Innovation Strategy versus Brand Strategy
Interview – Steven Cristol – Strategic Harmony® Partners
I had the opportunity to interview Steven Cristol, Founder and Managing Partner of Strategic Harmony® Partners about branding, innovation and sustainability. Strategic Harmony® Partners is a strategy consulting firm, and holds a patent for the first decision model to align and integrate product strategy and brand strategy.
Here is the text from the interview:
1. Do strategies for brand, product, and innovation need to be closely linked?
Absolutely. That linkage is the key to one of the biggest questions companies ask me: “How can we ensure that every dollar we spend on product development will ultimately create shareholder value?” Brand equity is central to this, as there’s a half century of research in the marketing literature documenting the links and correlations between stronger brands and greater revenue, fatter margins, lower selling costs and lower cost of capital. So the challenge then becomes being disciplined about evaluating product development portfolios in terms of brand impact – that is, the degree to which any new product or feature is not only aligned with ideal customer experience, but also optimized for competitive impact. That means knowing how much each innovation project will help your brand on the dimensions where it most needs help, since companies tend to overspend on the things they’re already best at. The strategic importance of any innovation initiative, whether sweeping in scope or simply a feature enhancement, has to be largely determined by some combination of metrics around those two core brand-building considerations.
2. What role should brand strategy play in an organization’s innovation strategy?
Too often companies are innovating in ways that are disconnected from the brand’s aspirations – that is, what the brand wants to stand for and needs to stand for in the minds of customers to dominate a category, or even an industry, or to successfully create a new category. I remember years ago when we were advising HP just after they had incorporated the word “Invent” into the company logo, and the CTO saying that the billions they spent each year on inventing “won’t matter if we’re not working on the right things.” Brand, and the customer’s voice, has to be at the center of determining what the right things are. So among the many moving parts of effective innovation strategy, companies need to be vigilant about ensuring that there isn’t a breakdown between marketing requirements and product requirements. Technical and non-technical organizations need to be managing product development to a shared vision of customer experience and competitive imperatives, with a shared framework for product portfolio decisions. That means that brand managers, product managers, and product development managers must all be managing to the same set of attributes that are the drivers of brand preference at each key intersection of product line and market segment.
3. What should an organization be aware of if they decide to incorporate innovation into their brand positioning?
I think it’s less about incorporating innovation into brand positioning (like HP did with “Invent”) than it is about incorporating brand into innovation. The most successful companies are more likely to do brand-sensitive product portfolio management, putting products in service to the brand. That also means brand isn’t just owned by the CMO and his or her organization, but by everyone whose efforts ultimately touch a customer. And that turns out to be most people in a well-managed enterprise, with products at the center of it all in products companies. In cultures where engineers realize they have as big a hand on the brand steering wheel as the marketing folks do, great things happen. Especially when they’re driving in the same direction of making sure that new products provide the greatest possible tailwind for what the brand wants to be.
4. Which companies are doing interesting things around linking sustainability and innovation?
Before I mention any specific companies, let’s look for a minute at that one-quarter or so of large companies that MIT and Boston Consulting Group like to call the “embracers” of sustainability. As a group, they tend to deal with sustainability much earlier in product development cycles. Instead of greenlighting new products or features and then investigating how to source and manufacture them more sustainably, they know that 80-plus percent of a product’s environmental impact will be determined in the design phase. In the context of a stage-gate type of development process, that means starting to seriously address sustainability before passing through Gate 2, and baking it into the business case before greenlighting. So sustainable design is a real focal point. Creating “environmentally obvious” products like electric cars or CFL light bulbs is one thing, but making all products sustainably is quite another. It means that long before you have to worry about compliance-level or reporting-level data sets around environmental impact, you can still have a discussion about the degree to which new product X vs. Y is likely to be energy- or water-intensive, likely to negatively or positively impact climate change and biodiversity, more likely or less likely to carry toxins in the product itself or in packaging, or likely to stimulate sustainable vs. unsustainable behavior among customers, channels, and in the supply chain. Beneath the high-profile sustainability initiatives like GE’s ecomagination and Walmart’s supply chain metrics, look at companies like Steelcase, The North Face, and Green Mountain Coffee that have long made sustainability an integral aspect of innovation.
