Archive for the ‘Uncategorized’ Category

Trojan Horse with a slice of open innovation

Written by: Nikola Tosic
Publishing date: 25 Jun 2020

trojan horse

Entering new markets is one of the more efficient growth methods. The key to entering new markets is to find a hole in the competitor offering and fill it with your own new product. Important factor is not to place too much pressure on this new product because its main role is to allow company entry and promote other products. This new product is a Trojan Horse allowing the company to sneak in among the competitors without a direct conflict.

This Trojan Horse product needs to satisfy following 4 requirements:
1) It needs not to compete with current competitors in the new market, direct competition makes growth slow and expensive,
2) It needs to be very valuable to the customers, best if it is a highly innovative and unique,
3) It needs to be very good at selling the company brand and its other products,
4) It needs to be quick and easy to make so many Trojan Horses can be tested.

Best way to solve points 1 and 2 is to use open innovation. Internal innovation processes are too slow and expensive, while copying competitors creates direct competition with them.

I recommend that you make your own Trojan Horse.

3 weird innovation stories

Written by: Nikola Tosic
Publishing date: 17 Jun 2020

orange juice

Orange juice started as a marketing project to sell more oranges.
“In 1916, Lasker came up with a brilliant idea: Sell more oranges by empowering customers to juice them. He realized that the average consumption per serving was normally half an orange. But if customers made their own juice, that number would jump to two or three oranges – up to a 400% increase!”

Tentacle porn provided a way around Japanese censorship.
“Nudity in Japan traditionally has not been viewed as taboo like in some Western countries. However, according to Article 175 of the Japanese Criminal Code, individuals who exhibit and distribute obscene “pictures” or “documents” can be subject to plenty under the law.”

Richard Stallman started Open Source because he could not edit printer code.
“In 1980, Stallman and some other hackers at the AI Lab were refused access to the source code for the software of a newly installed laser printer, the Xerox 9700. Stallman had modified the software for the Lab’s previous laser printer (the XGP, Xerographic Printer), so it electronically messaged a user when the person’s job was printed, and would message all logged-in users waiting for print jobs if the printer was jammed. Not being able to add these features to the new printer was a major inconvenience, as the printer was on a different floor from most of the users. This experience convinced Stallman of people’s need to be able to freely modify the software they use.”

4 ways open innovation improves sales

Written by: Nikola Tosic
Publishing date: 11 Jun 2020

Getting the product right
Main difference between closed and open innovation is that in open innovation customer relationship starts before product design, and in closed it starts only after. By talking to customers earlier companies can make products which match customer needs better.

Empowering customers
Open innovation a powerful sales method because it increased quantity and quality of a customer relationship, giving customer more power and access to the company. Customers will want more and more to influence product design and they will look for companies that provide them this influence.

Reducing churn
Customers’ innovation ideas can reflect smaller frustrations. These frustrations are not big enough to become a complaint but they are still an important symptom of a negative experience. Addressing them reduces churn.

Better customer understanding
When customers share their innovation ideas they are telling customers what their vision of the future is, which is one of the highest priorities for them. Customer innovation data should have equally a high priority in CRM.

3 tips for an innovation culture

Written by: Nikola Tosic
Publishing date: 27 May 2020

young einstein

Innovative company culture is based on constant sharing of innovation suggestions for products, services, marketing, sales, processes, etc. Team members can give more value to customers and company if they are engaged on a more creative and innovative level instead of being operational and passive. Here are 3 tips on how to build an innovation culture inside your company:

Explain that innovation can be done everywhere – in services, marketing, sales, processes
Many team members are blocked by thinking innovation is a word for new products. They think it is R&D which is usually big and expensive. This makes them passive, while they wait for someone else to innovate. Fact is that improving supporting services, marketing, sales, and other processes can deliver a lot of competitive value to customers and company.

Explain that innovation does not need to be big
There are all kinds of innovations. Some are big but majority is small. Also big innovations do not work unless small innovations do not support them. Idea that innovation can only be big is another way to block team members into waiting for someone else to innovate while they remain passive and operational. Fact is that small innovations are necessary, valuable, and add up.

Consider every innovation suggestion as training and motivation
In some companies 1 in 1,000 innovation suggestions becomes a product. This does not mean that unrealized innovation suggestions are not valuable. Engaging team members in innovation is highly motivating and is a good way to increase their know-how of products and customers.

Innovation is only an addition to the company culture. It works well with sales, marketing, product design, strategy. It should be seen as a spice that makes everything a bit better, and not a revolution.

