Market Sensitivity

We strive to be sensitive to the needs of the marketplace...


Market sensitivity involves a constant focus on the needs and requirements of customers.

Market sensitivity demands intense customer contact at all levels of the business. We strive to be sensitive to the needs of the marketplace and to meet those needs.


ACTION POINT: Ask your customers what they like and want.

Weighing the Pros and Cons

...looking at a project in just narrow cash terms may mean you miss out on some of its other potential benefits,

The easiest way to do this is through a cost-benefit analysis -- simply comparing how much benefit the idea will bring against how much it will cost in terms of resources. That might give you an overall feel for one project over another, but a more useful approach in some form of "decision matrix" that helps you compare many different alternatives on a number of cost and benefit dimensions.

Sometimes, looking at a project in just narrow cash terms may mean you miss out on some of its other potential benefits, like entering a new market, or learning some new skills, that you could then use in future projects.

ACTION POINT: Consider all of the cost's and benefits for any innovation opportunity.

Choosing the Right Options

...it is important to select only the most promising ideas to pursue.

Using these ideas helps you see what your options are, and how the would help your organization. But you still need to decide which of these options to choose, and justify that decision. Each option you pursue views opportunity costs in time and money, so it is important to select only the most promising ideas to pursue.

So how do you decide on this? You could just run with the ideas that attract you and act on your hunches. That is a little like a gambler throwing the chips down randomly or backing a horse in a race because they have a "feeling" about it. Or you could use a more systematic approach. You can never make innovation a cast-iron certainty, because there is too much uncertainty involved--will technology work, is there a market, will the competition introduce something else before us? But you can convert the uncertainty into some form of calculated risk.

ACTION POINT: Use some for of check on innovation projects before you start on them. Will the reward you expect be worth the risk and cost of the project?

Plotting an Innovation Profile

This will give you a simple outline of where your strengths and opportunities lie in a given market.

Having identified the order qualifiers and order winners in your target market, use market research to plot them on a simple graph against their importance to consumers.

Then develop a scoring system for how ell you and your competitors meet those requirements, and add the lines. This will give you a simple outline of where your strengths and opportunities lie in a given market. In the example,(blue line represents what market wants) you (yellow line) are behind the competitor (green line), so you either close the gap, or exit from the market.

ACTION POINT: Make sure you base your analysis on the most recent market research.

The Birth of Jesus Christ

Immanuel--which means God is with us.

This is how the birth of Jesus Christ came about: His mother Mary was pledged to be married to Joseph, but before they came together, she was found to be with child through the Holy Spirit. Because Joseph her husband was a righteous man and did not want to expose her to public disgrace, he had in mind to divorce her quietly.

But after he had considered this, an angel of the Lord appeared to him in a dream and said, "Joseph son of David, do not be afraid to take Mary home as your wife, because what is conceived in her is from the Holy Spirit. She will give birth to a son, and you are to give him the name Jesus, because he will save his people from their sins."

All this took place to fulfill what the Lord had said through the prophet: "The virgin will be with child and will give birth to a son, and they will call him Immanuel -- which means, God with us."

Winning Market Share

You need to have an idea of both...

In any marketplace, some basic requirements -- "order qualifiers" (factors that attract people to your product or service in the market place)-- must be met just to stay in the game. If your prices are twice those of your direct competitor, you are unlikely to do much business. But when everyone offers the same price, what will differentiate your product is something extras your offer -- higher quality, more features, sleeker design.

Order qualifiers are your entry into the marketplace, but "order winners" (factors that determine whether people will buy your product or service.) are what determine whether people buy form you or not. You need to have an idea of both: whether your planned innovation is simply catching (basic order qualifier) or moving ahead (creating an order winner).

ACTION POINT: Know the order qualifiers and order winners for your products and services.

Applying Strategic Analysis

Doing this well means collecting different views and information.

The innovation compass can help you look at possible directions, but you also need to plan in ways that help you move ahead of your competitors. You can do this through a strategic analysis of your market situation, to see if your proposed innovations have the potential to give you an advantage.

One way to do this involves profiling the planned innovations against what the market wants and what your best competitors can offer. Building such profiles step by step can provide a focus for shared discussion and bring in different perspectives from across the organization.

Strategy is rarely about "right" answers--there's too much uncertainty about innovation to make that possible. So you need to explore as widely as possible to get a "good" answer. Doing this well means collecting different views and information.

ACTION POINT: More minds on the job improves your overall knowledge and helps build support for your decisions.

Types of Innovation

...the types and degrees of innovation.


