Toilets and Innovation – Can The Two Mix?

A funny thing happened the other day when I was on my toilet, I started thinking about innovation and toilets.  If you are thinking what I am thinking, innovation and toilets are two words that rarely (if ever) end up in the same sentence.  Yet see how far toilets have evolved from their humble beginnings.  But early in the last century, toilets have just stopped evolving.

What a red ocean this category is in the U.S.:

–          All toilets are basically the same (sure you have elevated and elongated toilets but that is a line extension, really)

–          All toilets are basically white (sure, you have black, bone (that’s a weird name, but OK), linen, but really most toilets are white)

–          Price points hover around $300-400

Given how everything else in our lives seems to have different flavors, different colors, different options, toilets have remained basically….basic.  You can customize your toilet seat, but that’s about it.

So why so little innovation when the category is so mundane, so plain, so homogeneous.

It is not for lack of usage – depending on the user, it usually is daily.

It is not for lack of need – can’t really do without one.

It is not for lack of importance – I wouldn’t buy/rent a home without one.

It is not for lack of profit – can’t imagine it costs that much to make.

It is not for lack of cultural hygiene – Americans are quite picky about cleanliness.

It is not for lack of inginuity in the bathroom – look at the Kohler showerheads.

Looking at toilets from a cultural perspective, the Japanese definitely have taken cleanliness and toilets to the ultimate level.  

So is there a lack of demand (if it ain’t broken, why fix it?) or is it a lack of innovation (if you build it, they will come)?

 What do you think?

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In Innovation, Technology Is Not The Only Answer

There is often a myth in innovation that it must be technologically driven.  P&G and many of its peers are excellent at research and development (R&D) and constantly bring new technologically-driven products to the market (Acti-Lift Tide, Regenerist, etc.).  Depending on the technology, it has the potential to create a short-term competitive advantage.  And sometimes, it can create an entire blue ocean.  But more often than not, it is a short-term play that competitors copy/adopt into their products (tablet computers seem to fit here).

A few months ago, I read an article in The New York Times about a new transit system being funded in China (“Riding High: A Chinese Concept for Bus Transit”).  What struck me with China’s new planned transit system was really how simple it is.  There is no new technology here.  This light-rail system still has a large space for lots of paying consumers to sit.  It depends on rails to travel on a paved street.  Electricity is required to propel the vehicle.  What’s different is that it eliminated some of the biggest drawbacks of light-rail systems – they take a lot of space on the road (or even require their own corridors) and they are slow.  In instances where the light-rail system is combined with regular traffic, its speed and bulkiness becomes an issue.  Although more people are moved in a given space, it slows down the rest of the vehicles to impact traffic overall.

This new light-rail system has none of these drawbacks.  It does not take any additional space.  The only infrastructure required is elevated stations and the same electrical infrastructure as any other light-rail system.  It can travel at any speed without impeding traffic.  And none of this required any new technological advancement.

Innovation does not necessarily need new technology.  Sometimes, it just requires new thinking which can lead to changing the business model.

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What if…

True innovation can often come from a basic questioning of the status quo.  It can simply come from asking “What if…?”  The ideas that answer that question may be “blue sky” ideas but they can lead to “game changing” innovation that take a company from a red ocean to a blue ocean.

A “What if…” question is often based on a consumer insight, explicitly or implicitly.  What if my trash can did not have to smell like one or be so disgusting?  Sounds a bit “blue sky”?  After all, it is trash.  The input is always the same and over time, it naturally decomposes and starts to smell.  So unless the input changes, the output will remain the same – status quo.  Well, the folks at Hefty(r) found a solution – BlackOut Kitchen Bags with OdorBlock technology.  The black bags make trash less visible and the odor blocking technology hides the smell.  Is it “game changing” innovation?  In my mind, it changes the category.  Trash bags now actually mitigate the two things that make trash so unappealing.  Granted, it will never be appealing, but it will change the quality of my life – noticeably.  And that is game changing, because now you will have smelly trash bags and OdorBlock trash bags.

But it is not all that easy.  The “What if…?” question is not a panacea.  Just because the idea answering this question is innovative, you have to keep in mind the marketplace in which the product will finally be compared in.  Take, for example, method(r) laundry detergent – just pump to dispense your laundry detergent!  Easy to measure (sans measuring cup to clean each time), comes in a small bottle rather than a mega plastic container, uses plant-based ingredients – great idea.  But the market leader is at $14.99 for 64 loads (Tide 2x Ultra Original Scent Liquid Laundry, 100 oz).  The price of method’s innovative product?  $15.49 for 50 loads.  I get 14 more loads essentially free with Tide.  That is a very large premium to pay.  The convenience of not having to mess with a soapy measuring cup (and it is a pain point) may not be worth the premium for many consumers.  I would not be surprised if Tide comes out with a pump product in the near future for roughly its current everyday price.

