The Seven Core Principles of
Value-Driven Innovation
Paths to Performance Excellence
Innovation is both process and result. More than that, innovation is a mindset... a culture... a way of seeing and doing business. Innovation in itself has little value until customers and other stakeholders are satisfied to the point of being loyal. That is, innovation sets its sights very high, looking beyond satisfaction to durable relationships.
Two core axioms set context.
·
No one ever buys a product.
They always buy
what they think the product will do for them.1
You know by instinct that this is true, yet in the rush to market, you might forget. No one ever buys a compass. They buy a sense of direction. Not a drill bit, but round holes. Not loudspeakers, but sound. Not mousetraps but fewer mice.
We don't buy products, we buy the value of products. We buy the sum of benefits that products deliver. The same is true everywhere in business. No one ever invests in a new venture. They invest in returns on investment. Not funding for a project, but potential competitive advantage. Not work done, but progress made.
Value exchanges enable relationships with customers. Product-for-payment enables trust and opportunities, over and over.
·
We have no inherent value
as suppliers of products and services.
We are all strategies.
From the customer perspective, we are sources of valuable products, not the value itself. Though they rarely use this language, customers see us as strategies – ways to get desired products. If they can find a distinctly better way (strategy) to meet their needs, they'll eventually use that alternative.
Only one aspect of business can overcome this "strategy constraint." Relationships. We can choose to see ourselves as servants that meet customer needs. We can put relationships first, developing precious loyalty that delivers returns far in excess of mere sales.
Seven formal principles then guide performance excellence.
·
Principle of Value
Consciously structure, lead, and manage
to consistently increase the win-win value
of relationships with customers
and other stakeholders.
The axioms and this principle say that our job is never to manage businesses or create products. It is always to develop and sustain durable win-win relationships. Products for payment define the classic win-win. Salary for performance is another. Investment for profits. Everywhere we look, we see win-win relationships as the core of durable success.
Of course, applying the Principle of Value requires consciously structuring, leading, and managing. The remaining six principles all implement the Principle of Value.
·
Principle of Focus
Make conscious, informed, proactive choices about
who we want to be,
where we want to go,
how we intend to get there, and
how we intend to behave.
"Who" is about identity. "Where" about goals and objectives. "How" about strategies. "Behavior" about culture. All are about leadership. To make those choices, we ask and answer lots of questions. We synthesize answers into powerful, durable, detailed, marketable visions at levels of businesses, business functions, projects, products, services, and even embryonic ideas. Visions, in turn, drive every aspect of business, especially performance.
Well done visions include value promises to stakeholders. Building loyalty requires making value promises very visible, then honoring them with performance over time. (That is branding.)
Visioning processes logically precede planning. Pre-Planning™ improves and accelerates planning by making decisions in advance with formal, proven, robust decision processes. Planning then drives performance. The better the vision, the better the performance.
·
Principal of Strategy
View every action as a strategy to achieve goals,
then carefully choose the best strategies.
Businesses need strategic direction. Goals are desired long term results that set durable directions for the business, lasting many years. Objectives are desired measurable near term results that typically change with each plan period.
Strategies are methods for reaching objectives. Once we see R&D, manufacturing, marketing, etc. as strategies, we realize that choosing strategies structures the business. Choice of marketing strategies then structures the marketing function, and so on. We balance choice of strategies against resource limitations, including time, expertise, facilities, funding, and investor support. Significant objectives require integration of a range of strategies.
Our most important objective is ever increasing loyalty from ever larger numbers of customers. Leaders and strategists put those relationships first. They start with goals and choose actions carefully. Tacticians may start with actions, spending resources on efforts that don't help reach goals.
·
Principle of Need Satisfaction
Conceive, develop, and deliver value to customers
better, faster, and more profitably
than any competition.
With business focus set, need satisfaction turns products and services into sources of relationships. Of course, features have no value in themselves. Features are strategies (or tactics) for delivering value to customers. Amazing features manufactured with ultimate quality have no value if they meet no needs.
