How to build innovation by understanding consumer preferences. Innovation is: - Approachable - Doable - Feasible - Practicable Anyone can do innovation but you need to understand it. Innovation should be based on future disruptive projections and not on existing old assumptions. # **Design Thinking** Design Thinking means identifying the future problems of customers today and providing their solutions today. **For Example:** - When Radio came in 1900, people were astonished because they cannot believe that a machine can have audio. - In the 1920s, black and white CRT television came. After that, colour CRT Television came and then the Plasma TV/Liquid Crystal Display (LCD) came, then LED (Light Emitting Diode), and then OLED (Organic Light Emitting Diode). - Similarly, innovations had also be taken place in telephones. It was started by the Radio Common Carrier in 1940S. - After that, Dialer telephones came, then Fixed Analog Phones came, and later Portable Cordless phones came. The changes that came in the last 10 years are more drastic than the changes that came in the last 100 years. **For example:** **1. Telephones:** - 1990s – You can only call from a telephone. - 1996 – Telephone features include – calling, timer, and clock. - 2002 – Telephone with cameras. - After 2003 – Telephone had cameras and e-mails checking in Blackberry phone. Later, Sony Ericsson came up with Walkman phone including music and FM. - After 2008 – Smartphones came into existence. It was led by Apple and other brands followed it. Smartphones evolution and technological evolution takes place drastically and now, you can get everything in your phone like watch, calendar, alarm, newspaper, camera, music, TV, games, movie booking apps, banking, shopping, emails, wallet, astrology, navigation, etc. **2. Software disruptions** Now, software disruptions are going on. Some of the examples of software disruptions are Amazon, Paytm, Uber, Flipkart, and OLA. **3. 3D Scanner and printer** - 3D Scanner and printer has helped China in making 10 buildings in just 10 days. It has helped in making 40 floors building in Dubai. It helps in making anything whether it is a shoe, building, cars, human prototype, and airplane equipment. - 3D Scanner and printer is used in aerospace, automotive construction, healthcare, and manufacturing. So, time will keep on changing and a time will come when a farmer becomes the manager and robots will do the farming. **4. Computer on wheels** - Earlier, Mercedes-Benz and Audi were competitors but now, Google has come with Tesla in competition with these brands. - Google along with Tesla has made driver-less cars. All the tests of these cars are done. Now, car on wheels has become computer on wheels. # **How innovation is done?** Following are the steps for bringing an innovative product: 1. Identify customers’ needs. 2. Make a pipeline of positive ideas. 3. Conduct small experiments. 4. Do commercialization and launch the product. 5. Keep on bringing improvements. Customer centricity brings the disruption; technology is only a medium for disruption. **For example:** - Jack Ma was an English translator. He didn’t get a job anywhere. He faced failure everywhere. He didn’t know anything about technology or engineering. But, today, he has built a successful company named Alibaba, which is a technology-based company. He is able to build a technology-based company because he has focused on only one rule, “Customer centricity is the real disruption.” - OYO was not made by technology; it was built due to the non-availability of hotels. - [Gaana.com](http://gaana.com/) and Spotify apps were not made by technology; they were made because people have to buy songs or buy the complete CD, DVD for one song. To solve this problem, [Gaana.com](http://gaana.com/) and Spotify were introduced. - Amazon was not built by technology, but, the bad behaviour and bad customer service made it. - Uber and OLA were born due to the limited taxi and price control of taxi owners. So, you need to: - Understand the existing customer data - Discuss with your manpower to understand what customer is asking for - Identify the pains and problems of customers - Conduct surveys to determine customers’ experience about your products - Conduct focused interviews with your customers to understand their problems - Determine what your competitor, who is ahead of you, is doing - Take regular feedback from customers # **Framework for Execution** **1. Brainstorm around the shift and the expected need statement of your perfect customer** You need to determine the shifts and the changes coming in the buying behaviour of your customers in the next 5 years. You need to determine what will be the future demand of your customer. If you do so, you will get a premium from customers, i.e. you can charge more from customers. If you are selling the same product as your competitors, then you need to give discounts to the customers to buy your product. >**Customers’ need is the food for your growth strategy.** **2. Create a Laundry List of Game-Changing Promising Ideas** - In this list, mention the things that you can do during the changing buying pattern of your customers. - If you find that the customer problem can be solved by technology, then you can bring a technology vendor and learn from it. - So, if a promising idea is based on technology, then don’t hesitate, just write it. - Make a list of at least 20 promising ideas. **3. Identify the low-lying/low-hanging top 2 implementable ideas** - Among the 20 ideas, select 20% or 15% of these ideas, i.e. 2 or 3 ideas that will impact the customer the most and you can practice them. These will be the ideas that can be implemented instantly and thus, they are also called low-lying/low-hanging ideas. - Also, take the consensus of the team on the selected ideas to make them feel that they are participating in the growth of the organisation. - Make sure that the ideas you are getting from team are around the need statement and goal statement because people may miss the need and goal statement while giving the ideas. **4. Create a solution architecture** After identifying the 2 or 3 ideas that can be implemented, you need to determine what will you do further to implement them. **5. Anticipate the 5P’s in your business around this new change** You have identified, the following two P’s: **Prospect –** It is your perfect customer. **Problem –** It is the problem of your perfect customer. Now, you need to determine the other 5P’s: **1. Product** - Decide and write the changes you will be bringing in your product in terms of experience, durability, or quality. **2. People** - Decide and write about the type of manpower you will require or the changes you will be bringing in your manpower like whether you will be promoting people, changing their departments, or hiring new people. - Determine which type of people and leadership you require to make this product. **3. Price** - Decide and write the price at which the customer will be ready to buy your product. **4. Promotion** - Plan the campaigns of your promotion. - Decide how you will promote your product via Digital campaign, Physical campaign, Leaflets/ hoardings, in-shop branding, etc. - Decide the budget or investment you will do in promotions. - Do a pilot experiment because the first product is never your final product. - If after promotion, you get customer acceptance, then move further; otherwise, follow the framework again. - If the customer is liking your product and buying it as soon as it comes to the market, then move to the next P of business. **5. Process** - Expand your process by determining the distribution network you will use to sell the product. - Decide where your digital/physical franchise, retailer, dealer, distributor, and C&F (carry and forward) will sell your product so that you can do market penetration and develop new geography. So, this is the framework used by companies who do innovations. It is also called reverse innovations, which means that first determine the needs of customers and then do the innovation based on their needs. One mistake made by most of the businessmen is that they first build their organisation, make the product, and then search for people to sell it. This is not the right way. You should first understand customer needs and then make your product based on it.