The innovation compass can be used to illustrate the types of degrees of innovation. Examples of the types and degree are:

• Radical Business Model Innovation - Apple's iTunes and iPod systems, which changed the music industry.
• Incremental Business Model Innovation - Rolls Royce's after sales support that emphasized service and support.
• Radical Product Innovation - White LED lighting that led to a shift in energy efficiency.
• Incremental Product Innovation - The first flat beds on transatlantic business class airline routes.
• Radical Process Innovation - Online banking and insurance aide the delivery of financial services automatic and cheaper.
• Incremental Process Innovation - NHS Direct in the UK, which began offering health advice over the telephone.
• Radial Market Innovation - Low-cost airlines that made flying available to a whole new market of flyer's.
• Incremental Market Innovation - Low-cost single use shampoo packets for low-income Indian households.

ACTION POINT: Look across markets, products, process's and the business model for areas of innovation.

Article 7.6 Innovation

Innovation flourishes when new ideas and approaches are nurtured rather than discouraged...

Innovation is the generation of new ideas, new products, new services, and new ways of doing things. This is critical to our continued vitality. Innovation flourishes when new ideas and approaches are nurtured rather than discouraged, when a positive work environment is created, when risk taking is supported, and when experimentation is encouraged.

We must in our pursuit include the collection of competitive data. Comparison of FSG performance to the most effective competitors is critical. Our goal is to exceed the best competitors in those critical factors that are relevant to the strategy of each business unit.

Through ongoing competitive analysis, we will strive to understand our best competitors to ensure that we compete effectively.

ACTION POINT: Know and understand what the best in your industry do well, then strive to exceed them.

Defining Your Innovation

A number of journeys can be taken, not just along the four main directions, but in combination.

The compass defines the "innovation space" your organization needs to explore to help move it forward. A number of journeys can be taken, not just along the four main directions, but in combination.

For example, you could introduce a new product that opens up a new market, as Nintendo did with the Wii and the DS, targeting people who had never played computer games before. Or you could apply a radical procedure as McDonald's did opening up the fast food market by applying lessons form Henry Ford's mass production process innovation in car making.

ACTION POINT: Look in all directions for innovation opportunities.

Modeling Innovation

Each of the four points of the compass represents one of the innovation directions.

To plan for innovation, you need some way to map the different possible directions, in order to apply resources and energy appropriately. One useful mode of this is the innovation compass, which plots innovation along two axis: doing things better, and doing things differently.

As we have seen, innovation can be radical or incremental, and can proceed in one of four directions: product or service, process, market, or business model. The innovation compass maps all these variables against each other, allowing you to work out where innovation efforts in your organization are concentrated, and where they are neglected.

Each of the four points of the compass represents one of the innovation directions. Incremental innovations sit closer to the center while radical innovations are placed farther away. Plotting all of your innovation projects on a graph helps you direct innovation to the areas of your organization where it will be most useful.

ACTION POINT: Understand the four directions of innovation: product/service, process, market and business model.

Innovation with Impact

Make sure people understand the "big picture"

India's Aravind Eye Clinics revolutionized treatment of eye problems like cataracts, which caused preventable blindness for around 45 million people. The operation to treat it is relatively simple but costs around $300 -- well out of the reach of the rural poor.

But through a systematic series of process innovations targeted at reducing cost without compromising quality, the average cost came down to $25. This sustained pattern of innovation continues, and with around 250,000 operations performed every year, these clinics have become "best practice" centers for surgery, with doctors coming from around the world to learn from them.

ACTION POINT: Make sure people understand the "big picture" -- what you are trying to achieve with innovation. Once it's clear what the challenge is they can contribute their creativity and energy to help make it happen.

Innovating Across The Board

...they need the discipline to manage what can be huge projects: to complete them on time and within budget

It is not just commercial organizations that need an innovation strategy. Our public services desperately need creative ideas for change to deal with problems like education, health care, transportation--but simply spending scarce taxpayers' money on any project that looks interesting is not a good recipe for long-term improvement in those services. We need focused change, targeted at what will make a real difference.

And they need the discipline to manage what can be huge projects: to complete them on time and within budget, and, if necessary, to kill them off before they become potential high-profile disasters.

ACTION POINT: Focus on areas where innovation can make a real difference.

Article 7.5 Quality

We will strive to make quality a basic goal of all businesses and activities.

Quality is delivery of products and services which fully meet customer requirements and expectations. All of us have customer relations who expect and deserve high quality.

We will strive to make quality a basic goal of all businesses and activities. A goal which we do not compromise.

ACTION POINT: Know and understand customer expectations and then meet them.

Innovating Internally

it is just as important to have a strategy inside the organization,

An overall innovation strategy matters if you are competing with other organizations in the marketplace. But it is just as important to have a strategy inside the organization, to help prioritize changes you make to the ways you do things -- or process innovation.

This will help you to avoid a situation where you spend your energy improving irrelevant details while leaving the really important changes undone -- a bit like rearranging the deck chairs on the Titanic.

