One of the great brands we have all grown up with is LEGO.
In the 1990s, its patents began to expire, so the company reacted by “doubling the number of unique bricks to more than 12,000 and moved into new areas such as computer games, children’s clothing and theme parks.”
This was the good news, according to professors Martin Mocker and Jeanne Ross, who wrote about the transformation in a Harvard Business Review article titled “The problem with product proliferation.”
The bad news is excessive innovation created issues for retailers and their distribution companies. Inventories were flooded with unique bricks. Employees couldn’t navigate shortages from one country to another.
Eventually, LEGO found itself on the brink of bankruptcy.
LEGO addressed the complexity by initiating a major business transformation starting in 2004. During this transformation, it reduced the number of unique bricks to make the LEGO experience easier for customers and employees. That move paid off in profitability and growth.
There’s an old saying: “Once you discover a hammer, everything looks like a nail.”
Our companies in Wisconsin face similar issues every day.
Teuteberg Inc., an innovative marketing services company, started modestly in the manufacturing of business forms, before the dawn of the Internet. As the Internet rose to prominence, the business pivoted when necessary and now provides digital and direct marketing services.
Instead of trying to be all things to all people, it chose to focus on new and innovative products and services from which its existing customers could benefit. Given its niche in direct marketing, Teuteberg could support companies interested in reaching their target audiences.
And to make its services even simpler, it now leverages data that empowers campaigns with business analytics. With the power of business analytics, Teuteberg is then able to consistently track and evaluate the results of direct mail and digital marketing campaigns, which it can adjust based on the data gathered.
This benefited the company by not only retaining and growing existing customers, but also adding many new customers to its portfolio. The result of a sound innovation.
The professors of the Harvard Business Review study recommend three guidelines to avoid the dark side of innovation.
- Begin with focusing on vision. The vision is the brand promise of the organization; why does it exist? Whatever that goal or vision, maybe it needs to be clearly understood by every employee and customer who purchases the product or service. Apple Inc. comes to mind. It is a company that offers world-class design and functionality. All product innovations have to be viewed through the lens of whether it delivers on that vision.
- Focus on integration and not variety. By this they mean: focus on making the customer and employee experiences easier to understand and reinforce existing products or services. Cross-selling and bundling are obvious options.
The best approach would be to offer services that help customers solve their problems. The average website has a help desk, but how helpful is it, really?
Create cross-functional teams that bring a perspective of employees from different departments of the company; include especially those in customer service. Everyone gets excited about creative enhancements of products or services; but how is the customer’s experience made less complex and easier to navigate?
- Selecting the correct criteria. This is where the tire meets the road. You need to be able to list in order of importance the criteria any new product or innovation must meet. Criteria could include how hard it is for employees to solve customer problems. Does it make the customer experience more or less complex? What is the time to market and the cost of the innovation? This will help create a comparative measure of various products before you decide what to introduce.
Innovation is exciting, but it has to be disciplined innovation if your company wants to increase revenues and bottom-line profits. You now know the drill; use it!