The Innovation Manual

Welcome to the Innovation Manual (Wiley, 2009)

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“A definitive book destined to become a key reference for executives and managers. Solidly based in theory and best practice, comprehensive in coverage and oriented to action. The title says it all, a manual for innovators, everywhere!”

Pierre Pringuet, Chairman and CEO, Pernod Ricard

It’s not 1904*, Mr Blatter: why can’t soccer join the 21st Century?

Innovation can, and is, applied to enrich sport: particularly video and detection technology to improve the fast, accurate and consistent application of the rules.  Think of Hawk-Eye in cricket and tennis, or digital playback of questionable plays in American football.  Yet I was again struck this weekend on how the application of rules in soccer is rooted in the past, despite clear evidence the pace of the game has outstripped these ancient practices.  

The fact is the English Premier league title might be decided by poor refereeing rather than skillful play.  Many fans believe Chelsea won over Tottenham Hotspurs with a non-goal and an offside goal.  Similarly other fans believe Arsenal and Manchester United each had a penalty denied.  And earlier in the week there were doubts over a sending off in the Real-Barcelona Champion’s League semi-final.  And these are not the first in an ever-growing list of questionable decisions.  The many millions of fans around the world deserve better. They should see the team that is more skillful, organized or motivated win the game—not the one that is lucky because the officials made most mistakes in their favor. 

Now this is not the fault of the officials. At this level they are clearly professional and trying their best, especially in these top games.  Rather, the speed and skill of the game has outstripped the ability of the officials to keep up with play.  And the total coverage of television ruthlessly exposes their mistakes to all.  Soccer is being damaged, steadily but relentlessly, so that luck, not skill, plays more and more of a role in the outcomes.

To be fair to Mr. Blatter, FIFA is considering goal line technology: but very slowly.  To me that one is a no-brainer, do it FIFA!  In the 21^st century we should know whether it is a goal or not!  Having third and fourth opinions on refereeing decisions is admittedly more difficult.  The counter-argument being that it would slow the pace of the game.  However, surely we can use technology to help?  Rapid replay is possible. So are computer algorithms that detect from multiple video feeds whether it is, for example, handball or a high tackle.  The referee could receive advice automatically or from an external panel in very little time at all.  It is surely time soccer’s rulers joined the 21^st century and examined all the ways technological innovation could help the world’s favorite game.

*1904 is the year that FIFA was formed.  And I’ll confess I am a Manchester United fan.

Space Tourism Gets Nearer

I noticed that Virgin Galactic will be making a presentation at the Front End of Innovation Europe conference in Berlin in March 2011 (good conference to go to if you are into innovation and a great city to visit).  I think commercial spaceflight is clearly a major innovation, both in technology (SpaceShipTwo) and business model (very expensive, risky flights).  The interesting question that popped into my mind is, while they claim to have lots of willing individuals signed up for the first flights, can it be  a sustainable long-term business for them?  I think the answer lies in the basic principles of business and innovation but let's divide it into the two steps—introduction to the market and growth to sustainable scale.  As it happens I presented some data on space tourism in my book (sourced with permission from Devinney, Crouch and Louviere—good mates from Australia—and entitled Going where no tourist has gone before, Sydney: Future Choice Initiative, 2006).  That data suggests there are indeed high income or asset rich, relatively young, individuals who like risky activities, own risky “toys” and would pay those kind of prices for a flight. Moreover, the asset-rich segment prefers sub-orbital flights, fitting right into Virgin's plans.  So it looks like initial acceptance is not an issue.  But can Virgin deliver so that these individuals have a great experience and spread the word and can it be sustainable once the rich segment is exhausted?  Time will tell on the experience. Virgin are pretty good at service, and SpaceShipTwo is designed to maximize the visual experience.  So let's say the first flyers report good things and experience no problems.  Sustainability will then depend on the willingness of others to follow in their footsteps and, as always, competition.   Willingness to follow will partly depend on Virgin's ability to get the message out to the world once the initial press interest has waned and, of course, price.  Can Virgin scale their model to get the price down?  Not being a space scientist, I don't know the answer to that but most technologies do fall in cost and price over time (and Virgin is not the hide-bound NASA).  Competition is more tricky perhaps.  If space tourism is attractive over the long-term (rather than a fad) Virgin will attract competition.  And we know that most pioneers find it hard to sustain leadership against second and third movers, for many reasons, but mostly because they hang on to their initial technology too long.  To keep leadership the pioneer needs to continue to innovate (SpaceShipThree and Four perhaps).  So the odds suggest Virgin will fall by the wayside, to be replaced by a better alternative.  But maybe by then this doesn't matter, space tourism will be a sustainable industry and Virgin will go down in history as the initiator.  Or they will renew themselves, invent the next generation of technology and become synonymous with space travel in the way a very few companies achieve.  Either way it promises to be an exciting ride and students of innovation should be watching it carefully.

