The Question of Transformation

The Question of

Transformation A perspective on the pursuit of breakthrough innovation.

There’s a rarely-discussed but fundamental truth about the pursuit of growth-driving transformational innovation: the likelihood of an innovation project landing on transformational answers pivots almost entirely on whether it starts with transformational questions…

After years being delighted by the diversity of the innovation challenges coming over the transom— in our case, a decidedly mad mix spanning wellness to whiskey, soft drinks to software, money to music, hotels to haute jewels, microchips to potato chips, and literally soup to nuts— you suddenly find yourself gob-smacked by the thread of similarity running through it.

Across companies, categories and countries, an armada of innovation teams sets forth daily, each with great promise, an aggressive, growth-minded leadership team, a formidable body of knowledge about its market space, and a tangible asset base spanning brands, infrastructure, technologies and market presence. Yet the majority struggle to unlock the transformational answer.

The struggle triggers a call for help from outfits like ours, and a conversation that, in one way or another, dances toward the same big question:

So how will you guys crack the transformational answers we haven’t managed to unlock ourselves?

What they mean of course is: C’mon guys, what’s the big answer’s proverbial secret sauce?

What’s the repeatable rain dance that allows you, or anyone else for that matter, to crack the lightning strike transformational answer that we somehow can’t quite see for looking?

What we tell them, and offer here to anyone in innovation with transformational ambitions, is that they’re asking the wrong question.

The real alchemy of transformational innovation isn’t about the answers at all.

The answers are, believe it or not, the relatively easy part.

The tough bit is what comes before:

Finding transformational questions.

A QUESTION OF

Competitive

Advantage What becomes clear in a long march across dozens of companies and categories is that a staggering amount of competitive advantage lies in the definition of fundamentally new questions around which to engage the marketplace, and mobilize your team’s pursuit of breakthrough innovation.

We’re not talking about

clever new probing techniques or the familiar ‘what if…’ questions—which are, in truth, just potential answers with question marks at the end—it’s much more fundamental and strategic.

It’s about framing big, high altitude questions that pack a healthy disrespect for present reality, that dare to challenge the fundamental nature of the categories, businesses, behaviors, experiences and companies around which we’re asked to innovate, and that ultimately define a path to positive market disruption.

In our experience, transformational questions have superhero powers.

They materially change the conversation, both inside a company and with the customers it’s out to serve.

They challenge underlying assumptions that have, artificially and unhelpfully, come to be mistaken over time for immovable category truths.

And above all, these transformational questions spawn transformational answers—breakthrough innovations and the new competitive advantage that comes with them.

A QUESTION OF

Assume you and your competitors

PERSPECTIVE Before we go deeper on the pursuit of those transformational questions, let’s understand the innovator’s life without them.

are chasing the same consumers. So, sensibly enough, at the outset of your innovation program, you round up a bunch of them, and probe what they like and love, dislike and barely tolerate about their current category experience.

You tease out their pain points and unfulfilled aspirations and conjure sparkling new offerings that do away with the bad and usher in the good.

It works for a while, but eventually you find the thrill is gone. Everyone in your category, it turns out, is rallying around the same questions, and chasing marginal builds on the prior answers.

Some better, some worse—but subtle differences do not a breakthrough growth engine make.

You’re left relying on fleeting advantages in technology and design rather than sustainable, highly differentiated and scalable strategic and conceptual market-making platforms. In the long run, the commonality of questions becomes strategic gravity, begetting narrowly clustered innovations across a competitive set.

Of course finding new answers to age-old questions isn’t a bad thing. You’ll occasionally pluck a tasty helping of low hanging fruit that way, and that kind of innovation has an important role to play in a balanced innovation portfolio. But, as a general rule, a same-questions approach will tend to make future growth a function of execution rather than strategic differentiation, which can lead to margin erosion and sleepless nights for your CFO.

Enter the transformational question.

The way a transformational question changes the odds of a big answer is that it shines the klieg light on something we call the problem behind the problem—not the surface level challenge the project was initially chartered to solve, but a big hairy thing lurking behind it in the shadows.

More often than not, the surface problem is just a symptom of the bigger one.

For instance, where a beverage company

once engaged us around the question of how to reignite the interest of 21-year-old guys in a once-hot category on the wane, the problem behind the problem was that the powerful underlying technology platform had been leveraged only against a narrow and fickle segment of society. Solving that background issue would open bigger growth opportunities, and ensure a similar problem wouldn’t resurface in a few years when 21-year-old tastes took their next inevitable u-turn. Finding the problem behind the problem takes some practice, but experience says it’s always there, and solving it does two big things.

