B2B Innovation Curve

February 27, 2009

In my previous article on the “innovation bell curve,” I introduced the new bi-modal innovation curve.  Yesterday I gave a speech for Babson College MBA students.  One of the attendees asked how this bell curve worked for the B2B environment (versus B2C).

Great question – and a harder one to answer.  The reason it is harder is the psychology behind the buying decision.

I wrote about B2B versus B2C innovation a while back.

B2C purchases are made for both functional and emotional reasons.  Functionally, a Lexus is similar to a Toyota.  But there is an emotional component that makes the former more appealing.  People often don’t just buy transportation, they also buy comfort, status, peer pressure and other less tangible attributes.

B2B purchases are made for primarily functional reasons.  At the end of the day, the main purpose of a B2B purchase is to solve a particular business need. Yes, there are examples of B2B companies on the right-hand side of the bell curve.  But quite often, these are luxury B2C brands that insist on high-quality, branded materials.  In this case, the B2B provider is an extension of the B2C brand.

B2B companies, for the most part, play in the left-hand side of the bi-modal curve.  Buyers of B2B products/services want:

  • Someone who is easy to do business with
  • High quality – they want it right, and they want it right now
  • Cost is always a factor

Or, as Dr. Michael Hammer (the father of Business Reengineering) used to say, “People want it fast, right, cheap and easy.”

Yes, there are emotional reasons why B2B purchases are made.  Back in the 1980’s, executives used to joke that you would never get fired for buying “Big Blue” (IBM) computers. It’s not that IBM was the best, but you knew they would not screw up.  If you bought a computer from someone else and things didn’t work out, you might lose your job.  But you were always safe buying the more expensive IBM boxes.

But even this emotional decision resides in the left-side of the curve. It is the emotional connection to the value you are getting that is at play.  Value in the B2B world is defined a bit differently.  That’s all.

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Innovation Survey

February 26, 2009

My good friend, Chuck Frey, at innovationtools.com is conducting a quick survey to determine the state of innovation.  It is only 5 questions long. Please contribute 5 minutes of your time to help us better understand how innovators are coping with today’s dire economy.

Take the survey here.

Thanks.

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Goal-Free Living

February 25, 2009

I recently sent a copy of my Goal-Free Living book to someone I worked with 20 years ago. I hadn’t seen or heard from him since the late 80′s. The wonders of social networks reconnected us after all of this time. After reading the book, he wrote the following…

The time is right for your message. A lot of people have to reflect on where they are, and where they are going. It helps to know the difference between a goal and an aspiration. In an earlier message to you I said that I consider myself goal-oriented. Thinking about your points, however, I guess I am more like a river person. I have aspirations, and they lead me to some really unexpected but very satisfying destinations. Like you say: it is important to seek out adventure.

Since becoming unemployed in December, I have had a number of chance meetings and interesting ideas. One led to a volunteer project resulting in a very successful fund-raising event. Another is an invention that I am working to patent. Two other ideas are being developed into business plans, with prospective backers for one of them already. That might lead to something else entirely. I don’t know where I’ll be or what I’ll be doing in six months. That’s kind of scary, but I am optimistic that it will be good, so I am also very excited.

Today’s crisis is causing people a lot of pain and concern.  Financial security is eroding.  Job security is vanishing.  As a result, “happiness” seems to be at an all time low.

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The New Innovation Bell Curve

February 20, 2009

The old model of innovation is dead…and a new model has emerged.

For months now, I have been writing about the Innovation Bell Curve.  If you read between the lines, you quickly realize that it is no longer a bell curve but rather more of a bimodal distribution.

Therefore I have re-drawn my frequently used graphic and replaced it with the new innovation bell curve.

New Innovation Bell Curve

The Value Brands are rapidly improving their quality to the point where they are displacing mid-market brands.  And, with the tough economic times, mid-market buyers are seeking greater value and shifting to the left, exacerbating this impact.  Premium Brands remain differentiated (albeit sometimes niched) and always appeal to high-end, more sophisticated consumers.  As the recession lingers on, these premium brands now offer lower cost versions of their products, further squishing the mid-market.

