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January 31, 2006
Innovation and segmentation
I was flooded with work to prepare for a workshop in the US. For my client. A lot of it relates to innovation and segmentation. More to segmentation than to innovation. I always had my own opinion about the advantages and disadvantages about innovation and segmentation, but now, I believe it is time to share it - put it up for discussion.
I begin to wonder even more.
What if segmentation is about markets that exist already. You start looking at existing customers and wonder, how many more slices can you do across the demographics, lifestyles, attributes, household income level, and other attributes? In short, you are looking at your customers from an ankle that exists already. Looking back to the past.
Innovation is different - radical innovation, not necessarily incremental innovation. When you innovate there are no markets. You are alone, because you are leading the market. You are looking towards the future. You look at markets, but you look at it differently. Trying to create something new, something useful, something that makes the life of potential customers easier. You don't necessarily have a market size, only rough estimates. It is possible to estimate how much you will influence other markets. Like, when Sony Ericsson created the Walkman Phone. There were walkmans and there were phones. They combined it, and probably estimated the stream of new users, potential users, first time users, and so on.
Innovation is for leaders, and segmentation is for - what? Followers, established companies?
Did Google look at Yahoo to copy what Yahoo did and to achieve market leadership? AirAsia at Malaysian Airline Systems or MAS? A car company at a horse carriage? A computer company at the typewriter? Ray Kroc and McDonalds at traditional restaurants? I could go on and on. Okay, we have Starbucks, looking at coffee shops in Italy and transplanting the concept to the US. Now this is an idea and was possible because the normal coffee in the US usually sucks. And nobody had the idea to transplant it in the first place.
But I think you get the picture. Innovation is for leaders. May be it is the overdone segmentation exercise that causes all the companies to look so similar.
Posted by Andreas at January 31, 2006 11:53 PM