Google, meanwhile, has revealed it is delivering goods using airborne drones in Australia, and numerous companies, including Ryanair, have recently announced they are setting up internal innovation ‘hubs’.
In the case of the Irish budget airline, it aims to kickstart an “online travel revolution”. And it could already be having an effect, with Ryanair’s refreshed website, new mobile app and improved customer service credited for a 4 per cent year-on-year rise in passenger numbers in August.
Although this brand activity shows off innovation as creative and cool, the processes within business and the definition of what makes a brand innovative are far removed from this view for the majority of marketers. Research conducted by Promise Communispace with senior brand marketers shows that this gloss is not reflected in the hard work that innovation requires.
Brands’ approaches to innovation breed substantial uncertainty among the marketers polled, as 39 per cent do not believe their business has a clear innovation strategy and a quarter say that innovation is an overused term that is talked about without people defining what they mean.
The study includes a quantitative survey of 61 brands along with in-depth interviews with 15 clients across a range of sectors, from travel and FMCG to healthcare and automotive.
In addition, it shows that although creativity plays a key role, innovation requires hard graft.
Arun Malik, consultant at Promise Communispace, says: ”Innovation isn’t as sexy as a lot of people think it is and there is hard graft that goes into making innovation successful. The project management, lobbying and structured and rigorous processes behind it are just as important as the ideas and creativity.”
Continuous innovation versus big change
Over a third of professionals surveyed think of innovation as ad hoc, large, infrequent new products, services or changes to the brand. This attitude is perhaps driven by seeing technology brands’ successes with revolutionary and – to use a favoured phrase of tech companies – ‘disruptive’ product launches.
But that is an unrealistic aim for most brands. At holiday operator Thomson, which is part of TUI Travel, innovation projects can take two years.
“If you work in an organisation that deals with multimillion-pound investments, such as launching a new hotel concept, the innovation process needs to be more controlled,” says marketing and digital director Jeremy Ellis.
This is because there are many stakeholders, external partners and suppliers involved and concepts need 24 months to reach market, he adds. Big changes need to be driven by strong strategic vision as well as customer and market insight.
Most marketers appear to take this view, as the research shows only 11 per cent of those surveyed feel that insufficient use of customer insight and data are a barrier to innovation and only 15 per cent are unsure of how best to involve customers and customer insight.
For example, Electrolux, working with brand consultants Prophet, recently conducted a consumer study to understand consumers’ behaviour and identify key needs and pain points throughout the purchase cycle.
This led to the development of the app Optimal Match, which recommends products to consumers based on a series of lifestyle questions. The app is currently being trialled in selected John Lewis stores via tablets and online.
Electrolux is taking a customer-centric view of innovation, having discovered the importance of offering pre-sales advice online and in store.
Frank Grueb, director of marketing experience, says: “It’s not just having the solution in store, as most consumers start [researching] online, and the tool is there to say ‘we’re helping you’. This first step is an approach to say, ‘we help to find out what is important to you’.”
“Innovation fails if you think you can just hire someone with digital in their job title. Frontline staff can often be your richest source of inspiration”
Saj Arshad, Bupa
Food chain Pret A Manger is taking the long-term view with a three- to five-year strategic vision that helps frame the annual operating objective. Between two and three innovation initiatives are launched each year to feed the growing appetite for new products. Group marketing director Mark Palmer describes it as a “rolling medium-term strategic plan that sets the overall direction for business activities”.
Growing the breakfast trade, for example, was identified as an area with room to increase average spend per customer. It was under this strategic direction that the team introduced porridge six years ago – perhaps not as exciting as an iPhone 6 but a significant shift towards serving a new type of customer.
Charlotte Burgess, associate director at Promise Communispace, says: “While the majority of people think that innovation is this big ad hoc thing, when you talk to leading professionals in their market they recognise that the value comes from smaller continuous improvements.”
This outlook of incremental advances essentially follows the concept of ‘kaizen’, or ‘good change’, which was pioneered by Japanese manufacturers during the second world war and remains part of Toyota’s corporate philosophy.
An example of this can be found at Nike, where the internal maxim is ‘evolve immediately’ and in-built into its values is an appetite for constant change, according to its merchandising and product manager Gorkem Gulan.
“Change and speed are at the heart of our culture. For example, every few years, people will move around, thereby learning roles across functions and embracing change,” says Gulan.
In terms of product, the style of the brand’s Pegasus running shoe has had over 30 different iterations. Every year a new version, with new innovation and performance attributes, is released.
Siloed or spread wide?
Where innovation sits within businesses differs depending on the company culture and growth strategies. Diageo scrapped its specialist marketing innovation unit in June and in its place launched a start-up accelerator scheme this week, whereas Ryanair created a digital innovation hub in July (see Q&A, below) .
Only a small minority of brands take this latter approach, according to the Promise Communispace study. It finds that 14 per cent of marketers say innovation is the responsibility of an innovation department. Indeed, marketers are ambivalent about the concept, with 38 per cent saying that siloed organisations are in fact the biggest obstacle to innovation.