ACTION POINT: Look internally for innovations that really matter to your business.

Developing a Strategy

...what are you going to do, and why are you choosing that option over others?

An innovation strategy requires three key elements:

• Strategic analysis: what could you do, and why would that make a difference?
• Strategic decision-making: what are you going to do, and why are you choosing that option over others?
• Strategic action: how can you make sure the project happens, and support and review it as the innovation takes shape?

Some of the most important innovation decisions are not about starting projects, but scrapping those which looked good at the outset but which then failed to develop as expected.

ACTION POINT: Make sure all your decisions have sound strategic backing in line with the wide aims of the organization.

Planning for Innovation

Careful planning is essential for successful innovation.

Every organization needs to innovate to keep pace with a changing world. But unless you know where, what and why you want to change, your blueprint for innovation will come to nothing. Careful planning is essential for successful innovation.

Developing a road map for change, or an innovation strategy, can help your organization to stay ahead of the competition over the long term. Any innovation project involves resources - money, time, employees' skills -- and you need to spend these wisely if an innovation is to be worthwhile.

ACTION POINT: Are you keeping pace with the changing world?

Preparing For Challenges

Do you actively explore the future...

Be aware of areas in which proposed innovations could help make your organization both more vulnerable and more resistant to outside changes. The following checklist is a guide line in preparation for challenges:

• Does the organization's management create "stretch goals" that provide the direction but not the route for innovation?
• Do you actively explore the future, making use of tools and techniques like scenarios and foresight?
• Do you have the capacity to challenge your current position--do you think abut how your business could be adversely affected?
• Do you have strategic decision-making and project selection mechanisms to deal with radical proposals?
• Do you have, and make, connections across your industry to provide your organization with fresh perspectives?
• Do you have alerting mechanisms to warn you about new trends?

ACTION POINT: Identify which of the above you should begin doing.

Article 7.4 Envisioning The Future

Not daring to take the risk of making the new happen, takes by default the greater risk of being surprised by what happened.

We must understand change and accept change as a way to update the old and bring in new creative ideas. Forming a vision calls for a capacity to take risks, to literally suffer change. This is distinctive among market leaders.

Forming a commitment to vision means giving up the present for a limbo state, somewhere between what is and what will be. Limbo can be a shifty, treacherous place. For one thing it is often chaotic. In fact it is the epitome of the ambiguous. We must tolerate inevitable resistance, and in the name of the vision, hold true to the uncertain course.

Not daring to take the risk of making the new happen, takes by default the greater risk of being surprised by what happened.

Current success will be achieved through the willingness of all the FSG team to look to the future rather than dwell in the past, to see the world as it is rather than as we would like it to be, and to move toward our goals boldly.

ACTION POINT: Be bold and endeavor to make new things happen.

Dealing with the Unexpected

How can you implement innovations that are totally different from anything you have done in the past?

Dealing with the unexpected is part of the innovation challenge -- in some ways the most important part, as unexpected challenges can prove life-threatening to an organization. From Henry Ford working on "a car for Everyman," to the IT specialist who moved banking, insurance, and stock trading online from paper, or the revolution in the music and entertainment industry caused by Internet file sharing, new business models are constantly emerging.

And in each case, established players were severely damaged because they responded too slowly, leaving the door open for new competitors, some of whom have become today's major players. To combat this, innovation managers should always try to answer the following questions:

• How can you search at the edge of your organization's radar for problems and opportunities?
• How can yo make sure your message gets listened to and acted upon when something important occurs?
• How can you implement innovations that are totally different from anything you have done in the past?

ACTION POINT: Be aware of areas in which proposed innovations could help make your organization both more vulnerable and more resistant to outside challenges.

Meeting Challenges

...you need to be thinking about the challenges that will face your organization in the near future.

Innovation is about adapting to an environment that is always turbulent and often hostile. It is not enough for a manager simply to cope with today's challenges -- you need to be thinking about the challenges that will face your organization in the near future.

Like human beings, organizations tend to view world in terms of what they expect. Contemporary business is extremely complicated, and seemingly distant changes can suddenly turn out to have a huge impact close to home as the 2008-09 global financial crisis amply demonstrated. While, for the most part, your organization can rely upon established models, radical changes in the business environment do sometimes occur, and innovation is essential to coping with them.

It is vital for the innovation manager to consider not only how to innovate when things are going well, but also when they are going badly. Some current factors that have the potential to upset established business models include:

• Climate change
• Sustainability of energy, and waste disposal
• Increase in digital commerce and telecommunications
• Social trends such as an aging population in western Europe and the US
• Shift in economic power to emerging markets
• The rise of consumerism in developing nations, especially those with large populations

ACTION POINT: Look ahead for the challenges that your business will face in the near future.