The Innovation Human Factor

Companies across industries are looking to refresh their way of functioning in order to remain increasingly relevant and lower the risk of being disrupted. Some companies get it right and some don’t. With the need for innovation rapidly permeating across organizations and geographies, how can businesses get it right?

Innovation is no simple feat. It is a combination of multiple facets, thought processes and components all that transform into differentiation. While there are several tangible aspects of innovation within organizations across industries, it is crucial to focus on the intangible.

There is one specific external intangible needs to be encoded into any and every innovation process. This is the Human Factor, in this case it being an organization’s key customer. While technology has leveled the playing field for corporations and start-ups, the successful ones will be those who can encode the human factor into their offering.

The traditional sense of business has taught companies to focus on WHAT goals are and HOW they can be achieved. Identifying the end and creating the means, so to speak. The WHY behind it all doesn’t seem to figure as there are very clear objectives that have been established. However, that is what needs to change for companies to be truly innovative.

Asking WHY is imperative to get a deeper human perspective, in this case of the consumer’s mindset. It is imperative to grasp not only where it has been and where it is currently, but where it can be heading. Before embarking on any innovation initiative, its crucial to understand WHY your industry is being disrupted or is prime for disruption. It’s equally imperative to assess WHY consumers are shifting away from your business. The organizational WHY is also a key component, but that’s a story for another day. Highlighting the WHY behind an initiative will help define WHAT needs to be done and HOW it can be achieved.

One could also argue that industries are not being disrupted by technology but solely because they lost sight of their WHY. The global permeation of technology could have been utilized to keep incumbent businesses one step ahead of their would-be competitors, but complacency allowed them to be ideal candidates for disruption. The WHY keeps changing and matching its dynamism will ensure that offerings are consistently aligned with their customer base. Guesstimating and assuming the inside thinking of a customer will result in a complicated product pool that adds to the mayhem during the decision-making process.

Digging deeper and asking the right questions will help teams put themselves into the shoes of their customers. This will allow them to recognize rationale trends and the mindset behind each decision through either (or both) the consumer decision making process and the customer journey. Detailing down why each decision was made and why it was crucial in the eyes of a consumers will enable teams to break down what specific aspects need to be focused on when it comes to innovation.

Switching places with the consumer will help create a commonality between brand and user, providing a valuable perspective in the product and services design process. Approaching the innovation process any other way, without grasping the WHY, can result in a perceived groundbreaking achievement with minimal market traction.

When this happens, companies loose appeal with their customers. The inspirational and aspirational messaging (very often associated by the WHY) behind the offering loses its influence, prompting customers to make a choice based on empirical factors. This is when offerings become increasingly commoditized, with customers shifting their focus and money to the next shiny object.

Let’s dive into this deeper by way of an example: Why are customers increasingly opting for digital banks and successfully challenging global incumbents?

Customers could be looking better pricing on their banking products or for convenient solutions that seamless integrate with their daily lives. The shift in loyalties could also be driven by a growing sense of distrust in large financial institutions. It could be propelled by a sense of not wanting to associate with traditional institutions that have been around for longer-than-imaginable periods of time. Perhaps younger customers want to do things differently from their parents and take their own decision.

Interestingly, each of the assumptions above presents itself as a different solution. Every one of them can be combined into a singular solution that addresses WHY consumers are opting for the challenger bank.

A potential response in this particular situation can be that banks would need to launch a digital alternative that is not associated with the established brand while offering a large number of in-branch transactions via a mobile platform and provides financial products based on the customer demographic requirements.

Understanding motivators behind choices made by consumers during their journey is crucial. Clarity can be provided by communicating with your set of consumers more; either through focus groups, surveys, ethnographic research or just by imagining yourself in their position. There are several ways to do so but it is important to gauge the validity of your findings into any innovation initiative.

If only it were that easy! Starting with the WHY is not the definitive solution in innovation. But it absolutely brings you closer to one.