If you were to conduct an in-depth study of the most successful, industry leading companies, you would find their success is due in no small part to their willingness to innovate. These companies understand that in order to stay ahead of the competition they must continuously innovate their products and services. They also understand that just because a product was successful in the past is no guarantee that same product will be in the future. This is the belief that if you continue to stand still for too long you will either be left in your competitor’s dust or worse run over. What happens though when you reach a point where your customers are just not willing to pay extra for this innovation? This is the challenge or problem with innovation.
In a Wall Street Journal article back in May of this year, this problem was referred to as the Umbrella Problem. “Manufacturers say that ‘they have a tough time innovating, because most people aren’t willing to pay much for an umbrella’. As a result, they are locked into a design mindset that ‘hasn’t changed in centuries.’ Even the director of product development at umbrella-maker Totes admits that ‘the umbrella is an archaic thing…it’s fundamentally a stick with spokes with a piece of cloth on it.’’ This article makes a strong point that maybe instead of the product being innovated, it is the business model that needs innovating. If the customer is not willing to pay more for an umbrella then maybe the answer is in how it is marketed and packaged to the consumer. A great example of this would be if an umbrella was packaged with a partner company like London Fog and offered a “total rain protection system.” The consumer would theoretically buy a pair of rain boots, a rain jacket and even a hat at a much higher total price. The manufacturer could then throw in an umbrella and market it as a “freebie”. Since the umbrella would be part of the total package, if the consumer loses it they could contact the company and received a free one (up to a maximum #). The “total rain protection system” subsidizes the cost of the umbrella and more importantly the consumer feels like they are getting the umbrella for free!
Innovation is a great way to become a leader in your industry. Yes it requires risk, but there is also a big risk in not innovating but rather continuing to sit still. Steve Jobs states clearly the importance of innovation; “Innovation distinguishes between a leader and a follower.” If you are having a hard time finding new ways to innovate your products or services, why not look at possibly innovating your business model instead?
In a Wall Street Journal article back in May of this year, this problem was referred to as the Umbrella Problem. “Manufacturers say that ‘they have a tough time innovating, because most people aren’t willing to pay much for an umbrella’. As a result, they are locked into a design mindset that ‘hasn’t changed in centuries.’ Even the director of product development at umbrella-maker Totes admits that ‘the umbrella is an archaic thing…it’s fundamentally a stick with spokes with a piece of cloth on it.’’ This article makes a strong point that maybe instead of the product being innovated, it is the business model that needs innovating. If the customer is not willing to pay more for an umbrella then maybe the answer is in how it is marketed and packaged to the consumer. A great example of this would be if an umbrella was packaged with a partner company like London Fog and offered a “total rain protection system.” The consumer would theoretically buy a pair of rain boots, a rain jacket and even a hat at a much higher total price. The manufacturer could then throw in an umbrella and market it as a “freebie”. Since the umbrella would be part of the total package, if the consumer loses it they could contact the company and received a free one (up to a maximum #). The “total rain protection system” subsidizes the cost of the umbrella and more importantly the consumer feels like they are getting the umbrella for free!
Innovation is a great way to become a leader in your industry. Yes it requires risk, but there is also a big risk in not innovating but rather continuing to sit still. Steve Jobs states clearly the importance of innovation; “Innovation distinguishes between a leader and a follower.” If you are having a hard time finding new ways to innovate your products or services, why not look at possibly innovating your business model instead?
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