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Letting Innovation Drive Corporate Level Strategy:Part 2

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AnonymousBy Reagan Cerisano 4 years ago
Home  /  Innovation  /  Letting Innovation Drive Corporate Level Strategy:Part 2
Letting Innovation Drive Corporate Level Strategy:Part 2

The last post on human data and strategy focused on gathering known data from a company’s key stakeholders in order strengthen the company from the inside. But when it comes to innovation, what happens to corporate level strategy when the customer doesn’t know what they want? View it like an iceberg:consumer behavior (human action) floats above the surface – in plain view. But stakeholders’ actual unarticulated desires are a giant mass below the surface. Behavior floats on the surface, but underneath lay the unseen – often unarticulated – reasons for those behaviors:values and worldviews.

Read part 1 of this series.

[image type=”thumbnail” src=”https://www.9lenses.com/wp-content/uploads/2014/11/corporate-level-strategy-consumer-behavior-iceberg-1-1.png” alt=”Corporate Level Strategy:Consumer Behavior Iceberg”]

So how do business leaders align their corporate level strategy with this great unknown? Well, to a large extent, it’s a matter of educated analysis based on human data. After all, the general population couldn’t have necessarily articulated what they would want next from the movie rental industry. Netflix had to base their launch into the video streaming industry by analyzing consumer behavior and relevant data. This sort of strategizing focuses on three concepts:

Understanding “why”

Bringing everything full circle, when we ask why a person acts the way he or she does, we’re essentially asking for the worldview and values behind the action (bottom of the iceberg). In terms of a corporate level strategy, businesses which understand why they do what they do, already have a leg up on the competition. The next step is to successfully communicate that core to ourselves and our customers. Simon Sinek noticed on his famous TED talk, “When we communicate from the inside-out [or via why], we are talking directly to the part of the brain that controls behavior and then we allow people to rationalize it with the tangible things we say and do.” Customers don’t buy what we do, but why we do it.

In other words, in order to reach the values and worldview of a target audience, leaders need to effectively communicate why and what they believe even before making factual claims.

Understanding the data

Techonomy wrote that, “When companies drive strategic decisions with data, innovation bubbles up from user behavior and the imperative is on meeting customer needs, not matching competitors’ offerings.” In other words, data driven innovation doesn’t come from simply copying competitors. While competitor business strategies may provide the foundation of your new idea, but they don’t launch you forward. Instead, start using the data to discover consumer pain points and their unarticulated values and expectations (understanding why!) and then adjust to meet those needs.

There are very few people that deny that data is rapidly transforming and segmenting the business world on every level. The trick becomes how quickly and in what manner we react to the data. At its core, it’s a method of listening and learning how to empathize with the stakeholder. Empathy is a method of looking at life from another person’s perspective, and ultimately, a collection of data helps understand behaviors and often points us to the roots – the values and worldviews – behind those behaviors. So if you want to improve, let the data speak before you do.

Understanding the fringe

This was written about extensively in a past post. The core principle is this:innovation occurs along the fringes of an industry. Opportunity doesn’t lie in well-known territory; it occurs after you identify the borders and then innovate in order to establish new ones. For Netflix, it was understanding the video-rental industry (drive, pick-up, drive home, watch, drive, return, drive home) and restructuring it (order, receive, watch, mail back). In order to innovate even further, Netflix eventually adjusted again its corporate level strategy along the innovation fringe by eliminating the step of transportation and providing streaming services for its subscribers.

In the same way, all industries should be looking for the borders in order to push innovation to the next level in all segments of their organization. This includes innovation through marketing, product development, and even organizational structure. But often this means information and data must first be gathered in order to make this innovative changes.

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In a sense, a worldview communicates “why.” Most people don’t have worldviews which match perfectly, but certain points intersect with others’ values. And at those points, cultures can be formed. This is why societies are divided into cultures and subcultures. The tribe of Apple users don’t connect solely because they all have Apple devices. No, they form a subculture because they share a set of similar values. The same can be said for any music group, hobby, or clothing style (hipsters, anyone?). However, in order to allow innovation to flourish, one must first leverage a worldview and then innovate along the fringe of that worldview.

Is it easy to build a strategy in this way of thinking? No, it’s not. But remember:there’s a difference between the easy way and the right way.

Header image courtesy of Sebastiaan ter Burg via Flickr

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  Innovation, Strategy
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