Decision Making: 3 Factors That Influence Business Innovation

A few weeks ago I attended TEDx Sydney watching a talk from Tom Griffiths. In his contribution, he is addressing the concept of the explore/ exploit tradeoff. In short, the tradeoff appears whenever you make a decision between exploring new information and exploiting information already gathered. For instance, when planning your next holiday you have to make a decision. Either choose a destination you have visited before. You already know to an extent what awaits you and what you will get out of it. Or, you might try and travel to a new destination. In doing so, you are faced with uncertainty. It’s not clear yet how much you are going to enjoy this new place. At the same time, the still unknown gain of a new experience might outweigh the certainty of revisiting a familiar location. This concept of having to choose between the known and the unknown applies to a wide range of aspects in your life. And so it does to running a business.

Depending on various factors entities spend more or fewer resources on exploring new information. To develop new products and services in the hope of reaching new customers and generating incremental growth. Or exploit their current, proven, and successful offers. Some companies such as Kodak and Nokia have failed because their focus was heavy on exploiting what made them so successful in the first place. Most car manufacturers are still exploiting combustion engines while there is a demand for cleaner alternatives. Tech companies are investing huge sums to fuel innovation and new services. What is the right balance of exploring the new vs. exploiting the known? I suggest, there are three main factors determining the degree of exploration.

1. The level of maturity

A start up is more likely to explore than an established business. Reason being that an established business is operating of an existing model. It is easier to make this model more efficient. A startup needs to explore ways to turn their ideas into profit. If you go on holidays for the first time any destination will be new. You have to explore as you don’t have any existing experience to exploit.

2. The level of risk tolerance

Certain company cultures invite their employees to be creative, to take risks and seek new opportunities. Well aware that the majority of initiatives are bound to fail, they emphasise the desire to progress through exploration. Other businesses might be more risk averse with a culture that champions process and standardisation. These traditional entities are more likely to exploit existing knowledge and expertise. Like the mindset of travellers. Some are more adventurous looking for unique thrills. While others prefer the comfort, safety and convenience of the known.

3. The external environment

Sometimes exploiting is not an option any longer. Evolving customer needs, a change in legislation or a new technology. All might force a company to shift their focus towards more exploration. If your favourite holiday destination is no longer accessible or your favourite hotel is fully booked you have no choice but to explore alternatives.

When it comes to the point of the right balance between exploiting vs. exploring each business will have a different answer. In the end, it all comes down to the simple challenge of delivering against your objectives. This might be achieved by developing new solutions or capitalizing on what’s existent. Sometimes it’s more effective strengthening what already works. Ask yourself, how many resources does your company invest in exploring? How much profit/ sales stem from recent launches and new activity? Is it worth the effort? What’s your view?

How To Come Up With A Business Idea

Everything starts with an idea. The great businesses of today were at some point nothing else than a vague idea. This article summarises a number of concepts and ideas that can help you to generate a new business idea. 

What is a business idea?

A successful business requires nothing more than a few basic ingredients. It usually starts with a problem. A problem could be anything people are struggling with. Anything that is not ideal or not being run the way it should be, causing loss of time, energy and/ or money. The problem needs to be real. It can not be made up only to serve your idea. A real problem is crucial to define if there will be demand for your service/ product.

Problem + Solution + Availability/ Payment = Business Idea

In the essence, an idea is nothing more than a solution that addresses a real problem. The solution usually takes the form of a service or product that people are a) interested in and b) willing to pay for. Creating and activating your solution will of course take time. There are many steps between coming up with a business idea and actually running a successful business. Ideally, the idea would thus relate to a skill or passion, something you especially like or are particularly good at. Something that keeps you motivated. Lastly, there needs to be a way to make the solution available to your future customers. And to get paid in exchange for the product/ service you have developed.

Inspiration is all around you. A couple of tips how to generate good business ideas

The good news is you don’t need to be very creative to come up with a business idea. Anyone can come up with an idea and write their own success story. The tips in this section should help to get inspiration. As a general rule, ideas flow easier when you are relaxed. Probably, you have come up with great ideas in the past while least expecting it. If you struggle to find ideas try to relax and take a step back. Great ideas are abundant. Be present in the moment, inspiration is all around you. Start thinking about what is going on around you. The world is changing every day. With change comes opportunity in the shape of new inefficiencies, needs and problems. Problems that you may be able to solve.

To help you brainstorm think about the following:

Everyday Problem… Solved. In the end, any good business idea is nothing else than something that solves a problem. Think about what frustrates you on a day-to-day basis. Where do you struggle? What does not seem right? Chances are you are not the only one who feels this way. Try to think about ways to improve the situation or solve the problem.

