Many companies now rely on innovation as their primary pathway to growth. But growth through innovation can only happen when your market ‘gets’ what you are doing, and when it makes commercial sense for them to buy it.
This year, KPMG interviewed thirteen hundred Chief Executive Officers, many in Australia, and discovered that 91% were confident about their company’s growth prospects over the next three years.
More than half of these CEOs (55%) said they are investing heavily in innovation –developing new products, services and ways of doing business – while 43% said they were also pursuing an ‘innovation-led business transformation model’ as a route to growth.
This is great news for business confidence and investment. But realistically, where is all this growth actually going to come from?
In my work as a business development consultant, I’ve noticed that companies tend to view innovation as the solution to two major problems; disruption and commoditisation.
Both of these problems actually originate outside the business. Disruption is driven by competitors, and commoditisation is driven by customers.
However, innovation is only part of the solution.
Based on KPMG’s analysis, most businesses will fall into two main camps – those that are investing heavily in innovation, and those that aren’t.
1. Businesses that are investing heavily in innovation are exciting to be part of. They’ve got new products and services, and will talk about them all day long if we let them.
The problem for these kinds of businesses is getting their customers to listen, and to understand, and to buy at a rate and margin that justifies the considerable investment they are making.
2. Businesses that aren’t investing quite so heavily in innovation tend to have the opposite problem. They have been talking about what they do in the same way for so long that their customers don’t really value it any more, and are constantly demanding cheaper and cheaper prices.
The problem for these kinds of businesses is how to get customers to stop making unfair and unsustainable price comparisons, and to appreciate the commercial value that their products and services actually deliver.
Which camp would you say your business falls into? The first or the second?
Either way, even if you don’t have an innovation problem, you most likely have a communication problem.
That’s because business development success is a case of ready, aim and fire.
Most of us spend all our time in the ‘aim and fire’ part, targeting customers, and firing off pitches and proposals.
What we don’t invest enough time in is readiness; making the connection between what we know and do, and what makes commercial sense for customers to buy.
As a result, we end up woefully unprepared to communicate and hold our ground with demanding customers, including professional buyers.
Every organisation can benefit from regularly revisiting its commercial value proposition, making sure that their customers not only ‘get’ what they do, but actually want to buy it.