5. What is the most important culture change for organizations to make in order to support innovation?
I’m not an expert on culture change as it relates to innovation, but one aspect of that change that I do know something about brings us back to the topic of brand. Innovators within the company have to care as much about the brand as marketers do, and that’s a big culture shift – especially for technology-driven, engineering-driven cultures. One hallmark of the most successful companies in simultaneously innovating and building brand equity is that the CEO has accepted the job of “corporate brand manager,” not relegating that responsibility only to the CMO. Is there any question that Steve Jobs has been Apple’s senior brand manager? Innovation and brand management are in powerful lockstep when the chief executive becomes the chief evangelist for both, and ensures stewardship of both across his or her leadership team as well.
6. What are some of the biggest barriers to innovation that you’ve seen in organizations?
Well, there’s certainly no shortage of obstacles, but few rival the short-term financial pressures of being a 21st-century publicly held company. Investor expectations on profitability, quarter to quarter, regardless of how unrealistic, so often drive bad behavior relative to innovation – which clearly needs to about the long view and the requisite patience for handsome but deferred returns. So a disproportionate majority of innovation ends up as incremental rather than breakthrough, whether it’s technology innovation or business model innovation, because investor impatience has too often punished company share prices for investing in longer time horizon innovation. Investors will thank them later, but meanwhile it takes real courage to keep shareholders at bay while driving toward the radically innovative game-changers that open new markets and create amazing new customer experiences.
7. What skills do you believe that managers need to acquire to succeed in an innovation-led organization?
Managers will have to be more sensitive to how innovation impacts brand equity, and how in turn sustainability increasingly impacts brand strength. We’ve already talked a bit about how innovation, strategically channeled, builds brands. But now that we’re passing through this tipping point of more customers in all the world’s largest economies demanding greener products, we’re seeing sustainability become one of the principal drivers of brand image. That brings us back to the importance of sustainable design. If innovation is going to serve the brand well, innovation-led organizations will have to infuse sustainability into the DNA of their innovation and product design processes. From a skills perspective, that means a higher level of knowledge among managers about sustainability – particularly the environmental impacts of innovation – and about the strategic and financial importance of brands.
8. If you were to change one thing about our educational system to better prepare students to contribute in the innovation workforce of tomorrow, what would it be?
I’d really have to continue with the themes I was just speaking about. For a hopeful sign of things to come, look, for example, at the Design MBA (DMBA) program at California College of the Arts in San Francisco. It integrates innovation, product design, sustainability, and user experience with business disciplines around strategy and brand. It’s that holistic, balanced blend of sensitivities and consciousness across those arenas that will supply the innovation workforce with the talent it needs. I just hope there will be enough of it. It’s that talent that will be suited to the less siloed organizations of the future, to organizations that are less and less isolated more and more agile as they open their innovation processes to broader ecosystems of partners and constituencies, to organizations that make decisions as if human health and prosperity depends on new products with sustainable materials, sustainable manufacturing, sustainable distribution, and sustainable product use and disposal or re-use. And since human health will depend on it – our lives our children’s and their children’s, not to mention every company’s social license to operate – sustainability itself represents one of the greatest innovation opportunities in history. Education needs to retool in those directions in business schools, design schools, and executive education, and it’s finally on its way.
Braden Kelley is a popular innovation speaker, embeds innovation across the organization with innovation training, and builds B2B pull marketing strategies that drive increased revenue, visibility and inbound sales leads. He is currently advising an early-stage fashion startup making jewelry for your hair and is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. He tweets from @innovate.