New channel strategies: Sometimes disruptive innovation is a where, not a what
September 4, 2014
Our CEO, Carla Dearing, recently wrote about what makes an innovative product disruptive. Thanks to technology, we assumed for many years that innovation would always mean more bells and whistles. But it turns out (also thanks to technology) that what really excites us is simplicity. The most exciting new products today take the unimaginable mass of data available on any topic and make it useful in our daily lives.
And then keep making it more useful. Think about Google Maps and how much easier it makes it to chart a simple course from place to place. Then think about the amount of real-time data embedded in that simple map, and how much more data it contains than the first time you used it. Always good, Google Maps is better today than it was even six months ago because it delivers more information (especially real-time traffic data) with more simplicity.
The American Automobile Association used to do this job (even the TripTik was once a disruptive innovation), but its solutions now seem antiquated both because they aren’t based on real-time data and because you have to drive to an AAA office to pick them up.
It is such an obvious point that it often goes without saying, but disruptive innovators not only sell us new products; they usually sell them in new places. And what used to seem like a convenience – a nearby AAA office – immediately seems hopelessly out of date when we can access the same data on our phones.
How Can Non-Disruptors Innovate? Sometimes disruptive innovation is a where, not a what.
The global consumer brands that make up IMC’s clients are not always the best disruptors. In the language of Clayton Christensen (who invented the term “disruptive innovation”) they are often the established competitors whose ability to perfect high-value products often prevents them from recognizing disruptive innovation themselves.
We help these brands deliver disruptive innovation by connecting them to partners, companies that can effectively deliver something new in a new product category.
But sometimes the innovation these partners deliver is less in the product itself than in the place where it is sold. For many brands, their established distribution channels (like their strength at generating defensive innovations) actually make it harder to deliver disruptive innovation in the places where they sell their own products. New channels of distribution may represent the disruptive growth idea they need most.
Channels of distribution change faster than we recognize. In my own lifetime I’ve seen the creation of entirely new national channels of trade like DIY (Lowe’s and Home Depot), craft (Michael’s, Jo-Ann Stores, and Hobby Lobby), and pet (PetSmart and Petco), to say nothing of e-commerce. If your brand is sold in traditional channels like supermarkets or drugstores, failing to introduce products into new channels means missing all the customers and shopping occasions that happen there. If you have a mature consumer brand, channel innovation may represent the best and most disruptive way for you to grow.
Channel innovation is uniquely well-suited for brand licensing and other kinds of partnerships. Serving a new channel of distribution is expensive and risky. It requires capital and people in the form new production capacity, new sales resources, and new relationships. A partner who brings manufacturing capacity and relationships in a new channel is often a better innovator that a mature brand can be for itself.
When TGI Friday’s wanted to give fans the chance to make its famous potato skins at home), it was a lot easier to innovate through its partner Anchor Foods (now owned by Heinz) than to manufacture and deliver the products to supermarkets itself . As I recently wrote, dozens of other restaurant brands have followed that innovative lead.
The pet channel has continued to grow fast even during the Great Recession. It has also been an exciting place to innovate. A brand like Glade has partnered with Nestle Purina to deliver a Tidy Cats kitty litter with the fragrance of Glade, a surprise for consumers and possibly that brand’s most successful innovation in years. Arm & Hammer has done the same thing with odor- and dander-removing air filters for pet owners (from Protect Plus Air) and oral-care products for dogs.
Even in a stodgy category like hearing aids, the next disruptive innovation may come not from tweaking well-developed technology but offering it in new ways and new places. Major brands now have the opportunity to support the launch of hearing aids in drugstores.
Next time you go shopping, stop at an unfamiliar retailer. Next time you go to a trade show, stop looking for companies that can serve your existing products or services and look for the ones who make products you’d like to buy yourself. When you do buy something new and exciting, think how it might have served your own goals in a new place. If you want to accomplish disruptive innovation you don’t necessarily have to become a disruptive innovator yourself; you just have to follow disruptors wherever they go.