After some innovation? Just ask around

At last, a cure for the common cold? Well, not quite. But with Vicks First Defence, Procter & Gamble hopes it might have the next-best thing. First Defence isn’t a drug. It doesn’t actually attack the cold virus. Instead, it neutralises it by a clever combination of physical mechanisms. A nasal spray creates a gloop that wraps itself around virus particles while creating a protective barrier on the skin inside the nasal passage. This prevents viruses from replicating. Meanwhile, because the gloop has a low pH, it also deactivates them.

So, as soon as you notice any symptoms, simply take First Defence a few times and the chances are you’ll fend it off. With a pitch like this, P&G hopes it has trumped the over-the-counter cold remedy market. Vicks First Defence is a “technological breakthrough with a revolutionary formula that will step-change the way consumers, doctors and pharmacists pre-empt a cold”, it boasts. Eat your heart out, Night Nurse.

If First Defence takes off (it is already on sale in Germany and will be launched in the UK soon) its potential market is huge. Yes, it has taken five years of research and development to get the gloop working properly, but the fundamental elements of the product – nasal sprays, lower pH levels – are not new. P&G just put them together in a new way to tackle an old problem from an unexpected direction. It’s indicative of a new, more pragmatic but urgent approach to innovation now sweeping companies. The biggest thing in innovation right now is that companies are being innovative with innovation.

What are the ingredients of this rethink? Cross-fertilisation of every type – across technologies, across market and category boundaries, and across departmental and organisational boundaries – is one.

Speaking at the Marketing Society’s Summer Campus last week, Diageo head of global innovation strategy Syl Saller noted that the key to Smirnoff Ice’s success was a determination to cross-fertilise the previously separate markets and marketing strategies of spirits and beer. “Co-creation”, where companies work with customers to identify and develop new ideas, is one of the new buzzwords. “Openness” is another. One of the hot topics at P&G is “connect and develop”. Until recently, P&G’s approach to research and development was rather “like the Kremlin”, observes Nabil Sakkab, global leader of P&G’s fabric and homecare research and development. It was closed and highly secretive.

harnessing the massed millions Hand in hand with cross-fertilisation is reconfiguration: unbundling existing propositions and putting them together in new ways to create new markets. Many of the most successful innovations do a combination of four things, Insead professor Chan Kim told the Summer Campus last week. They eliminate things that cost a lot or that customers don’t care about; they reduce some elements of cost or offer; increase others; and perhaps add a few elements that are totally new.

Low-cost airlines are a good example. There’s no great product breakthrough in what they do. They just configure the old elements (planes, airports and so on) in a new way. Likewise, there’s no Earth-shaking, patented ingredient to Starbucks.

Smirnoff Ice eliminated the costly economics of brewing, reduced the price and strength of its spirit content, and increased marketing spend to beer levels while emphasising masculine credibility. By rearranging such “molecules” of value, it created a stunningly successful new bundle.

But the dream, argues Kim, is to reconfigure entire markets in the same way. Companies that do so successfully create uncontested high-growth new market spaces, which Kim calls “blue oceans”. In the blood-filled “red oceans” of traditional competition, competing players slug it out, using well-known tools and techniques, for share of a market that is already clearly defined. Blue-ocean strategists create new markets. “If people are confused about what industry the company is in, that’s good,” says Kim.

A third ingredient is what P&G UK and Ireland managing director Gianni Ciserani calls “holistic innovation” – innovation that looks at every aspect of value, not just the product. Recently, many of the most successful innovations have simply delivered the same old product in new ways, he observes. Think soap-powder tablets, for example. “Perhaps the majority of future innovations will come from new packaging or from new ways of using products rather than from new products per se.” New customer or company processes are part of this holistic approach. Think how the iPod changes the customer process of acquiring and accessing music. Or how Google changes our use of the internet.

Power through the people According to Ciserani, the biggest challenge in innovation is “the challenge of listening. It’s all about curiosity.” Every week, P&G invites 1,800 children and their mothers to its global paper technical centre in Swalbach near Frankfurt. They help the company test out new ideas for products such as Pampers. But they also give P&G personnel a chance to chat: to ask open-ended questions. The idea for children’s toilet wipe product Kandoo came that way, Ceserani points out.

Changing culture is never easy. That’s why Virgin Atlantic never employed people with an airline background, and why First Direct never employed people with a banking background. Listening isn’t easy either.

But the underlying shift is clear. We used to think of innovation in terms of products and inventions. Now, increasingly we are realising that innovation starts and ends with people. As P&G European president Paul Polman puts it, “as we talk innovation, we talk attitude”. Has your company got the right attitude?

Alan Mitchell, asmitchell@aol.com