If you have not done so, please read all of my articles on the Innovation Bell Curve.

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Is Your Career Doomed? Mine Might Be.

February 19, 2009

I spend most of my days thinking about the “innovation bell curve.”  The concept is simple, yet profound.

Budget brands will continue to prosper as mid-market consumers move left to save money.

Although premium brands may suffer slightly, there will still be strong demand for high-end products and services.

It is the middle of the bell curve, the “mid-market brands” that are getting squished as consumers move toward greater value and premium brands reposition themselves (a bit more) toward the mid-market customer.

I’ve been thinking about this model as it relates to my career – giving speeches about innovation

On the right-hand side of this model are the “celebrity” speakers.  These individuals include Harvard Business School Professors (e.g., Clayton Christensen), former CEOs of big companies (e.g., Jack Welch), and major best-selling authors (e.g., Seth Godin).  These individuals charge MUCH more than I do.  But they are also a draw.  For large events, having one of the speakers on the platform will get butts in seats.

On the left-hand side of this model are the “vendor” speakers.  These individuals work for large companies who view speaking as great marketing.  These speakers are often not only free, sometimes they even pay sponsorship dollars to be on the platform.  VPs of Innovation for large consulting firms or presidents of innovation software vendors fall into this category.  They have something to sell the audience.

Where does this leave me?  It certainly leaves me rethinking my business model.  Then again, I am always rethinking my business model.

I am continuing to put more energy into books and products like Innovation Personality Poker®.  These move me towards the left-hand side of the model.  You can take me home for a fraction of the cost of one of my speeches.

I am also staying focused on the corporate market (rather than large conferences) because there is still great demand here.  With group sizes of 50 – 300, celebrity speakers are prohibitively expensive.  And given the small event size, the marketing opportunity is not as great for vendor speakers.  My business continues to boom in this area.

Finally, I am shooting the pilot for my TV show in April.  If all goes well, I may be able to re-position myself in the right-hand side of the chart – a celebrity speaker.  But of course, time will tell.

Where are you positioned?  Who is squishing you out of business?  How can you reposition yourself?

P.S. In a previous blog entry, when discussing the innovation bell curve, I talked about the wisdom of Mr. Miyagi in the Karate KidHe talks about those in the middle getting “squished like grape.”  I thought you might like to see the YouTube video…

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Goals Gone Wild

February 18, 2009

My book, “Goal-Free Living,” provides counter-cultural perspectives on goal-setting.  I suggest that we are a nation of goalaholics, and that this is reducing creativity, productivity, and happiness.   Harvard Business School recently published an interesting paper, “Goals Gone Wild,” that supports my perspective.

The authors say…

In this article, we argue that the beneficial effects of goal setting have been overstated and that systematic harm caused by goal setting has been largely ignored. We identify specific side effects associated with goal setting, including a narrow focus that neglects non-goal areas, a rise in unethical behavior, distorted risk preferences, corrosion of organizational culture, and reduced intrinsic motivation.

Rather than dispensing goal setting as a benign, over-the-counter treatment for motivation, managers and scholars need to conceptualize goal setting as a prescription-strength medication that requires careful dosing, consideration of harmful side effects, and close supervision. We offer a warning label to accompany the practice of setting goals.

I couldn’t have said it better myself.

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Starbucks and the Bell Curve

February 10, 2009

It was just announced that Starbucks is now selling a coffee and breakfast for under $4. It’s true.  According to CNN You can get a 12-ounce coffee with a breakfast sandwich or roll or a 12-ounce latte with either oatmeal or a coffee cake.

According to CNN, “the move may be…targeted to drawing back business lost to more cost efficient retailers like McDonald’s and Dunkin’ Donuts.”

This is another examples of the “squeeze” of the players in the middle of the bell curve.  If you are not familiar with it, read  my articles on the bell curve of innovation.  Dunkin’ Donuts (DD) is a great example of a coffee shop budget brand.  As they expanded their offerings, they started to compete (at least in terms of coffee quality) with Starbucks.  Although some think of Starbucks as a premium coffee, most real coffee snobs (and I know quite a few of them) turn their noses up at Starbucks.  It has always been in the middle of the bell curve.   In the past, the middle of the bell curve was a great place to be.  No longer.

