Innovation has always been crucial to the success of any business looking to stay competitive in today’s rapidly changing economy. However, recent years have seen a number of fundamental shifts in consumer behavior and market dynamics, making growth in the new economy much more challenging. These shifts are forcing businesses to rethink their innovation strategies and adapt to new realities. Whether you are a start-up or an established business, understanding these changes is essential for staying ahead of the curve and achieving long-term success.
The first change: Funding
There is less funding available to support pre-profit activities and investors are increasingly focused on companies that can quickly turn a profit. This means that companies need to demonstrate a clear path to profitability and show that they can scale up quickly.
The second change: Buying budgets
Customers are more risk-averse and budgets are tighter, so choosing something new and unfamiliar is considered a risk. In his book, Crossing the Chasm, Geoffrey Moore argues that scale-ups require a shift in the perception of their innovation from “new and high risk” to “familiar, sexy and desirable.” This means that the innovative product or service needs to shift from high-risk to desirable in the mind of the customer—and quickly.
So, what does “new” mean to customers?
In theory, innovation and “newness” are great. However, new is a major challenge when people are more risk-averse. New technology generates attention-grabbing headlines. The majority of people are interested in a product—until they’re asked to pay for it. Most people aren’t fans of taking a punt, and they want predictable outcomes in return for their money. Getting to grips with new things usually means more effort, which is why people like others to go first, to wash out imperfections before they dive in.
To overcome these challenges, companies need to focus on making their innovation familiar and desirable to customers.
Using marketing and branding strategies that emphasize the benefits of the innovation and explain how it solves a problem or meets a need can help to reduce the perception of risk and increase the perception of value.
One example of a marketing and branding strategy that emphasizes the benefits of an innovation is Apple’s marketing of the iPhone’s Face ID feature. Apple has positioned Face ID as a secure and convenient way for users to unlock their phones and make purchases. The company’s advertising emphasizes the benefits of Face ID, such as the ease of use and improved security over traditional passcode authentication.
By emphasizing the benefits of Face ID, Apple has effectively differentiated its product from competitors and created a strong brand association with security and convenience. This has helped the iPhone maintain its position as a market leader in the smartphone industry.
Another way to make innovation desirable is by creating a community around it. This can be done through social media, online forums, or events. By creating a community, companies can build a network of loyal customers who are passionate about the innovation and are willing to spread the word to others. This can help to generate buzz and increase demand for the innovation.
Gymshark are a great example of a brand building a community at the moment. They’ve become one of the fastest-growing fitness apparel brands in the world, with six million social followers just on Instagram. Gymshark uses its Gymshark Central blog as a sort of hub, making it effortless for both new and returning customers to engage with the community.
Finally, companies can also focus on creating partnerships and collaborations with other companies and organizations. By working together, companies can leverage each other’s strengths and resources to create a more compelling offering. This can help to reduce the perception of risk and increase the perception of value for customers.
We can go back to Apple as an example here. The company’s partnership with MasterCard to create Apple Pay worked hard to add true practical value for customers.
The newness of an innovation can be both a blessing and a curse. While it can generate attention and excitement, it can also make customers hesitant to adopt it due to the perception of risk. To overcome this challenge, companies need to focus on making their innovation familiar, sexy and desirable to customers.
By doing so, companies can turn their newness into a competitive advantage and drive growth in the new economy.