When innovation is hidden in plain sight

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by: Dominic Basulto

Sanjay Dalal of the Creativity and Innovation Driving Business blog has posted an interesting Q&A with Erich Joachimsthaler, founder and CEO of Vivaldi Partners and the author of the new book Hidden in Plain Sight.

One of the more provocative points of Erich's book is that the "need-fulfillment paradigm" (i.e. find what products and services customers need, and then deliver them) may no longer be relevant as companies look to develop new growth strategies:

"American companies today live comfortably in the world of either the product perspective or the customer perspective… Both of the perspectives have one central tenet that underlies them. It is the need-fulfillment paradigm. Find a need and fill it. The problem is that this model is not only obsolete, it is generic and geriatric – time to retire it and send it to Florida. We are facing a dilemma in mammoth proportion in America. Companies need to learn and accept that we are in a world of product proliferation where we already have served nearly every need several times over, where there are over 50 varieties of bottled water, over 78 different Lay’s chip varieties, over 29 varieties of Pop Tarts and over 20 different milk types – no longer the company is in charge, but the customer.

You have to abandon the simplistic notion of the need-fulfillment paradigm. The complexities of today’s consumers can no longer be measured in terms of a set of attributes, product or brand attributes, that need to be fulfilled or exceeded and that ensures commercial success. You follow this paradigm and you are more likely competing based on features in commodity hell than building a profitable growth business. We have got to retire the outdated notions that the need-fulfillment paradigm serves any useful purpose today in the day and age where over 95 percent of all new products fail within the first year. You have also got to retire the basic notion that consumers can tell you what they want."

Joachimsthaler points to the examples of Apple, GE Healthcare, BMW, Proctor & Gamble, Starbucks and Netflix as truly innovative companies that have started to move away from this "need-based paradigm." In its place, Joachimsthaler is advocating something called the "demand-first innovation and growth" (DIG) paradigm. Ya DIG?

ASIDE: While you're on Sanjay's site, you might want to check out The Innovation Index that he has constructed.

Original post: http://endlessinnovation.typepad.com/endless_innovation/2007/05/when_innovation.html