Last week I did a speech for the beverage division of a large food company.  This division is largely comprised of “make at home” coffee products, including instant coffee.  Business is booming.  They now have easy to use coffee, espresso, and latte machines.  These products represent an emerging “budget” entry.  For a relatively low cost, these machines produce a high quality, single hot drink with little effort.  There are no messy powders (uses simple capsules), no grinding, no cleanup.  Accessibility at its best.

I realize that Starbucks is more than coffee, it is an experience.  Unfortunately, today, people are less likely to pay for these experiences if other alternatives exist.

Are your products/services getting “squished?”  Can you make them more affordable?  More accessible? This may be the key to survival in this market.

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Mark Your Calendars

February 4, 2009

This summer, I will be giving speeches around Europe.  Some will be private events and others will be open to the public.  Regardless, I will be taking time to meet up with people during my travels.

On May 26th, I will be speaking in Copenhagen at a “Happiness at Work Conference.”  On June 1st, I am speaking in Athens, Greece.  Other countries are quickly being added to the list.

If you are a European corporate executive or conference organizer who is interested in bringing innovation to your organization during my visit there, please write for availability using our contact form.

Hope to see you this summer in Europe.

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Squished Like Grape

February 2, 2009

In a previous blog entry, I discussed why the middle of the innovation bell curve is a dangerous placeI even quoted The Karate Kid’s Mr. Miyagi who said, “Walk on road. Walk right side, safe. Walk left side, safe. Walk middle, sooner or later [makes squish gesture] get the squish, just like grape.”

This prompted a question from Gareth Garvey, a great English innovator based in Copenhagen.  He asked, “What happens as the products in the middle get squashed? Are we talking about a narrower road where we need to walk even closer to the edge to survive/succeed or is the middle ground recreated by new entrants?”

Great question.  From my perspective, the middle ground is constantly shifting and getting recreated by new entrants.

Although using computers as an example is hackneyed, it does allow us to see the shifting dynamics in a short period of time.  Regardless, these concepts apply to all innovations.  Here are the dynamics…

The right-hand side of the bell curve is constantly shifting further to the right. That is, investments in innovation help premium product become better, faster, and higher quality. PCs now have the computing power of computers that once took up an entire room.  There will always be a need for high end computers, whether it is for business, science, or gaming.

The left-hand side of the bell curve constantly moves too. I wrote before about netbooks that cost about $300. These computers will continue to increase in power squeezing out current mainstream computers.

Here’s the wrinkle…It was just announced that India has developed a computer that costs $20. Of course these have significantly reduced processing power, but will serve the needs of a larger audience. As these $20 computers increase in power over time, they will squeeze out the netbooks.

Mobile phones also need to be taken into consideration.

Right now, mobile phones have their own bell curve. Low cost simple function phones on the left (which have greater capabilities than the high-end phones just a few years ago). And the iPhones and Blackberrys of the world on the right.

What’s interesting is to see how these high-end phones can leap from the right-side of the mobile technology curve to the left-side of the computer curve.

iPhones and Blackberrys have basic computing functions now. But soon they too will become more powerful. I assume that in the near future they will also have the ability to display on larger screens – either through projection capabilities, expandable screens (like on the Jetsons), plug in monitors, or low cost wearable goggles. The data entry abilities will also improve. When this happens, and as costs drop, mobile phones will move formally into the left-hand side of the bell curve for computer innovations.

The curves are always shifting in many directions. What is a premium product today will become old quite quickly. What is considered budget will improve over time and become mainstream, eventually to be squeezed out by a new low-end entrant. What was on one curve (e.g., mobile phones) can shift to another curve (e.g., computers).

The key is to choose which side of the fence you are on.  Premium or Budget.  High-end or mass-market.  Sophisticated or up-and-coming.  Just try to avoid getting squished…

I will continue to address the “bell curve of innovation” in future entries.

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