12: Innovating for the Unconscious
Most sources agree that 80-90 percent of all new product launches fail within the first two years of their introduction, and a similar number of startups fail in their first two years. As excited as we are about innovating, we seem to do very poorly at considering whether innovative ideas are actually any good. This is particularly true in the present culture of business, in which "innovation" is a buzzword that is attached to anything different than what was done before, and is often used as a subterfuge to re-try an idea that failed in the past.
There are various excuses for why a new product fails - but it always comes down to one thing: the market rejected the idea. Whether the insiders who developed the project ignored the market in pursuit of their own agenda, or were mislead by poorly conducted market research is subject to debate. And because human beings are embarrassed by failure, there is seldom sufficient and valid analysis as to the reasons why. In the rush to prove that failure is "not my fault" we fail to identify the actually cause of the failure (which is generally someone's fault), which means we fail to learn the lesson of failure, which means we repeat the same behaviors in the future and re-fail as a consequence.
For starters, innovation for innovation's sake is always a bad idea. We must be clear on what goals we are attempting to achieve, and be sure that innovation is the best way to achieve them. Sometimes it isn't. Sometimes, it does more harm than good. It's generally considered that the strength of the brand facilitates the introduction of new products by virtue of the brand's strength - but where the new products are not a fit for the brand, they can erode its strength. Not only does the new product fail, but the brand has lost some of the esteem it once had.
Even if the new product is a commercial success, it diffuses the brand if it is not closely related. Consider the example of Xerox, once so well known for its photocopiers that people would say "make a Xerox" rather than "make a copy." But Xerox lost that power when the firm attempted to reach into other office electronics - printers, fax machines, desktop computers, and more - so people went back to saying "make a copy" and increasingly considered copiers from other manufacturers. The additional profit of offering an array of products was far outweighed by the loss of on the product to which it was so strongly associated in the mind of the market.
Where a new product would weaken the parent brand, it's often best not to extend the brand. It's noted that both Clorox bleach and Hidden Valley salad dressing are made by the same company, but they did not market the salad dressing as being "from the makers of Clorox" as that would obviously be detrimental to both. Likewise, when Japanese auto manufacturers who had a long-standing reputation for cheap and efficient vehicles wanted to move into a more upscale market, they came out with new brands: they didn't want to advertise that Lexus is merely a fancy Toyota and Acura is an overpriced Honda.
This is not to say that a brand cannot span multiple products, but this depends on its association. Clearly, Xerox was associated to photocopiers and not to office equipment in general. But the brand Nike was originally a manufacturer of sneakers, but because the brand was associated with sports in general, it has been able to successfully extend that strength to all kinds of sports apparel and gear without diluting its association to shoes. But such companies are unusual - in most instances new products and brand extensions dilute the brand, making it stand for less rather than more.
Next is the problem of attempting to solve problems through marketing innovation when the real problem is not something that marketing can fix. If there are serious problems with the product, clever marketing is not a sustainable solution - it can trick a few people into buying it once, but never again. And with the internet and social media to share their outrage, the first few people you trick will prevent you from tricking many others.
However, marketing is not always a trick - sometimes it creates awareness of a genuine benefit that the market is not aware of. Consider that baking soda is useful for many things other than just baking, and marketing it as a general-purpose product for cleaning has driven sales of the product without being deceitful. Another example is Gatorade, which enjoyed moderate sales as a drink consumed during sporting activities. Marketing helped to educated the audience that it wasn't just a tasty beverage, but delivered specific benefits (replenishing fluids, minerals, and other nutrients) and that it was beneficial to drink before and after physical exertion to build up and replenish. This is also non0-deceptive, and made Gatorade seem more legitimate and authentic than other sports drinks in the mind of the market - and because it was still related to its core value (athletic performance), the use of the product as an anytime beverage did not diminish its association to athletic events.
The mania for innovation has also encouraged the mindset that everything old is bad, but this is simply not the case: there are many old brands that benefit from their sense of permanence and tradition. Coca-Cola is an old brand that seems forever young, and even Pepsi's attempt to make it seem outdated failed to win significant market share away. Many banks and financial institutions retail their markets by having a long history of stability. So there's much to be said for businesses that remain true to their roots and continue in their "old fashioned" ways - and for them to dress up in the latest trends and pretend to be teenagers would be ridiculous.
He goes back to the notion of fighting brands, which allow a company with a valuable history to be innovative without harming their brand. For example, Coca-Cola saw the fitness craze as being a trend that may not have much longevity, so rather than coming out with coca-cola water, the company created the Desani and Vitaminwater brands. (EN: the list of brands that are owned by Coca-Cola is actually quite extensive, as it often uses fighting brands for product categories and international locations where its parent brand might be an obstacle.)
Wrapping back to the opening point, most innovations may fail, and it's necessary to accept the possibility (or probability) of failure in order to make any progress at all. But at the same time, always be protective of an established brand and avoid diminishing its strength by tying its reputation to a new and unknown product. Extend the brand only where it makes sense for the existing product as well as the new one.