This guest column is by Anjali Chopra, Business Analyst, GreyB Research
The success of an organization depends on multiple factors. While strategy, human resources and company culture form the key factors for the success of an organization, there are other important factors that are needed to take the organization’s success to the next level.
Success doesn’t imply simply gaining monetary benefits but adding value to the business which would benefit both the organization and its consumer base. And how could one add value to its business without innovating. And how could those innovations help the consumer base if they aren’t aware of the innovations. That’s where marketing comes to the picture.
To quote Peter Drucker, “There are only two things in business that make money- Innovation and marketing. Everything else is cost.”
Though true, but it should also be noted that Innovation without protection is simply philanthropy. Protection is important to safeguard the investment made in innovation and marketing such that the value added could prove beneficial to the organization by retaining profits.
The three factors Innovation, Protection and marketing if implemented properly could take the company’s success to a whole new level. Let us delve a bit deeper and explore how innotecting works.
Necessity is the mother of invention, but innovation is the offspring of vulnerability. Finding flaws in the system and coming up with inventions to rectify those flaws are what innovations truly are. Every invention that is an improvement over prior subject matter or a totally new invention in a relatively unknown field falls under the category of innovation.
Most people question how innovation could be vital to determine the success of a product-based company. An excellent example is Netflix, which became a huge success because it continued to innovate.
Back in 1980s, Blockbuster, a video rental shop chain was a huge hit among the masses. People could rent videos from thousands of available titles by visiting a store nearest to them.
Netflix, started in 1997, knew that in order to thrive in the video business world, they would have to adopt a different approach. Netflix innovated and gave birth to the mail-order delivery system. They did value addition. Customers now could rent videos from the comfort of their homes.
Result: Netflix became a huge hit. Blockbuster, which was complacent, became bankrupt before it was bought by Dish network at a bankruptcy auction for about $320 million. Lack of innovation killed Blockbuster.
Netflix didn’t settle for just the mail-order business model. The rise of YouTube and other video streaming sites helped Netflix recognized online video streaming as the next innovation frontier. Netflix made huge investments in video streaming.
The result: as of October 2015, Netflix has 69.17 million subscribers with more than $5.50 billion dollars in revenue. 17 times more than how much blockbuster was sold for.
Does innovation make all the difference? No. Constant innovation does.
Blockbuster was just one example. There are many such companies which dig their own grave by not innovating.
Border Books (Book store), Polaroid (Instant cameras), Eastman Kodak (Camera films), Motorola and Nokia (Phones) suffered premature death because they ignored innovation and stuck to the obsolete technologies and lost their edge.
The intangible assets of an organization are as important as the tangible assets. An innovation without protection is similar to an expensive jewel out in the open without anyone to safeguard it- It could be stolen at any moment.
Huge costs are incorporated during the R&D phase of a product. And if you’re not protecting your product by means of patent or copyrights, then you’re axing your own feet.
Your competitors may use your intangible assets to gain an edge in the market by coming up with a similar product. And to top that all, at a lower cost for little or no money was spent on the research phase of the product.
Consider the example of Kiddicraft, a company built by child psychologist and pioneer toymaker Hilary Fisher Page in the 1940s. Kiddicraft manufactured plastic hollow building blocks with four to eight studs that could be used to build homes to skyscrapers.
While visiting a trade fair, Mr. Ole Kirk Christiansen bought a plastic molding machine which could produce different type of toys, similar to the one that Kiddicraft used.
Instead of coming up with different toys, he used the machine to manufacture similar toys, the exact replica of Kiddicraft toy sets and distributed them with the brand name of LEGO. Same toys, different name, better marketing strategy, success.
He copied each and every design of Kiddicraft toys and earned billions while Kiddicraft’s owner committed suicide as his company incurred huge losses. Innovation without protection isn’t good at all.
Protection saves the day for those who toiled years at coming up with innovative things. Consider the case of Curtis vs. Wright brothers, for instance. Glenn Curtis is considered as the founder of the US aviation industry. Curtis won various prizes like the first plane to fly a kilometer in a straight line and flying 25 miles in a plane he designed.
Curtis later designed aircraft that had aileron. Wright brothers already had a patent on ailerons and they warned Curtis to refrain from using their inventions. However, Curtis didn’t heed the warning and sold one aircraft having aileron. This led Wright brothers to file an infringement suit against Curtis.
After six years of trial, the court judged the ruling in favor of Wright brothers ordering Curtis to cease making airplanes that infringed on Wright brothers patents. Protection saved the day for the Wright brothers.
Protection is indispensable for businesses that invest a lot in innovation. There are multiple examples where lack of protection resulted in the company with the idea turning to ashes whereas the companies that copied the ideas made huge profits.
For example, Oreos was a rip-off of Hydrox biscuits. The ‘Dip and Squeeze’ packing by Heinz is a rip-off of David Wawrzynski’s idea. And so were multiple other products for which the original inventors didn’t get the credit due to lack of protection.
When investing in innovation, it is wise to go for any suitable protection in order to protect the ideas from being copied. Moreover, even if they get copied, royalties could be extracted following lawsuits.
The Marketing strategy behind a product or service is one of those important factors that govern how well a product would do in the market. A proper planned marketing strategy designed keeping target segment in mind could do wonders.
For instance, the marketing strategy of Candy crush was fantastic. Though there were a dozen three in a row games in the market, candy crush gained a huge fan following since it provided Facebook integration which was a huge benefit since every time someone ran out of lives, they had to ask their friends for help which constantly reminded everyone about candy crush making it a billion dollar phenomenon.
Not every product is as lucky as candy crush. Unfortunately, most products fail, some due to lack of functionality, others due to lack of proper marketing. For instance, consider the example of vanilla coke which was introduced in Indian market in 2004 but made an exit in 2005. The reason cited for the failure of the product was the improper marketing strategy where the right segment weren’t targeted, the price being premium and the taste unappealing to Indian audience. These reasons were enough for vanilla coke’s exit from Indian market.
Other examples include Edsel, Premium smokeless cigarettes, Pets.com and PanAm which had interesting marketing campaigns that earned them brand value but the lack of proper functionality resulted in their failures. As they say it, Bullshit might land you on the top, but won’t keep you up there longer.
Success requires both-great product and great marketing. There are multiple examples of products that were a huge hit since they were a right combination of both. For instance Twitter, Instagram, Whatsapp were huge hits for they provided the right functionality and came through right marketing channels.
The implementation of Right marketing strategy for an innovative product which is protected by copyrights, trade secrets or patents, Innotecting in short is an excellent recipe for success. The right mix always does wonders.