HarnessingDemandInnovation
IdentifyOpportunitiestoAddressNext-generationCustomerNeeds
■Customerneeds
·1storderneeds—Product/servicefunctionality
Product/servicefeatures
·2ndorderneeds—Improvingoperationaleconomics
Improveoperatingefficiencybystreamliningpurchaseandsupportsystemsandprocesses.
Havehighcostpredictability.
Helpmanagetheproductlifecycleandprovidetimelyupgrades.
·3rdorderneeds—Solveeconomicissues
Provideassistancewithinstallation,maintenance,financingandtraining.
Helpimprovethecustomer'scoststructureandremoveprocessinefficienciesbyreducingwasteandloweringcapitalcosts.
Helpcustomersreducecomplexity,makebetterdecisionsandspeedtheirownofferingstomarketbyprovidingsupportanddecisionsystems.
Helpcustomersreduceriskandvolatilitybyassumingresponsibilityforqualitycontrolandcycletime.
Helpcustomersgrowtheirtop-linerevenuesbyofferingadd-onsandintegratedoffersofproductsandservices.
·Growththroughdemandinnovation—Theessenceofdemandinnovationistolookforcommercialopportunitiesthatmeet3rdorderneedsforyourcustomers.Thiswillgenerategrowthinthreedistinctways:
Youwillcreatenewopportunitiestosellmoreofyourcoreproductorservice—becauseyouwillbereinforcinganddeepeningthecustomerrelationship.Thecustomerfocuswillmovefrompricingalonetootherdimensionsoftherelationship.
You'llbeabletocomeupwithintegratedofferings—andtherebygeneratenewsalesfromadjacentmarketsneverbeforeaccessed.
You'llhavetheopportunitytoturnimprovementsinthecustomer'svaluechainintonewrevenuestreams—throughout-sourcingfees,tollingcharges,outputguarantees,subscriptionfeesandsoforth.
UnderstandYourOwnHiddenAssetsAccurately
Demandinnovationisallaboutturninghiddenassetsfrommarginalopportunitiesintogreatrevenuegenerators.Virtuallyallestablishedcompanieshavedevelopedapoolofhiddenassetsthatcouldbeveryvaluableifproperlyutilizedandharnessed.Yet,mostoften,theseassetsarecompletelyignoredwhencompaniesattempttogenerategrowth.Thisisunfortunatebecausethedeploymentofhiddenassetscanmeanthedifferencebetweengoodandgreatinvestmentreturns.
Thekeyaimofdemandinnovationistoconnectyourcompany'shid-denassetstothenext-generationdemandsofyourcustomers.Thiswillrequireanentrepreneurialmind-setasyouexamineyourassetbasenotfromafinancialperspectivebutfromabusinessopportunitypointofview.Forexample,youshouldconsiderwhatassetsyouownthatanewcompanyoranentrepreneurtargetingyourindustrywouldlovetoown.
■Traditionalintangibleassets
Intellectualproperty—Youmayownpatents,trademarks,copy-rightsorothercreativeproductsthatcanbelicensedtootherstogenerateadditionalrevenue.Forexample,DolbyLaboratorieshascreatedsignalprocessingtechnologythathasbecomethedefactoindustrystandard.
Competencies—Yourbusinessmaypossessspecializedskillsthatdifferentiateyoufromallcompetitors.Inotherwords,youmaybeabletodosomethingattheleadingedgethatnoneofyourcompetitorscanmatch.
Brand—Youmayhavebuiltapowerfulimageandreputationwithconsumers.Forexample,Virginisoneoftheworld'sbest-knownbrandnamesdespitethefactthatthisbrandisusedforadiverserangeofproductandserviceofferings.
■Customerrelationships
Reach—Youmaypossesstheabilitytotouchalargenumberofcustomers.Forexample,24millioncustomersvisitaMcDonaldsstoreeveryday.
Interaction—Youmayenjoydeepandfrequentcontactwithyourcustomers.Forexample,customersvisittheirlocalWal-Martmorefrequentlythanothersvisittraditionaldiscountstores.
Insight—Youmaypossessdetailedknowledgeaboutyourcustomers'preferencesandtheproblemstheyface.Forexample,G.E.Plasticshasdeepexpertiseandexperienceindesigningautomobilecomponents.
Authority—Youmayhaveareputationasbeingtheexpertinyourfield.Forexample,UPSiswidelyconsideredtobetheexpertinthefieldsofshippingandlogistics.
■Strategicrealestate
Valuechainposition—Youmayoccupyapositionwithinyourindustry'schainofsuppliers,manufacturersandcustomersthathasuniqueadvantages.Forexample,DellComputeroccupiesastrategicpositioninthevaluechainforPCs.
Marketposition—Youmayhaveamajorityofthemarketsharemakingyouamajorplayer.Forexample,DeWolfeRealtyparticipatesinsomanyhomepurchasetransactionsthatithasasignificantopportunitytoprovidemortgageandhomeinsuranceservices.
Portal—Youmaycontrolagatewaythroughwhichothersinyourindustrymustpassinordertoaccessinformation,productsorservices.Forexample,Gemstar-TVGuidehasaninteractiveprogramguidethatdominatesitsmarketandservesinexcessof15millionhouseholds.
■Networks
Thirdpartyrelationships—Youmayhaveformeduniquerelationshipswithkeypartnerssuchassuppliersorcontentproducersthatwouldbedifficultorimpossibleforanyoneelsetoduplicate.
Installedbase—Youmayhaveaccesstoagroupofveryactiveownersandusersofyourproductorservicethatnoothercompanycanmatch.
Usercommunity—Yourproductorservicemayformthebasisforagroupofpeoplewhodefinethemselvesbytheirrelationshiptoyourproduct—likeHarley-Davidsonridersforexample.