Explore Something New. The combination of your upbringing, jobs, hobbies and interests all result in a unique skill set. Think about new ways to use these skills. What do you enjoy doing? How can you combine your skills to create a new offer/ product? If your idea is to build on something you especially like you will be more invested in the business.

One More Thing. Technology is changing the face of the world. New products are launched every day. Think about what might become the next big thing. What gadgets are trending right now? Is there some technology that impressed you recently? Is there an opportunity to create offers around these gadgets/ technologies?

Same Same. Existing products can be a great source of inspiration. Innovation is not equally spread. Some industries will see major change every couple of years. Others might not see changes in decades. Think about products or services that have remained the same for many years. How could change look like? Is there anything missing? What could improve the current core product/ offer?

Cheaper. It does not always have to be something new. The price of a product/ service is usually derived from the cost to produce/ create the offer plus a markup/ profit. Think about more cost-effective ways to create the same offer. How and where could you save cost? Are there better ways to create the same offer?

1 + 1 = Success. Combining two or more existing offers have led to some successful business ideas. Think about what products/ services would work well together. What products/ services complement each other? How could you add value by combing these products/ services? To be successful the new offer has to have a benefit outweighing the existing offers.

Think Small. Established companies will usually compete for the biggest or most profitable part of the pie. New products are specifically created for their defined consumer target groups. Think about people who do not yet enjoy certain products. Do you know people who would pay a lot of money for a product not available to them? Is there a way to tweak/ further develop an existing offer to make it accessible to a new group of consumers? Try to think about ways to cater for the need of profitable consumer segments not yet served by established companies.

Ask. Listen. Talk. Ever wondered what other people are struggling with? Being present can be a great source of inspiration. If you are interested in tennis racquets, for example, it might be a great idea to spend some time in a sporting goods store. Just observe, listen to shoppers and take note of the challenges they face. Ask them what they are missing in existing offers. What frustrates them? What are the most common complaints they express? You can also read reviews and blogs to get a better idea of problems surrounding existing offers/ services.

Above is just some food for thought. In the end, only you can come up with the right idea. So, grab a paper and pen and start writing. What are the first ten ideas that come to your mind?

3 Trends Towards Plain Packaging & What To Focus On Now

Look around. Consumer packaging looks good. It is the promise of reward. And the expected benefit is often bigger than reality. Now imagine change. Uniform packaging. Your favourite products all packaged in plain, white, standardised boxes. A plain packaging world. What are the trends that might take us there? And how to best prepare now?

For many years, packaging design has played a major role in the marketing mix. It is a powerful component in reaching your marketing objectives. Impacting many facets from building your brand to almost every stage of the shopper funnel.

Apart from obvious functional benefits, packaging is the key carrier of your brand’s logo. Few things serve better in anchoring a brand’s identity than a logo. It is a well-known, easy to remember representation of what your brand is about. And it lives on packaging. Hence, packaging has been key in establishing brands in the eyes of consumers. It is often the first thing consumers see. And it can make the difference between a sale or missed opportunity.

From guiding consumers through the funnel to building loyalty, packaging, if done right:

  • draws attention through eye-catching design
  • displays your product and benefit in the best light
  • conveys a sense of worth and price positioning
  • communicates promotional information
  • differentiates your brand from the competition
  • helps consumers remember your brand
  • represents your brand’s personality and values
  • forms part of consumer’s experience with your brand

In a way, packaging has been the eyes of the consumer. Yet, there are signs that this might change soon. There are trends that lead to a world with less branded packaging. Online and mobile are transforming the essential role of packaging. The growing desire for sustainability disapproves current packaging solutions. And the evolution of regulation might further prescribe how products are presented in the future.

Trend 1) From leading actor to sidekick; the new role of packaging in an online world

If packaging were an actor, the shelves of the grocery channel would be the big stage. This stage is shrinking. And with it the importance of branded packaging. Consumers are more and more shopping online. It is a journey of different paces. Consumers are more likely to buy their headphones online than their honey, eggs or cereal. But, sooner or later online will draw sales from all categories. And online channels transform the role of packaging. It becomes a functional consideration. A support of the experience. The focus moves away from the outside to the inside. In a journey from seduction to core benefit. In the past persuading and enticing consumers to buy a product used to be a role of packaging. In an online world, the consumer has evolved. With the combined knowledge of the Internet at hand, the shopper is in control. Peer reviews, social marketing, online research – all influencing the sale. Often buyers only engage with packaging after the sale. How effective is a well designed, ‘buy me’ box if a consumer only discovers it in the mailbox? Pre-boxed in a second box for shipping. Every layer of packaging adding to a product’s cost and decreasing its margin. Standardised, plain packaging, optimised for an online world reduces total cost of material and costly design features. It frees up investment locked into creative resources. And makes it easier and cheaper to ship goods through the mail. In the end, it is also less wasteful which brings us to the next trend working against branded packaging.

