20/06/2017
The Australian Prime Minister has been spruiking the innovation imperative since the beginning of his relatively new tenancy, but how legitimate is the need for innovation, and how urgent is the need for Australian corporates to begin adopting an effective innovation methodology? In other words do we have an ‘Innovation Imperative? The answer to all of these questions is a resounding ‘YES’.
A number of factors are contributing to this Innovation Imperative, including: rapidly changing consumer markets with unprecedented digital access. This means that the “market” which now consists of millions of online consumers, is no longer stable and consistent. Instead consumer habits are constantly shifting. Disruptive technology has meant a disrupted market. More micro and niche markets are available than ever before, and the opportunities for start-ups to take these rapidly developing market shares (your share) is easier than ever before.
I recently read a report on why McDonalds is struggling globally, with the author citing problems with quality and product identity. What this author failed to mention in the report was the consumer’s appetite (pardon the pun) for the McDonalds product. This is where any report on the success of the business should have started. If we examine the McDonalds product, it is at odds to what is happening with consumer trends. McDonalds has prided itself for so long on the fact that you could get a standard quality meal, no matter which McDonald’s outlet you went to. The problem with this business model is that consumer habits have changed. No longer are consumers happy with the standard. McDonalds is a typical example of the Automation Age, where businesses were characterised by: 1.Economies of Scale and; 2.Cost efficiencies. Modern day businesses have entered the Digital age and are characterised by: 1.The need to personalise products; 2.The threat and constant work required to remain relevant in a constantly changing market; 3.The need to insure that your products are designed to meet the tastes of the consumers (Design-intensive).
Within the Digital Age, consumers are seeking choice, and seeking the new experiences and conveniences attached to these new choices. Example: What is the biggest risk to beer manufacturers? The answer is losing their market share to boutique beer breweries which grew by 9.5% in 2015. The number of industry operators is growing especially smaller breweries that focus on niche markets.
The new economy is called the ‘economy of people’. Alongside the growth in this ‘economy of people’ is also the ‘economy of things’, which is the automation of things. The ‘economy of things’ is about automating the processes of the things that we own to improve customer service. When your car is involved in an accident or you lock yourself out of your house, for example, it is possible objects themselves interface with companies to autocorrect malfunctions or speed up the customer service process.
What does this mean to the market? It means that the major markets are segmenting into a larger number of micro markets. Modern day business is required to be agile in its product development in order to quickly appeal to mass customers in a market that may shift to something new in a relatively short period of time. It is incumbent on business to rapidly develop products and processes customised to the end users that can be scaled and descaled with efficiency. With rapid relatively rapidly changing markets, being first to market in order to capitalise, is sometimes everything.
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