Game changing innovation is hard. Unlike what most people believe, it is not just the outcome of brilliant ideas, but brilliant ideas executed brilliantly. Whether it be at P&G or Aravind Eye Hospital, innovation demands hard work and several organizations struggle to even get started with it.
That is why we chose to look closely at Godrej & Boyce. It's journey towards innovation is young and we believe it holds some interesting lessons.
Lesson #1: Boundaries can liberate
Several managers argue removing boundaries and letting chaos reign will unleash innovative energy and lead to discoveries of new growth strategies. While it works in some circumstances, at others this strategy runs the risk of having managers / innovators spending valuable time, money and resources on strategies an organization would not pursue under any given condition.
Paradoxical as it may sound, a creative way out is to orchestrate chaos within set conditions. To do this, the leadership team ought to spend time clearly articulating what the organization’s strategic choices are. These include what it wants to be, what it plans to do and what not to do to get to where it intends to get. The process can be liberating.
The executives at Godrej realized that for the company to grow, it ought to revive growth in its household appliance business, which over that last decade had been hammered down by competitors like LG and Whirlpool.
So instead of focusing its energies on finding ways to build a larger share in small market of consumers, Godrej opted to focus its competencies on finding a way to attract the 80 percent of Indian households who didn't consume Godrej products.
Lesson #2: Start with the customers’ job
A key lesson from ex-P&G chairman, A.G. Lafley is that the key to successful innovation is a ‘consumer-is-boss’ mind-set. He'd often argue, observing customers can help identify opportunities to innovate. Most often, customers have an important unsatisfied job to be done and either they are not able to adequately address this job today or face barriers which inhibit their ability to get the job done.
Armed with this insight, the team at Godrej thought it is a good idea to get their hands dirty and to figure out where potential gold mines lie. One of the questions they asked was: Why is it that over 80 percent of Indians do not own a refrigerator?
To understand that, they conducted open-ended interviews and videotaped habits of people in rural India. Post a series of ethnographic sessions, they figured the 'job' these consumers were trying to solve was elementary – all they needed was an affordable way to preserve leftovers for a day or two and to keep a few drinks cooler than room temperature.
This job was markedly different from the one higher-end refrigerators do and could not be solved with a cheaper strip-down version of the conventional refrigerator. Going to the non-consumers and understanding their barriers to consumption helped Godrej unearth an opportunity to create a new product for the underserved market.
Lesson #3: Build a sand-box for experimenting, iterating and failing
Innovation often involves working in a high-assumption, low-knowledge environment. The good news is that innovators can de-risk innovation by systematically extracting and attacking the most critical unknowns with tailored, low-cost experiments, and increase their chances of success.
Godrej’s team designed and built a prototype cooling unit from the ground up and tested it in the field with consumers. It collaborated with over 600 women in co-creation events to test its original prototypes and several others that followed. The women collaborated with Godrej on every aspect of the product’s design, from designing the interior arrangements to suggesting the candy red color. The outcome was ChotuKool (“little cool”), a top-opening refrigerator unit priced at $69.
Since ChotuKool was unique, Godrej needed to evolve a new business model that fit the market. It worked on several options and finally came up with a new financing plan and low-cost distribution system that generated profits.
Godrej is now in expansion mode and on its path to selling 100,000 ChotuKools in only its second full year on the market. ChotuKool was also awarded the 2012 Edison Award Gold prize for Social Impact.
Lesson #4: Reward the process, not the outcome
The inherently unpredictable nature of innovation makes measuring and rewarding success difficult for companies. A team could do all the right things and still fail, or succeed in spite of doing all exactly all the wrong things.
But by punishing well thought-out experimentation and risk-taking, organizations push managers away from treading the path of innovation. Instead, companies ought to look for ways to encourage courage and learn from unsuccessful efforts. It ought to share failures with employees, reinforce the idea that failures can be tolerated and disseminate lessons learnt that can eventually lead to success.
For example, encouraged by positive feedback from consumers during the concept stage, the household insecticide team at Godrej Consumer Products did a test launch for a new variant of Hit, in select markets.
The team had already invested Rs 20 crore into the launch, the launch dates and even ad creatives. To their dismay though, the product failed to get a `wow’ response they were expecting. To make things worse, the team was too far down the road to tell the management to roll the launch back. But they went ahead and did it.
The senior management saw merit in what they were trying to say and agreed to abort the launch. Not just that, the team was rewarded with Rs 20 crore. Chairman Adi Godrej reasoned it was critical to reward teams for putting in their best efforts. “If we don’t accept failures, how will they try to do innovative things the next time?”
Thomas Edison failed 1,000 times before finding the acceptable filament for the incandescent lamp. The 1,000 failures didn't deter Edison. He said, “Results? … I have gotten lots of results! If I find 10,000 ways something won't work, I haven't failed. I am not discouraged, because every wrong attempt discarded is often a step forward....”
By Rahul Nair & Akshay Mehra Rahul is an Analyst at Innosight. He specializes in collaborating with clients in medical devices, information technology and pharmaceuticals to identify launch and execute innovations using the disruptive innovation theory. Photography and cooking keep Rahul occupied during free time.
Akshay is a Principal at Innosight. He has worked with clients in consumer product companies, medical devices and pharmaceuticals to identify disruptive innovation opportunities in their industries. Before Innosight, he has worked in brand management at a consumer products company, and was heading a start-up in Bangalore. During his downtime, Crime Fiction and History keep him occupied.
The thoughts and opinions shared here are of the author.
Check out our end of season subscription discounts with a Moneycontrol pro subscription absolutely free. Use code EOSO2021. Click here for details.