Trend 2) What a waste! Packaging vs. increasing landfills and conscious consumption

Society is more aware of its impact on the environment. In an attempt to minimise their footprint consumers seek accountable brands. Brands showing that they are eco-friendly, transparent and responsible. Your common, non-recyclable packaging does not meet this description. Instead of triggering a sale it might prevent one if it is associated with wastefulness. Consumers might start to reject overtly branded packaging altogether. Shoppers have already started to bring their own recyclable shopping bags. When will they start bringing their own reusable containers, nets and bottles? To fill them with products of their choosing. This idea might seem far-fetched, yet there are examples. A supermarket in Germany (Orginal Unverpackt) is already trialling unbranded packaging. Eco-awareness and minimum waste concepts are about to stay. Going green does not agree with today’s consumer packaging. Apart from sustainability, increasing regulation might be a third change factor for packaging.

Trend 3) An increasing desire for labelling and regulation leaving little room for branding

The amount of regulation and labelling is set to further increase in the future. Consumers have a desire to know as much as possible about the products they buy. They want transparency to help them choose what is best for them. This desire finds its way on packaging through labelling in various forms: Expiry dates, ingredients, nutrition information, advisory messages, country of origin, and much more. All helping to protect the public from risks associated with the use of products. Obesity, alcoholism, diabetes amongst others are all health risks. Governments have a vested interest in minimising these risks. Regulators will continue to do their best in informing and protecting consumers. This will restrict the branded space of packaging. What if regulation reaches a point where branding becomes a secondary aspect of packaging? Or disappears completely? All to help consumers to make more informed choices. Consumer packaging of the future must balance these needs.

What to focus on now

Change is in the air. How consumers shop, their expectations and needs are evolving. Marketers will adjust their strategies. Some quicker, some slower. The future might not be as vivid as most of today’s packaging. Thus, how can you prepare? What to focus on now to meet your marketing objectives and keep your brand alive?

As a consequence of the evolving marketing landscape, there will be many ways to respond. For a start, a renewed product focus and a differentiated approach to communication.

Even if the packaging is how you got consumers to buy your brand in first place, the product is what makes them come back.

Focus on the product – this is your competitive advantage and will stay it. Don’t get distracted by fancy looks. Even if the packaging is how you got consumers to buy your brand in first place, the product is what makes them come back. More importantly today, with fully informed consumers, brands continue to become transparent. And they are under constant comparison and review. As a result of this, your core product and its ratings will make the difference. Your product defines the value you provide to consumers. How is it different and better than the competition? What is your unique benefit, solution and selling point? This is the competitive advantage that you want to focus on. Exploit and emphasise it when promoting your product. Consequently, this will generate consumer loyalty and sustainable growth. Also, be ready to invest in the product. Today’s competitive advantage might fade over time. Know your consumers and constantly measure your success in meeting their needs. Track their perception of your brand and your product’s performance. Use research to understand your shoppers and how latest trends are affecting them. This will enable you to identify opportunities, new problems worth solving and investments in the right product. By continuing to provide value, you are set up for a loyal consumer base.

Use content marketing to tell stories about your uniqueness which are worth sharing.

Once you are clear on the unique value you bring to consumers put it in writing and communicate it. Consumers are better informed and have more choice than ever. Take advantage of this. Use content marketing to tell stories about your uniqueness which are worth sharing. Generate content to grab their attention and convince them to try your brand. Focus on value, quality and relevancy. Create content that consumers want to share with their friends and social circles. Based on your brand truths. Consumers appreciate authenticity. Don’t just create messages, make your content interesting through storytelling. Use online to make content interactive and personalised to keep your consumer engaged. Track their interactions with your content to gain more insights on what they value and what problems they face. To return to the subject of product development, continue providing value. Instead of the traditional funnel with ever smaller conversions, consider an expanding funnel. Use the right content to convince one consumer and benefit from ripple effects through social networks. A good start to find out more about strategic content marketing is this collection of articles on Medium.

To sum up, the landscape for traditional packaging is set to change. Above are just a few thoughts on how you can respond. There is lots to do. But in the meantime, here are two actions you can take right away:

  1. Get crystal clear on the comp advantage of your product
  2. Start sharing your unique story with consumers