Innovation in sport

With the World Cup Final over (well played Spain) it seems like a good time to write about innovation in sport.  After all there has been heated debate around goal-line technology and off-side rules following a couple of poor decisions in earlier matches.  And soccer does seem a conservative sport with few changes in the last decade or two (penalty shoot-outs are the last that come to my mind).  But it is also a popular sport and a huge business and it seems to me the poor decisions are detrimental to its image.  It is also clear the pace of the game has moved beyond a referee and two assistants.  Today’s soccer players are brilliant athletes who can move the ball from one end to other in seconds.  So why not recognize this and either have goal line technology or extra assistants at the goals?  The counterargument that is put that this would slow the game down and make it less human.  I’m not sure though.  Referees are already linked by radio and could receive an audible “it’s a goal” signal or spoken word from a fourth referee.  The same is true for off-side.  The TV channels show whether a player is offside or not within seconds by overlaying a line on the screen, so why can’t a fourth referee come to as fast and accurate a decision?  The popularity and importance of the game demands better decisions and I’m sure FIFA will eventually come to the same conclusion.  Innovation is an important part of keeping the sport relevant and where technology and communication can help, why not use them?

The other sport that seems confused about technology is Formula 1.  In many ways this is ironic, the formula started with the goal of encouraging the development of the car as well as providing a spectacle.  But more recently it has got itself in a tangle between increasing costs and innovation; first advancing (e.g. Kinetic Energy Recovery Systems), then withdrawing, and then advancing again (KERS being back in the future).   Partly this is redefining what “innovation” means and I think the eventual direction is a good one—that is, encourage innovation which fits the environment  and fuel efficiency and will flow through to the ordinary car of the future.  That will make the sport more relevant to everyone.   Formula 1 also faces challenges in its refereeing procedures—the delay in giving “drive through penalties” to drivers being glaring--- however that seems to be down to more human issues.  The video replays are instantly available but the stewards need to speed up!

The more important challenge to Formula 1 though is over-taking.  Many races are incredibly boring after the first lap as, unless mechanical reliability or weather intervenes, the race order does not change.  This is partly down to track design and partly competition—which results in evenly matched cars.  There would seem to be two solutions to this problem.  First, the magic “push-to-pass” button (seen first with KERS and now proposed for aerodynamics) or second, allowing greater design flexibility so that teams would have more choices to make.  At the moment teams operate within a very restrictive set of design rules.  Formula 1 is pursuing the first option but I wonder whether the second is not in fact better?

Why Can’t We Get Major Innovation in Air Travel?

In my job I travel by air several times by year.  Every time I am struck by how bad your experience is as a customer.  You have to arrive way before your flight, the queues at security are always long, and service personnel overworked and unfriendly.  Airports themselves are always depressing environments, the food outlets mediocre, the toilets filthy, etc., etc.  Then you find an impossibly small seat in an unhealthy pressured metal tube, where you try not to go mad if it is a long-haul flight, or stare out of the window if it is short-haul.  And then, when you arrive, they lose your bags, the ATMS are out of money, and the taxis doesn’t take foreign credit cards.  A caricature you say. Sure.  Business class is better than economy. And there are better airports and even airlines (though in my experience only Singapore Airlines is tolerable, the rest mediocre).  Perhaps you say it is just my choice of trip and carrier?  And haven’t we had innovations in air travel?  Business books never fail to mention Southwest (or its European clones).  And now we have electronic check-in, don’t we?

I would suggest that, while Southwest is a great business model innovation, it did not change the customer experience that much.  It simply made that experience cheaper and available to more people.  And as for electronic check-in I’m sceptical. I always find myself talking to a human being for some reason outside my control. Again we may have saved the air lines money, and us a few minutes, but the overall experience is only slightly better.  This is because electronic check-in is a piecemeal innovation within a larger system, a system that clearly stretched by the numbers of people using it.

