Monday, November 13, 2006

Innovation: Eliminate a Customer Sacrifice

Most companies innovate to meet a customer need, a 'perceived' customer need, or sometimes they just innovate in hopes of creating a need. Many times they miss the mark. Recently, in an interview with Innovation expert Charles Thompson, on Gordon Whyte's blog Thompson says:

Most people think innovation is about meeting a customer need. I believe innovation is about eliminating a customer sacrifice.

For example, let’s look at health care in America. The number one customer sacrifice is waiting — waiting to get appointments, waiting in the lobby. Along comes a company called The Minute Clinic, which was recently bought by CVS Pharmacies. Their slogan is “You’re sick – We’re quick.” No appointment necessary. Walk into the clinic, housed conveniently at the CVS drugstore, and within 15 minutes you’ll see a nurse-practitioner. This is breaking the mold of the traditional healthcare model. How? By eliminating a customer sacrifice....

Businesses need to identify customer sacrifices and then overcome them. If they do that, they end up exceeded expectations. A good thing.

The paragraph above on health care reminded me of another great article entitled 'The Innovation Sandbox' in the Autumn 06 Strategy+ Business that talked about the concept of cultivating constraints. The article elaborates on developing breakthrough innovations in countries such as India, that starts with the identification of the following conditions:

  • The innovation must result in a product or service of world-class quality.
  • The innovation must achieve a significant price reduction — at least 90 percent off the cost of a comparable product or service in the West.
  • The innovation must be scalable: It must be able to be produced, marketed, and used in many locales and circumstances.
  • The innovation must be affordable at the bottom of the economic pyramid, reaching people with the lowest levels of income in any given society.

This 'constraint based thinking' is studied with two breakthrough innovations in the health care industry of India. One, for example was the production of a rubber prosthetic called the 'Jaipur Foot' costing the customer $30 compared to $8000 - $10,000 of most western made prosthetics. This is a great article on innovative thinking. I think some of these principals could be applied equally well to the health care industry in the west. This industry is ripe for overhaul by disruptive business models such as the ones described here.

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