Since the foreground issue is usually just a symptom, solving the problem behind it makes the first one go away.

And since the problem behind the problem is usually far bigger, its resolution opens bigger opportunities.

A few examples show how this plays out.

Question

Spending We were asked by a bank to frame up an innovative new way to teach people to save more. Racking up savings deposits is a big win, both for the bank on the receiving end, and for consumers’ hopes of a comfortable retirement. Based on prior research, the client team had concluded that the enemy was ignorance—consumers weren’t saving enough because they didn’t fully understand the consequences of not saving: namely, an inability to retire comfortably and retain their homes.

A quick glance around

the category revealed no shortage of attempts at this same sort of thing—stacks of brochures, interactive tools, seminars and even games. Clearly everyone in the category was having similar conversations with their customers, resulting in similar questions, and similar answers. The un-thrilling truth was that better execution of the same type of answer was the best this project could hope for.

The problem behind the problem was that saving competes with spending and loses almost every time they go head to head.

Enter the transformational question We kick-started our thought process by questioning the question—was ‘How do we make financial education more palatable and effective’ the right thing to be asking? Rather than begin in the narrow space of financial education and views on retirement, we started at a much higher altitude.

We asked everyone we knew—from the mailman to the pizza delivery boy to the stock broker to the soccer mom—something far more fundamental: did they think they were saving as much as they should?

A funny thing happened. No matter who we asked, their social stratum or level of financial acumen, we couldn’t find a single person who said yes. What this meant was that whether they were financial black belts or white belts, they all knew enough to want to save more, but weren’t getting there.

Then we asked them why they weren’t saving more. Here, the answers were vague, varied, delivered with little conviction and tending toward post-rationalization.

In fact the loudest thing in the conversation (and something you need to train your ear to hear if transformational innovation is your calling) was what wasn’t being said at all. No one ever described having made a conscious decision not to save.

The big picture, and the transformational question, suddenly snapped into view.

In the go-go consumerism of the past few decades, saving had gradually been transformed from a conscious thing to little more than a derivative consequence of dozens of decisions to spend, and the feelings in play in those moments.

As simple and obvious as this sounds, it’s actually a profound statement that completely reframed the challenge and approach to this initiative. The shift from ‘how can we make financial education palatable?’ to ‘how can we give saving a fighting chance against spending?’ changed everything about the approach.

If you begin to look at spending as your archrival, you see the world differently. Do a SWOT analysis on saving vs. spending and you see that saving is brutally disadvantaged. Spending is impulsive, hedonistic, emotional, instantly gratifying, fun, rewarding to the senses, and irrationally layered with feelings of freedom, power and self-reward. Saving, on the other hand, is premeditated, rational, moralistic, and synonymous with saying no.

The transformational question, ‘how can we transform saving to give it a fighting chance against the ubiquitous joys of spending?’, can only be answered through transformation.

Not a me-too attempt to educate, but rather a disruptive new model for capturing deposits that imbues saving with the new dimensions of hedonism, impulsiveness, and immediate gratification it needs to make meaningful inroads in day-to-day life in a pleasureseeking society.

CONDITIONAL

LOYALTY Flying in the cash-spinning jet stream of the first Frequent Flyer Card launched in 1979, loyalty programs have proliferated across everything from travel to soft drinks to your neighborhood hardware store. And with good reason.

The economics of getting the proverbial ‘one more purchase’ from an existing consumer are very sexy.

A client at the forefront of the loyalty

game engaged us to define their next move, hoping to up the ante over the competition, which had fast-followed their prior innovations and narrowed the gap.

They came armed with everything one would ever want to know about the ins and outs of the category’s programs today, and even their customers’ rankings of potential new features they would value most. The client team had brilliantly framed up the possibilities and was equipped with sophisticated modeling techniques, segmentation studies and payout analyses showing how moving the loyalty metrics on various consumer segments would lift company profits.

It all seemed poised for a straight march to success, but as we began our consumer discovery phase, talking to the coveted top tier road warriors that loyalty programs were built to woo, we began to detect something in the background that we hadn’t expected at all.

Fundamental disdain.

Beneath the seemingly reasonable discussions about future features, we began to sense an adversarial posture.

These most ‘loyal’ players saw the programs as little more than ways to actively use and abuse the companies that use and abuse them. We abruptly redirected the line of inquiry from features to feelings.

