The innovation mindset: Your brand’s most valuable asset
October 14, 2021 •Sorcha O'Boyle
Most business’ mission statements sound pretty similar. They offer goods or services that make their customers’ lives easier, happier or more productive, they strive to do their best and act with integrity and they value customer-centricity and innovation.
But what does innovation actually mean for the people in these businesses? How can leaders structure their businesses to foster an environment where innovation is encouraged? And why does it matter in the first place?
The rate of change in the world of direct-to-consumer retail and ecommerce continues to increase at pace, spurred on by technological advances, pandemic-inspired changes in consumer behaviour, and shifting expectations. Brands are forced to innovate constantly just to keep up and teams and leaders are always on the lookout for new ways to surprise and delight their customer while maintaining a lean business model and operating on ever-slimmer margins.
Just thinking about it is exhausting.
But innovation and new ideas aren’t enough by themselves. A culture of innovation can unlock growth and open the door to new opportunities that couldn’t have been dreamt of 6 months ago – but innovation can only be successful at scale if the business has laid the right groundwork.
Think of the groundwork like a petri dish. Take a good idea, give it the perfect conditions for growth and it will germinate and thrive. As the business grows, it needs different conditions to flourish. But you can’t just throw everything at it and hope something works; as a leader you need to test different ideas and see what brings the best results. To go back to our petri dish analogy, you have to keep the filter paper damp for the seeds to germinate but don’t flood the dish or your poor seeds won’t stand a chance.
Innovation, imagination and new ideas need to be tested ruthlessly and supported by rigorous processes and data-led decision-making. New research from McKinsey has found that the top-growing companies are more than twice as likely as low-growth companies to make their decisions based on data and to seek ways to disrupt their own businesses. Practically-speaking, it can be hard to lead with your head instead of your heart but the outcomes for data-led businesses are overwhelmingly more positive than from instinct- or emotion-led companies. As with everything, there’s more nuance in real life (and Artificial Intelligence is very different to Actual Intelligence) but the fact remains that investing in your analytics capacity and fostering an innovative business culture will help you be more successful.
So how can you foster real innovation in your business?
Test and learn
The advent of digital culture within organisations has been hugely disruptive. It hasn’t just changed the way we communicate with customers and colleagues, it’s changed how we run with new ideas. Digital teams (and particularly digital natives) have grown up in a world of ‘try it and see’ where plans are more fluid than before and can be adapted in response to performance or results. The beauty of digital campaigns and platforms is that teams can test new ideas instantly and learn what works best for the customer in real time.
Take Facebook as an example. The best Facebook campaigns start with a range of creative options that get equal exposure to customer. As Facebook has more data points than pretty much anyone else, the AI learns what creative works best with each cohort and can fine-tune each campaign based on consumer behaviour. At its very simplest, that’s how Paid Social campaigns work and it’s how digital teams work best too. Instead of starting with a firm idea of what the customer wants, teams are comfortable with testing a wide range of different ideas and learning from what works – and what doesn’t. The healthiest digital teams work in a cycle of testing, learning and planning (in that order) which is completely different to traditional approaches, even for D2C brands.
Most Board members aren’t digital natives. As a result, what works digitally may not go down well at Board level where there might be some wariness around investing in a plan or project with a test and learn methodology.
The digital approach is what works now. Think about it this way, if you run a successful womenswear brand, you’ll get much more value from investing time, budget and energy into A/B testing across your channels than you will from throwing £300,000 into a new menswear range for Christmas just because your Board thinks it might be a good idea.
Be prepared to fail (and enjoy it!)
In the wise words of Denzel Washington: ‘If you don’t fail, you’re not even trying.’
Failure and innovation go hand-in-hand. For every brilliant idea, there are probably three or four that fail miserably. But failure isn’t a bad thing; even if your plan doesn’t work, you’ll learn something new about your customer, your team or your product. Incentivise your teams to innovate and don’t criticise failure. Some of the world’s most successful businesses encourage their teams to embrace failure as part of the learning process and you should too.
Arm yourself with data
Data is key. Going back to McKinsey again, one of the standout findings in their recent research is that top-growth companies are 1.8 times more likely to have propriety data than low-growth companies. They were also more ready to act on data in real-time and use that data to drive their decisions.
Tapping into your customer database will help you to understand your customer journey better and find ways to improve it, eliminating bottlenecks and using every opportunity to enhance your customer experience.
As of the end of last week, direct revenues were tracking 20% ahead of 2020 and 2019 while offline retail lags behind 2019 levels. This is significant. D2C brands simply can’t afford not to be omnichannel anymore, you need to be able to seamlessly knit together your customer data across all channels and ensure that you’re ready to serve your customer wherever they are. Whether your customer prefers to browse instore and buy online or discover new stock drops on social and then come instore to try them on, your online and offline teams need to work as one to deliver the same personalised experience regardless of the channel.
The best brands recognise this and focus on building a single version of the truth from their data. Equipping your teams with the right data and meaningful insights (no vanity metrics!) will give them the tools they need to be innovative (and identify new opportunities) while a pro-innovation environment will allow them to test new ideas and react quickly to customer demand.
Digital isn’t going anywhere soon and nor is its way of working. Embrace the test and learn strategies that have developed in the digital world and use them to fuel your teams’ imaginations.
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