Customers are poor predictors of their own behaviour. No matter how much research a company does, managers who bring a new business to market will hold their breath at launch-time just as much as NASA scientists do with a rocket launch.
Tesco, for example, spent a year in the houses of the citizens of the West Coast of America ahead of their launch of their new store concept, Fresh & Easy, in November 2007. Their aim was to fully understand the needs and motivations of these consumers before bringing their new concept to the market.
Yet the stores never took off. The management team decided to rapidly roll out the new store chain based on the insights gained from their research, opening 100 sites rapidly and building up a chain of over 200 stores. Yet, the concept never worked and a little over five years from the opening of the first store Tesco had sold the Fresh & Easy chain to a private equity firm and made a cumulative loss of $1.5 billion!
I know from my own experience that research and even early success is a poor predictor of ultimate performance.
Back in 2003, when I was working for Boots, I led a team that researched a new-style city centre store. We piloted the new concept in London and our store immediately saw a double-digit growth in sales.
Believing we had found the answer I moved the project team on and a new team took over the work. The problem, however, was that much of our success was due to random factors rather than – as we had believed at the time – our own brilliance, and future stores failed to justify their investment. Less than a year later the programme was stopped.
My painful lesson from this experience was that creating an innovative product or business is, above all, an iterative process. It requires trial and error, constant review and refinement and a willingness to remain open-minded about the solution. Customer research can only point you in a certain direction; it cannot give you the answer.
Innovation is not the job for a strategist but for those focused on action and learning. It is a hands-on, sleeves rolled-up, dirty business and not a theoretical exercise.
As any successful innovator will tell you it is likely to be the hundredth trial that gives you the answer; it is almost impossible that it will be the first solution. This means that you must start small, learn quickly and go from there.
The irony for Tesco’s management is that they knew this. The development of their highly successful Tesco Express format in the 1990s, for example, took several years of trial and error of a handful of stores before finding a profitable model that the company could roll out.
How are you getting your hands dirty with your innovation process, and what steps do you take to rapidly test, iterate, refine and improve your initial ideas?
© Stuart Cross 2016. All rights reserved.