Need satisfaction defines performance excellence in products. Getting there means knowing customers better than they know themselves. It means being able to conceive of products that customers will want, just as soon as they know such a thing is possible.
·
Principle of Perception Management
Manage everything done and said
to consistently reinforce
desired marketplace perceptions.
We can do perfect work in focus and need satisfaction, yet foul it all up with self-centered communications and weak messages. Remember, our job is to build relationships.
Every communication both conveys information and creates perceptions. Perceptions change with every new interaction. Our audiences (customers, media, analysts, etc.) can't stop developing opinions, approvals, biases, etc. Self-centered communications focus on us, our business, and our products. Customer-centered communications focus on audiences and their needs before introducing businesses, products, and features as solutions.
Customer loyalty is a relationship built on trust based on consistent performance and congruent agreement between what we say and how we behave. Communication excellence, then, requires proactive choice of desired perceptions so that our words match our actions.
Branding is the core of this process. Indeed, brand equity (our loyal relationships) is the only durable source of corporate wealth. Everything else changes. Only relationships can survive over time.
·
Principle of Leveraged Strengths
Discover and leverage
the full nature and power of
every key entity and process in our business.
People, teams, and processes of all sizes, in all functions, are strategies for performance. All can be focused on value, strategy, need satisfaction, and perception management.
Beyond that, we can discover strengths we may not have recognized. A product, for instance, can be completely described by its features, yet customers buy value, not features. We can also describe products in terms of capabilities (what one can do with it), benefits (the value of using it), and intangibles (the reputation and image it carries). Innovation focused only on features will miss ways to deliver value and persuade purchase.
Then there are underlying systems. The most obvious is win-win, product for payment. So long as both sides are satisfied, the system will continue. The business itself is a system that can be diagrammed to explicitly show internal loops for focus, need satisfaction, perception management, and ongoing change. Each of those loops contains elements (processes) that are systems. Systems theory is a rich source of tools for leveraging strengths for performance excellence.
Well designed Pre-Planning discovers the full range of potential strengths in entities and processes, thus enabling powerful advantage.
·
Principle of Change
The only way to stay in control of our business
is to proactively lead into change.
Change accelerates. Indeed, change will never, ever again be as slow as it is today. Concepts of value are changed by all sorts of market forces, not the least of which is new product introduction. (We didn't know we needed that, but now that it's here, could we have it in silver... and smaller... and ... and ...) Change in perceived value forces changes in everything else in business.
Change leadership needs knowledge of customers, our own performance, and the impact of market forces. Basic research, market research, design engineering, and knowledge management thus become strategies for leading into change. In turn, all of those contribute to re-visioning of organizations and their multiple levels of strategies.
Leaders hold responsibilities for helping the whole organization adapt to changing realities. For corporate cultures built around the Seven Principles, adapting to accelerating change is as natural as breathing.
Two corollaries increase the impact of the Seven Principles. Indeed, to honor the Principles, we must become innovators. These statements came out of a pair of market research studies done in industry and government.
Þ Corollary of Innovation:
Movement of knowledge
is as important to the success of new products and businesses
as is the development of knowledge.
Þ Corollary of Agents:
Change-agent skills
are as important to personal careers
as are professional discipline skills.
Innovation isn't an option. We cannot compete today without developing and moving relevant new knowledge toward customers and stakeholders better, faster, and at higher quality than any alternative.
Performance Excellence
To summarize, performance excellence is nothing less than consistent increase in the win-win value of relationships with customers and other stakeholders. To achieve performance excellence, we apply seven principles.
· Value: Relationships first
· Focus: Integrated vision. Leadership
· Strategy: Goals-driven operations. Leadership
· Need Satisfaction: Value-driven products. Leadership
· Perception Management: Audience-centered communications. Leadership, management
· Strengths: Powerful people, processes, and systems. Management
· Change: Ongoing business evolution. Leadership, management
Value-driven innovation is rare. Few businesses set their sights that high. The seven principles set a stage on which every player in the business understands value and how to leverage it.
The time for change is now, and it always will be.
1 Miller, Robert B. and Stephen E. Heiman, Conceptual Selling, Warner Books, 1987
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