I just got back from a meeting my largest client held for its top brass.
Although my role is to provide ideas, I take as many notes as the next guy. One good idea from anyone can mean millions in profits.
I’ll be sharing some great business-building ideas with you in the coming weeks. Today, I want to begin with the one on top of my list: the importance of innovating.
As I pointed out in Ready, Fire, Aim, no matter what size your business is, there are only two ways to keep it growing.
(1) Increase revenues with sustaining innovations — by continually improving the products you are currently producing.
(2) Use disruptive innovations to create a new market, expand an existing one, or move into a different price category.
Sustaining innovations are perhaps the easiest to produce, because their need is apparent. (A microprocessor that enables computers to operate faster, for example, or a laptop battery that lasts longer.) Plus, the technology comes from existing research.
Apple does a fine job of sustaining innovations. That is one reason its customers are so cult-like in their loyalty.
But Apple made its greatest recent stride with the iPhone — a disruptive innovation. Disruptive in that it provides much more than cellphone users have been used to at a comparatively miniscule price. It is already eating up huge bites of the market. And when Apple’s contract with AT&T expires next year, sales will soar.
Improving your products incrementally will keep them fresh in the minds of your customers. That will mean continued renewals and back-end sales. But if you can introduce new products to the market — then you have the opportunity to double or triple your revenues in a matter of months.
Initially, disruptive innovations perform poorly compared with established products. But because they are often cheaper, simpler, and more convenient, they can create new markets.
When the transistor radio came out in the 1950s, it had very poor fidelity. It couldn’t, therefore, compete with the market for stereo systems: adults. But its portability and low price made it enormously popular with teenagers.
You want sustaining innovation so you can hold on to your existing customers. And you want disruptive innovation so you can expand and eventually dominate your market. Every smart businessperson wants both.
At ETR, we are constantly looking for ways to make our newsletters and information products more useful. We want our customers to get used to things getting better. We hope this will separate us from the competition. And, of course, we hope we’ll be rewarded for our efforts with more customer spending.
We also understand the importance of developing new products. In fact, we are committed to creating at least one brand-new product every three months.
For your business to succeed, you need two parallel processes: one that allows for sustained improvements, and another that gets you into different markets.
Both processes start in your head.
For one thing, you must recognize that coming up with incremental improvements is entirely different from creating something radically new.
You may need two sets of people and procedures to do both well.
If you run a new product idea through the regular channels, it will no longer be innovative by the time everyone has finished “polishing” it. It will be just another modification of what you are already doing.
Most senior executives I know claim they care about product improvement, but don’t walk their talk. When improvements are suggested, their first response is to worry about the costs — in terms of money, manpower, and time.
To create incremental improvement, you have to believe that it will pay off. Eventually. That’s a head thing.
And to create an environment where disruptive innovation flourishes, you must recognize that any sizable growth will come from ideas that are far afield. This, too, is difficult for most entrepreneurs. And with good reason. Their success is based on what has worked for them in the past. Not on moving into the unknown.
So your first step is an internal one: Make a commitment to innovation, both sustained and disruptive.
Your next step is a matter of communication. You must persuade your key people to believe in both types of innovation. You must give them a vision and inspire them to achieve it.
Your third step is one of implementation. You need two separate systems. Incremental improvements can be done with your core team. But the radical ideas — those will probably have to be developed on the side. (I like to bring in copywriters and marketers from other industries to brainstorm disruptive innovations.)
Ultimately, whether or not you keep the two processes separate doesn’t matter. What matters is that you become a business of “making things new,” as Ezra Pound once said.
Your customers — like all customers — are always on the lookout for new and better. If you don’t provide it for them, your competitors will.
P.S. If you are free this November, I’d like to invite you to ETR’s Info-Marketing Bootcamp at the beautiful Marriott hotel in my hometown, Delray Beach. You will get dozens of proven business-building strategies and sales-boosting techniques from a group of the world’s leading Internet marketing and business-building experts, including me.[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]