The common view is the industry is unprofitable and therefore unlikely to see much investment to change this state of affairs.  This is a question of perspective.  Air travel is profitable for fuel companies, airports and governments.  It is just airlines that are unprofitable.   Why?  The main reason is that governments control the industry, in particular which airlines fly where, because they regard airlines as “strategic” or “national champions”.  I think both arguments may have made sense decades ago but are now thoroughly flawed.  However, the result is there is no real competition for the customer—on most of my trips I have a choice of two carriers, but sometimes only one. And there are many mediocre airlines essentially kept in business by their governments. Even within the USA, a supposedly free market, Chapter 11 is used to keep flawed airlines in business.

So government is the seeming hurdle to innovation in air travel?  They control the system, keeping the airlines tightly constrained, allowing other stakeholders to profit, and showing little inclination to address the obvious problems.  Again there are some exceptions, some governments being willing to invest in airports for example.  But you see few attempts to make significant changes to the system—the new airports are bigger, shinier and cleaner and more efficient at moving people, but the overall A-to-B experience is much the same.

But in most countries customers elect these governments, don’t they?  So I conclude the real problem is us.  We tolerate being treated badly and rationalize it away as out of our control or “what do you expect for the price”.  We should complain more, lobby more, point out the stupidities in the system, find out how our taxes get used to maintain the mess, etc., etc.  I suspect we won’t though.  Air travel has been mediocre for many years now and, apart from isolated examples of customer rage, there is little evidence of a customer movement for change.

A final thought.  Even if we—the customer—don’t push for it maybe there is fundamental change coming.   I speculate that business travel will not come back to previous levels when the global economy recovers.  Also video technologies will clearly continue to improve making business travel less necessary.    With the main profit driver for airlines dwindling, the many legacy carriers will either go out of business or have to raise prices.   Two things may then happen.  Customers will resist higher prices without a better experience and governments will increasingly find it hard to prop up the old regime.  Hopefully that will lead to a freer market and better attention to service as a driver of business.  Or am I dreaming?

The Electric Car’s Even Bigger Challenge

I was reading an interesting blog on the Blue Car from Bolloré, yet another entrant into the race to bring a workable electric car to market. (http://innovtoday.wordpress.com/2010/01/29/can-bluecar-create-an-upset-in-the-auto-industry/).  The Blue Car will use a more advanced battery than most (LMP-Lithium Metal Polymer) and that is interesting in itself.  However, following from my blog on the Apple iPad, I started to think about the marketing challenge of getting people to buy electric cars.  Of course this marketing challenge also goes to the design and technological choices of electric car suppliers.  If electric cars don’t deliver the right benefits people won’t adopt them. 

The first problem for electric cars is that no innovation succeeds unless it is (1) as good as the existing technology in all-important areas and (2) brings an advantage over the existing technology.  So far most electric cars fail on the first issue.  They do not have the range, performance or carrying capacity of hydrocarbon-fuelled cars.  Now I will agree that statistics show most people don’t drive far on a typical day, nor in congested cities do they drive fast.   Also the typical car on the road has one person in it. So on paper electric car performance is fine.  But it is not fine in my mind—I might want to drive from Fontainebleau to Nice next week and I don’t want to have to charge or change my battery every 200kms, or worse get stranded in the countryside.  Or I might want to go to Germany and drive at 180kph on the autobahn.  Or I might want to take my family of four on a vacation. Thus most electric cars do not reach parity in people’s minds, which in turn means they never consider the advantage of zero pollution or cheaper operation.  There are electric cars that do better on some of these points.  Tesla has a sports car whose performance is stellar (electric motors are inherently better for car performance than petrol or diesel engines because they produce maximum torque at zero revolutions).  However, it still has a range problem.  You can burn rubber but not for long.  Bolloré are silent about the range of their Blue Car on their website (http://www.bluecar.fr/en/pages-accueil/default.aspx). But since their LMP battery can store several times more energy than the laptop battery technology other manufacturers use it will likely have a better range than the Tesla Roadster while having similar acceleration.  The Blue Car also seats four but is not a car for the German market as it cannot go more than 130kph. 