Burgess at Promise Communispace says: “Innovation is a ‘people’ discipline and is about gaining buy-in internally.”
”If you bring the right people in the room, customers and stake holders, at the beginning of the innovation process right to the end you are more likely to see an idea to market because you have the people who can make the idea a reality involved from the start,” adds Malik at Promise Communispace.
At Ovo Energy there is a culture where innovation is company-wide, with cross-departmental projects.
The brand, set up in 2009 to challenge the established utilities companies, hosts its first ‘hacking’ event this month, where everyone across the business can suggest problems in need of innovative solutions, and teams are given 24 hours to create a new way of fixing them.
When the brand first launched, everyone in the business was encouraged to have an idea, speak up and put it into practice, which is a culture that still exists today, according to head of brand Sarah Keegan.
She says: “We have 500 staff and 300 deal directly with the customers: they often are the ones that come up with simple ideas that make a big difference. People focused solely on innovation may miss that.”
Bupa also eschews the approach of siloing innovation within a specific job role or department.
“Innovation fails if you think you can just hire someone with digital in their job title,” says Saj Arshad, marketing and strategy director at Bupa. “Frontline staff can often be your richest source of inspiration.”
The brand is trialling a new internal crowdsourcing tool with 1,000 people on its front line. If the trial is successful, Bupa will use the tool to gather ideas from across its 33,000 UK employees around specific challenges set by the management team.
However, Ovo’s Keegan believes that innovation in this way can be “messy and unstructured” so it is important for brands to ensure staff are aligned to company goals.
She says: “Innovation is always most successful when you know what you want to do.”
Creativity versus graft
A key finding in the research is that the ‘cool factor’ of innovation does not reflect the reality of the hard graft that comes with turning creative ideas into market-ready products or services.
One reason for this, depending on the product, is the upfront investment innovation requires. The automotive sector is a prime example because of manufacturing costs and frequency of purchase.
At Ford, innovation often involves substantial investment that will only pay off years in the future. Inaccurate decisions on where to invest resources can seriously hurt the business.
Jonathan Mundy, product planner at Ford, says: “You need to be very confident that a product will succeed. It can be difficult to get buy-in from the team, as the investments are often substantial and take three to five years to make it to market.
In terms of idea progression, Ford believes it is important to see what something looks like quickly, so the company goes from concept to prototype phase rapidly, using models and sketches.
When Mundy communicates new ideas, his team will create illustrations, videos and animations to make a stronger message and sell the potential of an idea to the marketing, engineering and management teams.
As soon as something is brought to life, it is easier for management to imagine the potential of an idea, and therefore support it. Ford’s upcoming launches include redesigned models of its Focus, Mondeo and Mustang ranges.
“It can be difficult to get buy-in from the team, as the investments are often substantial and take three to five years to make it to market”
Jonathan Mundy, Ford
At L’Oréal, ideas are backed up with a business plan developed with the finance department, in order to understand the potential of a range of proposals and to consider the cost that needs to be hit in order to meet the company’s target margins.
Dara Chen, senior category and innovation manager at L’Oréal-owned brand The Body Shop, believes that using financial figures to state a case breeds confidence, so it is important to understand performance versus the competition, overall market performance and performance by region.
However, the objective is to get senior management to fall in love with proposals for new products or ranges, so the brand ensures presentations, mock-ups and meeting rooms look beautiful to “convey the universe of the concepts”.
Chen says: “It is really important to help senior management visualise the potential to get their full support. This allows us to win resources and to avoid them second-guessing the direction during the product development phase.”
Promise Communispace’s research shows that 6 per cent of marketers believe lack of senior support is a barrier to innovation and the same percentage say cultural resistance to change is a factor.
Ellis at TUI Travel acknowledges that a significant barrier to innovation can come from having stakeholders who have seen numerous ideas fail before, and are therefore cynical about the notion that a new idea on similar lines may provide a different outcome.
“You need to demonstrate through customer feedback how it will be different, and then find a way of launching it in a cost-effective way, he says.
“If a hotel concept takes 12 months from inception to appearance, and a further 12 months until it has customers, you make big bets on the market two years hence.”
This does not change the fact that many brands still rely on gut instinct or the spark of a perceived ‘big idea’ to generate innovations. At hotel brand Yotel, which launched in 2007 and is part of the Yo! Company, ensuring differentiation and stand-out came in the form of a robot.
The brand invested heavily when it entered the New York market in 2011, and was relatively unknown at the time.
“When you have an amazing idea that you feel is right for the brand, you need to take a chance,” says Jo Berrington, marketing director at Yotel. “We are a small player, so we need to shout loud; when we launched in New York we were totally anonymous.”
Yotel’s robot, which has been called Yobot, automatically stores baggage when customers leave their room so they can keep their bags in a safe place once they have checked out.
In the first nine months, the hotel had over $16m (£9.8m) worth of media coverage, which has still not entirely abated three years later.
Driving forces for innovation
Some innovations, however, inevitably fail. According to Nielsen, 76 per cent fail within a year of launch. This is perhaps most likely when a new product is developed purely on instinct, but timing is also a key factor and brands must understand how far a new idea has already progressed through what research company Gartner calls ‘the hype cycle’ in order to determine the level of demand.