We were struck by how these things called loyalty programs actually had nothing at all to do with genuine loyalty. They were merely transaction incentive programs doling out de-facto bribes in the form of freebies and status to those who transacted most, and punishing those who wavered with downgraded status. We realized again that we had been asking the wrong question. The question of ‘what’s the next breakthrough feature?’ would at best have spawned incremental change and a program that was disliked slightly less than the others.

The transformational question was ‘what’s the difference between the prevailing paradigm of loyalty programs and the bonds of loyalty formed between people through their lives?’ This change of perspective transformed the upside potential of the project from mere one-upmanship toward a transformational step-change in what a loyalty program could be and mean. We dove into understanding the characteristics, color and deeply embedded, unarticulated behavior codes that pivot around human loyalty, and found amazing flint to spark disruptive innovation.

Human loyalty is emotional rather than transactional, characterized by ongoing give and take rather than mutual abuse, and continually built over time as the cumulative body of interaction grows—without intermittent resets based on ‘what have you done for me lately?’

The problem behind the problem became clear: loyalty programs actually bear no semblance at all to human loyalty.

The transformational answers based on this understanding will not merely fulfill the immediate problem of restoring leadership, they will define a whole new path for loyalty program innovation, transforming the loyalty program experience and even the underlying algorithms by which loyalty is measured and rewarded, setting a new standard for decades to come.

While the specific transformational questions that unlock transformational answers on your innovation initiatives will be specific to category and task at hand, here are some principles that can guide you toward finding them.

WAYS TO GET TO Transformational Questions And The

Bigger Answers They Open Up

1

Assume transformation is necessary.

Consciously try to identify things in your category, consumer experience, products and business that just are the way they are, without needing to really be that way. In most businesses, you’ll find a long list of these things and transformational questions hidden inside them. In an age of personalization, when there is such tremendous breadth in consumers’

2

The only way to get to transformational questions is to purposefully chase them, and this starts with assuming that transformation is necessary rather than an option.

Assuming transformation is necessary changes the conversation in the team from ‘should we transform something’ to ‘what will we transform?’

financial means and trajectories, why do mortgages come in only 15 and 30year increments? When less than 15% of the population finds full-strength spirits palatable, why is 98% of the category sold in a way that requires compensatory behavior? For inspiration, just look how far architect Frank Gehry was propelled by simply questioning the need for walls and roof lines to be straight.

Cultivate a healthy disrespect for present reality.

Knowledge is a potent form of competitive advantage, but there is often a razorthin line between a knowledge base and the entrenched paradigms that have been attached to it over time and permeated innovation in your category. Know that knowledge is power in certain moments in the journey, but kryptonite in others if not properly harnessed.

3

Temporarily forget what you know.

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Ask yourself how likely it is that your competitors aren’t working on the same questions you are.

Move the camera around the room.

Literally picture yourself right now sitting in the room with a similarly-chartered project team at your key competitor’s office. If you can readily imagine them working around similar questions, you probably haven’t cracked the transformational questions you’ll need to get to transformational answers. The point is not to second guess what your rivals are up to, but simply to gauge your own conviction that you’ve uncovered transformational questions. Big thinkers find big questions exciting. So if you don’t viscerally feel that you’ve broken new ground, you probably haven’t.

Finding big transformational questions usually happens by distancing ourselves from the prevailing category context we live in every day and approaching it from a fresh angle. This doesn’t just work metaphorically, it works literally too. Looking at your ice cream business not through the eyes of the consumer seeking indulgence, but from the perspective of the product behind the frosted freezer glass watching consumers go by, like an orphan hoping for adoption, may open a powerful new set of questions to ignite transformational innovation. If that doesn’t work, deconstruct the life cycle of an ice crystal born in the churn at the factory, or ask what the spoon would say as it’s bent in the act of scooping.

6

Learn to hear the thundering sound of the thing that ISN’T being said.

Paradigm-creep isn’t just a company phenomenon. It happens to consumers too. They often become so accustomed to embedded characteristics and compromises that they don’t even think or talk about them. (When’s the last time you got to work and said ‘boy, how about that gravity today?’) The great innovator needs to a sk at every touch point what didn’t we hear that was interesting. We didn’t hear a single consumer say they had consciously decided not to save. We didn’t hear a single hint of loyalty in a conversation about loyalty programs. The unsaid is often the most telling thing on the journey to transformational questions, and the answers they unlock.

Fahrenheit 212 is an innovation consultancy that is engaged to deliver top line growth. To learn more about our transformational approach to innovation, visit www.fahrenheit-212.com.