The second problem for electric cars is the psychological status quo or ownership bias. What I own (in my case a turbo-diesel car) is psychologically worth more than an objectively equivalent car I don’t own.  To overcome this bias, and assuming the electric car achieves parity in other areas, the advantage of the innovation must be compelling.  And so far they are not.  Zero pollution is a tangential, esoteric and “in-the-future” benefit compared with “how do I get to work today.”  Yes, we know in a conceptual sense that zero pollution is an important societal goal but it will be hard for many people to give this goal much weight when faced with a car-buying decision.   Zero-pollution is not a compelling advantage. In contrast cheaper operation could be a compelling advantage.  Running a car is not cheap (it is typically ranked two or three in household spending after housing costs).  So a car that came with the message that it only cost half as much to operate would attract serious interest.  The hurdle here is the economics of electric cars are not yet fully worked out—no-one has yet given a detailed picture of what operating costs will be when there are many electric cars on the road.  At the moment the cost of the battery itself dominates the discussion, with various business model innovations trying to get around this hurdle.  These include Shai Agassi’s battery swapping stations and Blue Car’s plan to only rent their cars.  And the electric car industry also faces the chicken-and-egg problem of building an adequate infrastructure to enable access to everyone who might want an electric car.

So my conclusion is that electric cars will only be successful if they produce a better car.  A car that has the range, performance and carrying capacity of my current diesel car, but also costs less to operate. And a car that is supported by a service infrastructure that lets me “refuel” in five minutes pretty much anywhere, just like today.  Anything less than this is not an innovation in my opinion—whatever technologists or environmentalists might say—it is actually an inferior car.  Will electric cars reach the level of development they need to provide a compelling reason to change?  Hard to predict I’d say. I’m not ruling it out but it is an immense challenge, with many hurdles that could cause it to fail.  Indeed, the problems may be less on the technology side than the service infrastructure side.  One can see the technology itself has promise. But it is much harder to see how the infrastructure can be built to a level where it competes with hydro-carbon technology.  Unless, that is, a government or a brave large company decides to push it; or the price of oil rises sharply over the next ten years.  And of course the electric car faces competition from bio-fuels—which can use the current infrastructure—and other alternatives such as hydrogen (which is the worst of the three in my opinion).  So an immense challenge that I hope will succeed (I like the dream of the perfect electric car) but I’m not yet sure it will.

Apple’s big challenge

I have to write about the iPad, the most anticipated launch of 2010.  I waited a few days for the dust to settle, but it hasn’t really.  The world still divides into Apple fans and Apple detractors.  The tech blogs remain confused between those who see it as a phone with a bigger display and those who see it as an under-equipped laptop.  What, no camera?  No handwriting recognition (like a “real” tablet).  And worst of all, no Flash?  Therein lies Apple’s big challenge—what exactly is the iPad?    They claim it is a new category.  Building a new category is a challenge Apple has not faced since the Newton, where they failed.  On that occasion they left the market to Palm, which arguably had stronger grasp on customer needs and hence better arguments for building the new category in customers’ minds.  However, to be fair, Palm came after Apple (and Motorola and Tandy) and so had the benefit of learning from their mistakes.  What were these mistakes?  Two come immediately to mind.  First, failing to identify the right group of early adopters.  Second, not finding a point of differentiation that would change the status quo.  In contrast, Palm focused on road warriors (remember those) and synchronization with office systems.  And the rest is business history as Palm went on to create a great success out of the rubble of the three previous attempts at creating a “PDA” category.   

Faced with a “new” category, most customers try to classify the innovation into a category they already understand.  In this case, a phone or a laptop.  Either would be disastrous for Apple.   The iPad makes web browsing or emails easier than a smart phone but is too big to be a phone replacement.  And as a laptop or tablet the iPad (or at least the first version of the iPad) is under-featured.  To succeed Apple needs to target a group of customers who have a real need for an in-between device and then give them a compelling reason the iPad is better than the status quo.  Can they do this?  I think the answer is yes (which is not the same as saying they will succeed—I am not privy to Apple’s marketing strategy, and in any event execution is more difficult than strategizing).  To me the target group is most likely teenagers and the compelling reason is that the iPad is easier to carry around and use.  The teenagers I know live on Messenger and Facebook and in a totally different social environment to the one I grew up in.  If they use their phone it is to SMS rather than talk (and they complain loudly when they reach their monthly limit).  And they find lugging a netbook around a chore, let alone a laptop.  The iPad is thus a great solution for Generation Z (the net generation—born from the mid 1990s).  So I think most of the tech bloggers have (yet again) missed the point.  Moreover, if Generation Z starts to adopt, then the rest of us will fall in line, perhaps not to adopt but at least to accept the new category as valid.  My only reservation is the lack of multi-tasking.  The teenagers I know are good at multi-tasking and really value it.  So Apple will need to fix that in the next version, along with the lack of a webcam (some people say this is already provided for in the design).  But I’m sure Apple has a product roadmap.