Few rules of innovation

Written by: Nikola Tosic
Publishing date: 12 May 2020

wright brothers bike shop

1) Most problems are complex. They can appear simple in the start but solving them in practice is complex.

2) Complex problems require diverse and multidisciplinary solutions. If teams working on innovation are not diverse they will not be competitive.

3) Simplest form of innovation is elimination of errors.

4) Most complex form of innovation is paradigm change.

5) Innovation is a cycle which starts with a customer who accepts that they have a problem and ends with a customer accepting a solution. Therefore, innovation is an important part of a customer relationship.

6) Creativity of one individual (idea black box) is crucial but alone it does not create innovation. Innovation is a process of many individuals each being creative and working together for the benefit of customers. Therefore, innovation is always an incremental chain of creativity and one of the most complex forms of teamwork.

7) Innovation requires highly rational communication between customers and team members. It needs to remove all the restrains created by the power relationships inside companies and also between companies and customers. Innovation can only exist as a highly rational communication and teamwork, when it is fully open.

8) Innovation is too complex to be controlled by a precise process, but it should be managed. Goals, rules, deadlines, and tools can substantially accelerate and focus it.

Will 2020 and 2021 be Anni Mirabiles?

Written by: Nikola Tosic
Publishing date: 9 May 2020

newton apple tree

Under in crisis and under stress we tend to be more open and innovative. This is our natural reaction which allows us to cooperate and solve new complex problems. Openness also is an important component of innovation without which innovation is always drastically reduced.

Coronavirus crisis is causing substantial stress to everyone, including company owners and managers, and, as a result we have noticed that in past months SMB owners and managers have shown an increase in openness and innovation which manifested as:
– More direct requests for business cooperation with other companies and individuals;
– More direct requests for practical advice from people who were previously not engaged;
– More direct inquiries towards customers instead of reliance on covert analysis and sales-only-communication.

It is our expectation that after the Coronavirus crisis we will see an increase in cooperations, partnerships, know-how, and innovative products and services. While the effect of Coronavirus crisis is devastating to the majority of us, innovators had a chance to channel more of their creative resources into new projects, which hopefully can benefit everyone.

Maybe 2020 and 2021 will be Wonder Years in some industries.

How many people innovate?

Written by: Nikola Tosic
Publishing date: 29 Apr 2020

global innovation

At least 10 % of the world population are innovators. This means that approx. 760 million people designed, manufactured, and sold something new and different. Sale definition also includes non-monetary exchanges such as use of government and non-profit services.

Simplified logic behind this guess:
– There are 7.58 billion people in the world,
– There are approx. 200 million companies in the world,
– There are also millions of government and non-profit organizations,
– Some companies and organizations employ thousands and some have no employees,
– All companies and organizations must innovate in some way,
– Innovation output can be a product, process, service, content, business model,
– More complex companies must have many more innovators in order to deliver the initial idea to customers,
– 10 % or 760 million innovators suggests approx. 3-4 per company and organization.

The more companies and organizations there are the more innovation there will be available for customers. Number of innovators will increase as population increases, conditions for business improve in developing countries, and open innovation improves in developed countries.

If you can offer an alternative estimate let me know.

Understanding innovation, part 1 of million

Written by: Nikola Tosic
Publishing date: 23 Apr 2020

Luke Vincentini cake innovation

Innovation is important because what and how a company sells today might not work later.

Innovation consists of three main phases:
1) Input – understanding the customers,
2) Design – processing the input and designing the output,
3) Results – something new is made and offered to customers.

Each of these phases has its own rules:

Input
Input consists of all the data, information, feedback, reports from the customers, partners, internal team, and all other sources. More is better, even though not all is relevant for the Design phase. Companies should not a priori censor the Input and should learn how to sort and understand the data and feedback.

Design
Big problem in companies is that all the resources are dedicated to whatever sells now and not to creating something new for tomorrow. If there is no time dedicated to processing the input and working on the results then it is impossible to compete in the future. Another aspect of Design phase is that decision making is often a black box. This is unavoidable because of the very nature of creativity.

Results
It is best to innovate with new products, but waiting for the big thing to happen will make the company less competitive in the meantime. Companies do not have to innovate only with products but also with business models, added software, added services, sales methods, distribution, content, etc. Thinking of a company as a product innovator makes it less competitive.

Since innovation is highly creative and hard to formalize, large parts of these phases depends on intuition. This means that formal approaches to improve innovation should not be operational but higher level tools supported by creative motivation and strategic direction.