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Of Innovation : Monitoring company's survival

Tuesday, 17 July 2007

Almost every month we can see a new product is launched to the market. Customers have more choices through many kind of products flow to the market. Each company launch their new product where it is a result of innovation of each company. Innovation perhaps the main factors to make existence of the companies, keep their loyal customers or expand their potential buyers.

Good companies should care of innovations and usually have R&D division where innovation will come from. Innovation itself is not an easy effort and sometime it took a time or even wasting time process. Many people believe that innovations will costly, spend a lot of money. But the real question is that wheter should it cost million dollars? Should it costly?. Not really! Sometimes it does need a big budget but sometimes it doesn’t have to. It’s only matter of different point of views.

Technologically innovation based, perhaps cost a lot of budget. Some technology leaders,usually big companies like IBM, Samsung, Sony, Nokia, Novartis spends million dollars in order to have stayed at the cutting edge of dynamics industries. They boost R&D labs with full facilities at the best universities in the world. Those big companies headquarters is countries with myriad institutions that support innovations, liquid financial markets, venture capitalist to fund big bets on technology, research universities with many PhD, and clear legal frameworks that protects intellectual property.

In developing countries, usually lack of this advantages. But, does it mean that there will be no innovation in such developing countries? Surely not. Innovation in developing countries face serious challenge including political stability,volatile exchange rates, underdevelop physical infrastructure. Some condition in developing countries in fact have characteristics of :

- lack of solid technology and world class research universities

- customers with low disposable incomes, low GDP

- low budget for innovation

Then how to innovate in such conditions like that? Innovate from other of their business structure would be the answer. It means that they can innovate from other perspective such as from manufacturing, logistics, marketing, and customer services. A distinct approach of innovation where we can strategically exploit and deep knowledge of customers mindset, innovate “around” technology (rather than through technology)

Some companies from developing countries have proved that they can do it. Innovation comes from two varieties that are technology push and customers pull. Technology push means that innovation by giving new products based on cutting edge research while customer pull based means that we have to finds ways to solve customers needed without relying on novel science.

China’s company named Haier discovered new innovation by visiting their rural customers where they have to used washing machines not only to wash clothes but also for cleaning vegetables. With some modification of their washing machines, Haier can produce washing machine which can be used both for clothes and vegetables. As a result, Haier become the market leader in China rural areas.

CEMEX ( Cementos Mexicanos), the mexican cement giant company solve the challenge of delivering ready-mix concrete where contractors in Mexico usually change their orders at the last minutes. CEMEX look deeper towards this problems and found that it took 3 hours between the time when a change order was received and when the order could be delivered. Decreasing turnaround time will be the solutions for the problem. Therefore, CEMEX equipped most of it’s concrete mixing trucks with GPS locator, making easier arrangement to deliver customers orders within only 20 minutes.

Natura, a leading Brazillian cosmetics company focused on serving distinctive needs of multi ethnics brazillian populations. Realizing that Natura will not be able to compete directly with Multinational companies for technology-based innovation, they search for something else by knowing whats the customers mindsets. While big companies like Lancome launch 3 differents product for wrinkles solutions for women over thirty, Natura simplified it by produces Chronos, single products for the same purpose. Natura itself has 200.000 direct sales consultants where they can easily get customers feedback so that company can gain insight of their customers.

Another Natura’s daring ideas was it’s mother-baby products line which launched in 1993. research showed that Johnson&Johnson has 90% share of this martkets and had an unassainable lock in this market. Natura decide to enter this market by linking their mother-baby products with popular technique of Brazillian for strenghtening bonds between mother and their infants which called Santala. Brazillian can forge stronger relationship with their mother and their infants by gently massaging them during bathing while applying Natura’s creams and lotion. Natura’s mother-baby product line provides instructions a Santala massage and outlines it’s benefits.

Based on example above, it is obviously clear that companies anywhere in the world can do the same to win competition through innovation and creativities. Knowing the customers mindset is the key for innovations.


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