The last point to make is, of course, that the iPad is not just about product innovation.  It has the same powerful—App Store—driven business model as the iPhone.  Who knows what value may emerge from that in the next 12 months and how this will enhance the chances of success.

What is a Good Customer Insight?

The CMO Council (www.cmocouncil.org) recently released a report entitled Greater Innovation through Closer Collaboration.  The report builds on a survey of executive opinion on the topic of collaboration and partner networks.  The conclusion is that firms are more and more relying on external networks of partners and suppliers to help them deliver innovation.  However, what struck me was the frequent use of the two words customer insight, in quotes from firms like Best Buy and Pepsico.  No quarrel with that as a good step to take for any firm that wants to innovate but I think you have to be careful about what customer insight means and how you go about getting good ones.  The word insight has several meanings but the one I think comes closest to what we need here is ‘a clear understanding of a complex situation.’  That is because creating an innovation that changes the customer’s thinking, and thus reshapes the market, is not a simple task.  It requires a deep understanding of the customer’s goals and needs. That understanding includes both stated and latent needs, and building the ladder from the potential features of the new product or service to customer benefits and then to customer needs.  And it requires an understanding of customer differences, especially as they drive the market dynamics that will come into play once the firm launches the innovation.  The most important differences are those between the innovators and the mainstream customers.

 

So good consumer insights do not come from running a few focus groups, neither do they come from looking at the results of quick web survey. Nor do they come from brainstorming up a bunch of questions over lunch and asking them of whichever customers you can quickly get hold of.  In fact getting good customer insights is a science, needing rigour, system and sound theory.   Although it is an old point, ‘garbage in’ does equal ‘garbage out’.  In contrast there are sound theories and methods that managers can use to get good insights, some of which I list in Chapter Five of the Innovation Manual. Unfortunately they require a significant investment of time and money.  One paradox of the financial crisis has been that while R&D spending has increased, there has been a clear tendency of firms to cut costs on professionally conducted market research (Rockhopper Research 2009). I only hope that does not bite the firms involved too hard.  For if you have poor insights it is difficult to see how your increased R&D will result in anything valuable to the customer. 

Watch out! Smart companies used the recession well indeed

The release of Booz and Company’s latest Global Innovation 1000 survey confirms the views in one of my early blogs.  While net income fell, R&D spending rose in these firms in 2008, though at a slightly slower rate of growth than 2007.  This is remarkable, amid the worst financial climate since the Great Depression, 1000 of the world’s top firms increased their spending on R&D! (As the report points out, this is more D than R. Firms increasingly leave pure research to universities and governments, and focus more on turning technologies into commercial products and services. This is a trend that has been developing for several years.) 

Why did this increase in spending occur when firms cut costs in nearly every other activity?  According to this survey for three reasons:

1. These firms see innovation as a core part of their overall strategy
2. They commit to product development cycles many years in advance &
3. They see the recession as an opportunity to gain advantage over weaker firms.

It is point 3 I raised earlier (“Innovation and the Crisis” Post on Mar 20, 2009 at 3:58pm).  These leading firms have also used the recession to become more efficient at innovation, killing weak projects earlier and focusing on fewer bigger ideas to get more growth.  So they will emerge from the downturn, with more innovative products and more efficient processes, putting further pressure on their weaker or more short-sighted rivals.

 

I think that is a good argument, but it needs one qualification. The survey presents data to show that many of these firms are changing their mix of projects toward “more products with growth potential” and “more products for new markets”.  That is a laudable goal but not as straightforward as it seems.  Most companies are setup to create the incremental innovations they need to stay in business in their existing markets.  As a result their organization structures, employee incentives and skill sets develop to support modest levels of innovation.  Faced with developing more radical products, adding novel services or re-engineering business models they may find structures, incentives and skills also need to change.  Innovation that brings bigger rewards also involves bigger risks and more marked changes in organizational culture and skills. It will be interesting to see how these firms fare over the next year or two. Especially what lessons emerge about higher levels of innovation?  I believe the ones who will succeed will be those firms that go about it in a systematic and grounded way—building on all we know about innovation and organizational change.

