, speeding up, driven by growing incomes, an explosion of affordable always-on technology, and a global supply chain that can pivot on a dime.
This should be leading to an explosion in the ways that marketers can connect with their customers and provide greater value to them, in ways that are unique to that particular brand.
Instead, it seems to be breeding ever-greater levels of Me Too activity.
The measurability of digital media has helped us to build a wonderful industry, but the Law of Unintended Consequences means that we have also ended up creating a piper that we are all now paying.
In a world of escalating change, innovation is not a nice-to-have.
Every organisation needs to get to grips with a competitive landscape that customers can rapidly turn on its head by rapidly adopting new ways of doing things.
The big question then becomes: how do we continue to meet our immediate revenue or brand KPIs, while simultaneously grappling with innovation?
Our research in this area has led us to the conclusion that a parallel structure is needed.
The most famous example of parallelism is Google, who popularised the notion of 20 per cent time. Google engineers are encouraged to spend 20 per cent of their time on their own projects. For example, Gmail and Google Maps started life as 20 per cent projects.
Not all organisations have the ability to spawn initiatives in this unstructured away, but all organisations can build an innovation pipeline.
An innovation structure tends to have a few defining characteristics:
• There is a specific budget to support it
• The KPIs are learning-based rather than revenue-based
• The structure is designed to facilitate speed
• To enable speed of decision-making layers are removed and wide-ranging autonomy is granted
• To enable speed of execution, the team is small and nimble
• There is a process for taking initiatives out of the innovation stream and into the core organisation structure
This approach can be jarring to the main organisation.
Google X, for example encourages failure. By rapidly developing hypotheses and prototyping ideas (on a daily schedule), the team can understand current limits through failure. That leads to a constant process of learning, and to validation of any successes that do finally emerge.
Southeast Asia is one of the most mobile and social markets in the world. Nowhere is more ready for innovation, and yet nowhere is more constrained by hierarchical structures.
That is why the IAB SEA, Singapore Chapter has come together to form the Innovation Committee. We are putting in place the tools, the events and the training that organisations need to enable ongoing transformation activities internally.
We will be rolling out this program across 2014 – 2015.
If you want to get immediate help, please reach out to myself or any of the Innovation Committee members:
While we don’t have the solution in a nice neat box, we are committed to working together to help enable organisations find their own answers. We hope you join with us.
Innovate or Die!