One brand that admits to miscalculating is eBay, which was so excited about the opportunity of commerce related to watching TV that it created a shopping app on smart TVs, but the auction and retail site now believes that it may have been too early.
Jonathan Gabbai, head of international mobile product, says: “The landscape was very fragmented with too many different platforms, so we found a different way forward and focused first on the second screen, watching TV on your tablet and the commerce opportunities that offers.
“It’s important to put the customer first and think about how they want to use the technology, rather than being led by the technology itself.”
This is the strategy that educational toys brand LeapFrog has chosen. It takes proven trends in technology for adults and adapts them to suit the needs of children.
The brand recently launched video game console Leap TV for children aged three to eight, featuring motion sensor technology to promote increased activity, and LeapBand, a kids activity tracker that encourages active play and healthy habits.
International marketing director Sally Plumridge says: “How we bring innovation to our product is by adapting what is happening in the world in terms of technological trends, as long as they translate to learning and fun in an appropriate way for children.”
She adds: “You can’t just take technology that works in an Apple [context] and think solely about the technology.”
Gabbai at eBay believes that visualising the future is key to the innovation process because it allows the brand to start designing apps and products that will be ready for consumers when the need arises further down the line.
“The task isn’t easy,” he says. “Too much imagination and you end up with ideas straight out of a sci-fi film. “However, it’s important to remember how far we have come in the past 20 years. The pace of technological change is incredibly rapid so we shouldn’t hold back when imagining what is possible,” Gabbai adds.
Many brands have adopted the ‘fail fast’ approach to innovation that accepts some innovations will not work, but trying them out still contributes to the process of finding the one that will. Often it is about taking risks that are right for the brand, rather than for the sake of being innovative.
Berrington at Yotel believes that even though using the robot for the New York launch was risky – it had never been done before and the return on investment could not be quantified upfront – it was in keeping with the launch objective and the brand itself.
The final caveat is that innovation does not end when a product launches. Snack company Mondelez believes that although speed is important to get products to market as soon as possible, the focus on speed can also mean that there is not always the same focus on marketing support for a product post-launch, according to Barbara Schandl, global shopper insights at Mondelez.
She says: “The balance between cutting through the clutter but maintaining our impeccably high standards is an issue we are exploring at Mondelez.” What is certain is that innovation is not as clear-cut as it seems on the surface. The creativity surrounding it has a veneer of cool that masks the fundamentals of hard work, project management, internal selling, risk management and implementation, which combine to bring real value to customers.
39% of marketers don’t believe their business has a clear innovation strategy
42% believe their approach to innovation is either ‘hit and miss’ or ‘seriously needs to improve’
37% believe innovation means ad hoc, large, infrequent new products, services or changes to the brand
14% say it’s the responsibility of the innovation department
15% say a lack of investment is the biggest barrier to innovation
38% say the siloed nature of organisations hinders innovation
Source: Promise Communispace
Q&A: Kenny Jacobs
Chief marketing officer, Ryanair
Marketing Week (MW): What are the key reasons behind the digital innovation lab?
Kenny Jacobs (KJ): The role of marketers and how that is driven by data and digital is a permanent change and that is driving a lot of the change at Ryanair.
We wanted to get IT and marketing working together in a different way, so that there are no functional divides between developers and testers, who work in IT, and digital and content people, who work in marketing.
MW: Will the labs take a ‘fail fast and learn’ approach to innovation or look at products with long-term strategic growth?
KJ: The retail part – which is the current Ryanair website, app, data and back-end systems – is the ecosystem that we continually evolve and make better. There will be a fail fast approach where we have new ideas to the category and things we have seen elsewhere that we would like to try. We will incubate those in-house ourselves with teams of people rapidly evolving ideas to see if it has a wider commercial and customer application.
MW: How will return on investment be measured at Ryanair Labs?
KJ: The measures we’ll use include asking: do we think this will increase bookings, which is going to drive revenue; is this going to support the retention of customers; does it support the Ryanair proposition and the brand; and is it good for customers?
MW: How will you use the hub to set you apart from competitors?
KJ: With innovation we are pragmatic. It is sometimes new stuff and sometimes it’s making yourself more efficient, for example one-click flight booking is one of our goals of efficiency.
Six principles for successful innovation
1. Stories travel within a business: encourage people to imagine the possibilities of ideas, curate images and tell the stories behind them.
2. Use your professional relationships to push through ideas within an organisation and to generate support to help projects succeed.
3. Beauty sells: mood boards or experiential presentations can help bring an idea to life.
4. Make it real by creating visuals of the idea or having a project room to store visuals so that development can be tracked.
5. Be prepared to make a business case. Think of every eventuality before presenting an idea, including financial and customer benefits.
6. Co-create by bringing in key stakeholders into the development stage and work together to generate the idea.
Source: Promise Communispace
Festival of marketing
Hear Ryanair CMO Kenny Jacobs speak about customer service innovation at the Festival of Marketing, 12-13 November. Festivalofmarketing.com