Innovation and the Crisis (Revisited)

In my blog of March 20 I suggested the crisis is a good time to be thinking about innovation, especially for those companies that still have reasonable cash flow or employees with some time on their hands.  It was therefore pleasing to see my comments justified this week on two web sites.  First the World Advertising Research Center has an article on how P&G, Unilever and Wal-Mart plan to use the crisis to out-innovate their competitors.  P&G plans to outspend them on innovation, Wal-Mart to use the time to refocus on customer loyalty and Unilever to co-create new AXE products with customers.  WARC article on innovation in the crisis

        Similarly the Economist Intelligence Unit has a sponsored paper on “Taking advantage of the pit stop: How to prosper in a recession.”  EIU paper  Their conclusion is "A company with a strong team and a pipeline of new products or services is going to be in a winning position when the recession finally bottoms out. For the rest, playing catch-up when resources are once again scarce and expensive is going to put a significant drag on recovery."

And they make three great points here, rethinking your business model, finding new talent and finding new markets.  The Innovation Manual covers new business models and new markets extensively. Both are important to growth and profitability ands both involve mind-sets, skills and tools that many managers are not familiar with.  So in the Innovation Manual I place great emphasis on using evidence-based theory to identify the right people and the right tools for the task.   The point the EIU makes on talent is that of making sure you don’t layoff talented people during the crisis, talent which cost you a big investment to develop.  You may find it is not easy to hire similar talent when economic growth returns.  I would take this point further, as follows.

Working at a top business school I also see many talented MBAs looking for work right now.  Individuals who before might have thought about a career in consulting or investment banks (remember those).  But now they are much more open to jobs in mainstream firms, the firms that create and deliver innovation rather than give advice or fund it.  So the crisis is also a great opportunity to bring new people into your firm, people you would not normally be able to attract.

The Momentum Effect, the Innovation Manual and engaging the innovators

In 2008 my colleague Jean-Claude Larreche published a book The Momentum Effect with the tagline “how to ignite exceptional growth.”  I highly recommend this book to you, especially if you are in marketing (and it is endorsed by Sir Richard Bransom, a superb marketer).  And of course growth is also what the Innovation Manual is about so there is a thread linking both books.  This link is most clearly seen in my Chapter Seven Building the Market for the Innovation where in one section I build on Jean-Claude’s work.  In particular, on the role of marketing in designing and communicating powerful offers.  Jean-Claude focuses on the idea of offers whose benefits to the customer far outweigh their costs, so they create what he calls vibrant satisfaction and vibrant retention.   Essentially, the customer becomes emotionally engaged with the product or service, even becoming advocates for it. 

 

I apply these ideas to the task of getting those customers who are innovators to engage with the innovation, adopt it and thus give this innovation credibility in the eyes of other customers.  Unless this happens the innovation will fail within a few months.  Who are the innovators?  Well this will be the topic of another blog, but for the moment let’s define them as that small segment of customers interested and willing to take a risk on new things.  In other words the customers who get new markets started.  In Chapter Seven I look at the “Virtuous Circle for Engaging Innovators.” This circle involves making sure the new offer has advantages over the status quo, building satisfaction by removing sources of dissatisfaction and recovering innovators with grievances, and creating customer advocates for the innovation.  Following Jean-Claude I note this doesn’t mean “some” advantages, “good” satisfaction scores or a “complaints department.”  It means being systematic and open-minded to what are the real benefits and costs of the innovation to the customer (many firms are myopic about the costs, just focusing on the price paid).  It means identifying what are the clear and verifiable advantages of the innovation over the status quo (be this existing products or alternative uses of the customer’s money).  It means getting satisfaction and customer retention scores in the 90^th percentile.  And it means a pro-active strategy for listening closely to the innovators and moving speedily to remove sources of dissatisfaction or recover angry innovators.  All of which has a high payoff because the innovators are the catalysts for success or failure in the mass market.  Thus high and early marketing investment on a small segment has a compelling rationale through future profits. 

 

However, where I extend the Momentum Effect is to argue that for breakthrough innovation “positioning” (choice of which advantage to promote) is another critical part of the engagement story.  Of course positioning is an accepted part of all marketing, be it for innovations or existing products and services.  But for breakthrough innovation it is key and firms often get it wrong, choosing a poor frame of reference (which mental category does the innovation belong to) or the wrong points-of-parity or difference.  The Innovation Manual contains examples of this (both good and bad) and a tool to help managers think about the right positioning to engage the innovators.