The answer to a “what if…” question can be very powerful, and lead to “game changing” innovation, but it is not always the “end all, be all” answer.  Other factors need to be considered to make the answer truly innovative.

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U.S. Losing Its Innovation Edge – Not So Fast!

In these economic times when the US economy continues to sputter, the role of innovation in promoting long-term economic growth finally comes to mind.  The big stimulus was necessary to stabilize the economy before heading into a free fall.  Now, we need to look at the long-term mechanisms to help the economy come back from the abyss.

But all is not well in the land of U.S. innovation according to many articles written lately.  Many have reported that the number of patents registered at the U.S. Patent and Trademark Office has been increasing for countries other than the United States.  In fact, in 2009, more patents were awarded to non-Americans.  As if volume of patents is an indication of a country’s innovation.  One issue with this measure is that a patent filed by IBM’s India office will be treated as a non-American patent, not as a patent awarded to an American company.  Another issue is the quality of the patents.  Getting a patent for making a new toy is certainly not easy but does it really prove that a country is more innovative than another?  Did that patent create a new industry?  Did that patent create more jobs?  Did that patent improve the lives of people?  Somehow, the simple measure of patent volume doesn’t seem to quite do the concept of innovation justice.
Recently, President Obama appointed Paul Otellini to the President’s Council on Jobs and Competitiveness to find a way to make America more innovative and get people back to work.  Mr. Otellini points to the fact that “key measures spell trouble for maintaining that [technical and innovation] lead: the number of graduates, the number of companies being formed and the number of patents inside the country versus outside of the country.”  With the B.R.I.C. countries (Brazil, Russia, India, and China) modernizing their economies to evolve from low-wage economies to value-added economies, they are naturally going to improve their education systems and more companies are going to be formed.  For one thing, comparing the rate of company creation in the United States to that of a modernizing economy such as China’s seems to be lopsided.  How much profit are these new companies really creating?  How long are they profitable?  It somehow reminds me of the Wild West and the Gold Rush.

As for the number of graduates, there are certainly more of them in other countries than there are here.  For one thing, the population of the B.R.I.C. countries is far larger than America’s – that is a given.  So there is bound to be more graduates there than here.  But somehow we are back to the issue of volume vs. quality.  Or maybe it is a number’s game?  The more engineers, mathematicians, scientists, etc. will naturally create better innovation?

Really?

I have lived and worked in China and I can tell you that the education system there is based on memorization, top-down learning and book learning.

Innovation is NOT about knowing the basics.

Innovation is about questioning the status-quo.

Innovation is about taking risks.

Innovation is about thinking outside the [name the field] box.

Innovation is about creativity.

Innovation is about having the right “software” as author Adam Segal of the Council of foreign Relations explains in his recent book Advantage: How American Innovation Can Overcome the Asian Challenge.  He argues that “software” is about “social capital, tolerance for risk, willingness to leave jobs, ability to criticize superiors, the regulatory environments.”  And that is not taught well abroad.

But this is not to say that America is immune to a decline in its innovation lead.  In fact, what most articles have been saying is merely a harbinger of what’s to come.  Today’s education needs to reinforce critical thinking, multi-disciplinary problem solving, and risk-taking.  Yet in today’s education where standardization is the name of the game and where multiple-choice exams (where the answer is given to you) grade your “knowledge” (of taking tests), how can we continue to be innovative?  It is this push for sameness in the quest for making things easier to manage that will overcome the necessary skills to be innovative, create breakthrough technology, file more patents, launch new companies and create more jobs…..

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iPad2: Innovative Tablet Killer or Strategic Placeholder?

With the release of the iPad2 in the U.S. last Friday, there have been a plethora of articles from The New York Times  to Fast Company lauding Apple’s latest introduction in the tablet market it created about a year ago.  eMarketer expects worldwide tablet sales to reach 81.3 million units in 2012, up from 15.7 million in 2010.  Apple’s iPad series is expected to continue to own 2/3 of the market.  With over 100 tablets expected to hit the marketplace this year, Apple’s one-year lead will prove to be decisive.

