Here’s one highly certain trend: The U.S. consumer is unlikely to return to the level of spending before the recession. Blame it on the baby boomer generation, now realizing we must engage in a mad savings dash to make sure there’s enough money for retirement. With flatter consumption trends, US business investment absent an export surge will also grow more slowly.
If you can’t ride an improving economy to success, what might guide your firm’s strategy to regain revenue and growth potential? Business investment and consumer spending priorities remain so uncertain, how can a leadership team define true north?
Where Is Certainty?
Here’s what is certain: Focus business model innovations on unresolved problems and you’ll secure attractive growth.
For example:
- Food safety
- Affordable heath care
- Quality of life as we age
- A lack of time to balance family and work
- Environmental degradation
- Business’ need to differentiate in a growing sea of commodity offerings — otherwise the business cannot retain jobs or create new jobs
- Job creation in inner cities
- Learning English quickly
- Traffic delays
- Cost of college education for most families versus falling returns to a four year degree, especially for white males
- Affordable shoes that last
- Obesity
Take one minute and add to this list – it’s not hard. The problems are all around us.
Why are “big” problems such an attractive target?
Our entire US economy was built on solving complex, high-impact problems, from transportation to mass production to energy to education. Somewhere along the way US consumers moved up Maslow’s hierarchy of needs but as we did so, the companies that serve us kept adding more choices in existing categories at lower and lower prices. Curtains that families once saved for are now replaced on a whim. Styles change and last year’s wardrobes show up at Goodwill. Our teenage daughters spend their time eating out.
Yes there are real innovations – drugs that save lives, technology that has made our world smaller, photographic memories that are so much easier and cheaper to create. But if we took all new consumer products in US markets over the last 10 years and put those that truly improved lives on one side and all others on the other side, the piles would look even more out of balance than David and Goliath standing side by side.
Is it any wonder then that most new consumer products fail to meet their ROI objectives? It’s not just because of rapid copycat competition. The payback on new products has also fallen because most new products stem from “So what? Who cares?” problems.
To succeed as companies and as an economy in the decades ahead we must as leaders begin to identify the important, tangible problems that need solving and direct our efforts at solving them. And the best way to do this is to reduce the number of internal meetings and get out of our offices.
- Talk to customers about what keeps them from being more successful/joyful in their business/life and what works well in their life;
- Read more broadly;
- Travel to a new place where things don’t work exactly as they do in your own country; and
- Talk to people at least two or three degrees removed your day-to-day customers.
Solve a real problem and you’ll attract an attractive stream of consumer or business spending. Can your firm’s core competencies or relationships be deployed to address any of the pressing problems facing consumers or businesses? Look at the adjacencies to your current market positions. What vital problems are lurking there?
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The Uncertainty Paradox
To discover more certainties in an increasingly uncertain world, be sure to read two other bloggers tackling the Uncertainty Paradox –
Bill Welter’s Adaptive Strategies blog
Fred Schlegel’s Marketing Inspiration blog
Kay Plantes Business Model Innovations blog – Thank you for visiting
We hope you will share your ideas and observations.
Hi Kay, This is really great advice. In my experience, a small problem often is a big problem! Example: one way our industrial sales team differentiated itself was by touting the fact that we returned phone calls and emails quickly. This was indeed a big deal to purchasing agents and plant managers who were hustling to clear stacks of projects every day. If you can rid customers of a hundred small headaches a week, they will love you. Strangely,if you solve an immense problem for them, they sometimes forget it. Could that be because customers begin to see sweeping improvements as a new standard? I mean, when’s the last time anybody thanked their lucky stars for power steering or automatic car windows? Lots to think about …
Brad,
Your comments remind me of two principles:
First: Everyone copies a great idea. The first company to do power steering did win big, but then it became a requirement to compete, and no longer a differentiating attribute. Thus, companies must keep pushing the bar to compete beyond price.
Second: Create hard-to-copy benefits. Your company’s culture of fast-response was likely hard to copy by large, more bureaucratic competitors. The reason why I want companies to focus on business model innovation is that it leads companies to identify and build hard-to-copy company-wide advantages and therefore hard-to-copy benefits or cost advantages that attract and retain customers to the company’s entire offering.
I love this advice Kay. Changing from a because we can to a because it’s needed mindset can be a very powerful way to drive innovation in an organization. Often the easiest improvements get fast tracked simply ‘because.’ But that takes attention and focus away from the bigger possibilities.
And as Brad says, small problems can lead to the biggest solutions. When Apple entered the iPod market they figured out what people needed most was a way to organize their music digitally. iTunes was the big idea even though all the profit is in the iPod hardware. If they hadn’t been looking at the problem (organization) then they might have just put a nice little toy on the market to add to the wide variety of mp3 players that were already around.
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