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Published: November 3, 2010
 / Winter 2010 / Issue 61

 
 

The Global Innovation 1000: How the Top Innovators Keep Winning

Need Seekers

The distinct strategy of Need Seekers is to ascertain the needs and desires of consumers and then to develop products that address those needs and get them to market before the competition does. The capabilities required for success begin at the ideation stage, where Need Seekers pursue open innovation and directly generated, deep consumer and customer insights and analytics, as well as a detailed understanding of emerging technologies and trends, in order to identify both their customers’ needs and the technology trends that can help them meet those needs.

An example is Stanley Black & Decker Inc.’s DeWalt division, a maker of power tools for professional contractors. In its efforts to connect directly with customers even before it starts selecting which projects to develop, DeWalt regularly sends people out to construction sites to research builders’ needs and observe construction crews in action. One notable result of such efforts was the development of a 12-inch miter saw, which became one of the company’s bestsellers, after researchers watched carpenters struggle to cut large pieces of molding on the industry-standard 10-inch saw.

Need Seekers generally continue to remain connected to customers both during the project selection process, in which ongoing assessment of market potential is a key capability, and during product development, when it is critical for Need Seekers to engage with customers to prove the real-world feasibility of their products. At DeWalt, for instance, once prototypes of new products have been completed, engineers and marketers take them back to the same job sites where the research was originally done. They leave the new tools with the customers, and come back a week or so later to collect information on how the tools performed. That information feeds directly into the company’s iterative development process.

Given that Need Seekers frequently depend for their success on developing technically innovative products, a further key capability at the project selection stage involves technology risk assessment and management. At the Xerox Corporation, for example, Steve Hoover, vice president of R&D in charge of software development for the company’s products, notes the importance of risk management in assessing the potential business value of any project under development. “How big an opportunity are you going after here?” he asks. “What will drive its value? Where are the biggest technical risks? What might cause the project to fail? You’re looking for correlations. Where there’s risk, you have to put in the extra work to ensure you capture the potential value.”

At the commercialization stage, Need Seekers value pilot-user programs and global product launches as crucial for keeping in touch with customers even as they scale up their sales efforts to capture the maximum value of being first to market. Both DeWalt and dental equipment maker Dentsply rigorously assess the percentage of sales coming from new products. For Xerox, which sells its products around the world, managing the launch phase is a critical and highly complex endeavor, designed to accommodate the long lead times, logistics, and training needs involved in selling large and sophisticated machines in very diverse markets.

Market Readers

Market Readers, on the other hand, pursue their customers more cautiously, preferring to innovate incrementally and keeping a close eye on the innovations of competitors. Like Need Seekers, they must pay careful attention at the ideation stage to what customers are looking for in the products they choose — but in their case, the goal is to make sure they are delivering successfully differentiated alternatives. Market Readers also seek to track the technology trends that can help them create that differentiation.

Tim Yerdon is director of innovation and design at Visteon, a global auto parts manufacturer. But his real focus, he says, is “to look at market trends and translate those trends and needs into new products and services.” That’s why taking accurate readings of the marketplace at both the ideation and the project selection stages is a key capability for Visteon. A case in point is the company’s development of reconfigurable digital displays for cars. Until recently, not many in the auto industry anticipated that drivers would favor digital displays over traditional instrument clusters. Yet consumers were clearly happy with the flat-screen TVs they were buying for their homes. Says Yerdon: “We did the market research, we put all these data points together, and we could see where the trends were going.” In late 2009, Visteon successfully launched its first reconfigurable displays.

 
 
 
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Online Innovation Profiler

For a new assessment tool from Booz & Company, designed to help evaluate your company’s R&D strategy and the capabilities required, visit: www.booz.com/innovation-profiler.

Resources

  1. Barry Jaruzelski and Kevin Dehoff, “Profits Down, Spending Steady: The Global Innovation 1000,” s+b, Winter 2009: Last year’s study showed that most companies were sticking with their innovation programs in the early stages of the recession — and many were boosting spending to compete in the upturn.
  2. Barry Jaruzelski and Kevin Dehoff, “Beyond Borders: The Global Innovation 1000,” s+b, Winter 2008: This study revealed for the first time how R&D money is benefiting most parts of the world.
  3. Barry Jaruzelski and Kevin Dehoff, “The Customer Connection: The Global Innovation 1000,” s+b, Winter 2007: This study identified the three distinct innovation strategies: Need Seekers, Market Readers, and Technology Drivers.
  4. Barry Jaruzelski and Richard Holman, “Innovating through the Downturn: A Memo to the Chief Innovation Officer,” Booz & Company white paper, March 2009 (PDF): How companies can tailor their product and technology initiatives to new market realities and refocus their investments on their core R&D and innovation capabilities.
  5. Zia Kahn and Jon Katzenbach, “Are You Killing Enough Ideas?s+b, Autumn 2009: How companies can improve their innovation performance by getting their formal and informal organizations in sync.
  6. Alexander Kandybin, “Which Innovation Efforts Will Pay?MIT Sloan Management Review, October 1, 2009: How companies can use an incisive analytic tool to gauge their overall R&D effectiveness.
  7. Paul Leinwand and Cesare Mainardi, “The Coherence Premium,” Harvard Business Review, June 2010: The power of capabilities-driven strategy.
  8. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/innovation.
 
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