The iPad2’s new features, though noteworthy, are more about product improvements than blue ocean innovation.  The iPad2 is now 0.34in thick.  Its closest competitors pale in light of this waistline.  The iPad2 has a 5-megapixel camera on the back and a low-resolution camera on the front – this is reminiscent of the iPhone4, and nothing new in the tablet industry – it is merely playing catch-up.  The iPad2 has a H.D.M.I. adapter to allow it to connect to a high-definition TV – a move to hopefully one day dominate the TV in your home.  And there is the new cover, complete with magnets, that switches off the machine when applied over the screen.

None of these changes have the same “wow” factor as the iPad originally had.  None of these is earth-shattering innovation.  But that is not the point.  With a one-year lead on the category and everyone else trying to just get a foot in the door with their first introduction, the iPad2 is not trying to be an innovative tablet killer.  It is merely a strategic placeholder – a good one at that.

Every competitor will be fighting for awareness and share of use – an expensive proposition.  Every competitor will be fighting the copycat shadow that it will cast on itself.  Every tablet will need to outdo not only Apple’s iPad but all the other introductions – how different are they all from each other?

Apple has long understood the notion of blue ocean and the advantage of forging new categories.  The first-mover advantage is extremely powerful and offers incredible advantages.  The iPad2 is merely a strategic placeholder to wait out the competition brawl that is about to ensue – why fight them when they will outdo themselves – and to give Apple just enough time to work on the true tablet killer and a true innovative product in 2012 – the iPad3.

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For long-term, sustainable innovation success – innovate the business model.

In my humble opinion, innovation tends to be like sports where success is fairly elusive, ephemeral if you will. You may have a blockbuster this year but that does not guarantee a lifetime of success. But there are a few things that can be done to build sustainable innovation success.

Diversify your innovation

Although innovation is not a fad, it certainly comes in waves. With recessions, innovation groups tend to lose resources. Talent loss is one of the more serious issues because it means losing knowledge (technical know-how, consumer insights, etc.). Depending on the talent, they may be scooped up by the competition so you may be losing your innovation to them. Budget loss is another issue that needs to be managed. It all comes down to managing your innovation portfolio. Game-changing innovation is costly, fraught with failures, but success offers long-term profits. Product line extensions are relatively inexpensive, have a decent success rate, but only offer limited long-term profits – they are just short-term plays. You need a mixture of both.

The big problem with true innovation is that it is a long-term play. Sure, you have short-term, ROI-driven product line extensions or cost-cutting product reintroduction. They will provide short-term profits (great for the balance sheet and Wall Street), but they provide no long-term competitive value. But the business world (at least in the US) has become so blinded by short-term profits that we are squandering our competitive futures. One answer is innovation management – balancing the number of innovation projects between a few large ones and many smaller ones. It not allows you to stay competitive in the short-term, but earn profits that you can reinvest in the business (and the innovation portfolio). Innovation portfolio management is also about “filling the gaps” that make strategic sense and are profitable. This innovation diversification helps you develop an innovation reputation that you can take to the bank (Wall Street) and attract great talent. It’s a bit like baseball – a few good hits get you home (not as sexy as a homerun) but it gets you to a win in any case.

Innovation from the inside out

So far, all I have talked about is product or service innovation which in itself tends to be short-term. But innovation needs be so much more. Innovation should be both global and “global”. By global, I mean looking beyond the shores of one’s country. Innovation is everywhere. P&G sources innovation ideas from all over the world. They keep dedicated innovation experts in all five continents to keep a pulse on innovative ideas, technology, and talent. Need inspiration, travel and see what’s being done elsewhere. Can’t travel? Go to ethnic stores/areas and get a flavor! As I will discuss in another post, we need to stop being myopic – the U.S. is not the innovation powerhouse that it has been built up to be.

Innovation from the outside in

Innovation should also be “global” in the sense of holistic. Product innovation is ultimately shackled by the supply chain and business model in place. If you want to be innovative, you have to look at everything inside the company. Ultimately, you create a “blue ocean” by changing (or expanding) your business model – a long term profitable space with no competition at least in the short-term, if not for the long-term. Cirque du Soleil did not innovate the product (a trapeze artist is a trapeze artist), it innovated the business model – so much so that no one has been able to replicate it because their supply chain, their business model is holding them back.

Apple is another prime example. Its iPod was NOT the first MP3 player on the market. Sure, the design was different, but design alone does not make for a sustainable business. Apple brought the combination of the iPod and iTunes that revolutionized music usage and Apple. That is what makes Apple so successful today. Apple builds innovative platforms and business models with well-designed products.

So we need to move beyond the short-term, beyond local innovation and innovate your business model to get a more sustainable, long-term innovation success.

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