Innovation & Marketing in Business

 

Below is 2000 words on how I feel Marketing and Innovation create company success and how the perform with each other.

  • What makes a company successful, is it driven by innovation or marketing? (PART 1)
  • Can a highly innovative technology be successful without high involvement from the marketing team? (PART 2)

 

Defining the Two Gears

To answer this question I will just be focussing on the roles of innovation and marketing in a business. Of course there are many other components that power a company as Cooper et al., (1994) and Dahlquist et al., (2000) suggest that there is no single dominant factor influencing a venture’s destiny and that several dimensions shape the probability of success, but determining the absolute power of just two of the gears (innovation and marketing) is certainly interesting. To answer the questions posed, I think it is important to define both gears as well as company success and how the interact with each other.

There are plenty of articles from high profile publishers such as Forbes, SmartInsights, VentureBeat and many more that argue both sides of which gear is more important to a company’s success. Peter Drucker previously stated the business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs (Forbes, 2006). It is imperative to understand that while marketing has a more unambiguous definition innovation does not. Marketing, as defined by Kotler is “human activity directed at satisfying needs and wants through exchange processes” (Kurzbard & Soldow, 1987) or for those who don’t support Kotler’s view, marketing can be defined by the American Marketing Association as “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational objectives” (Kurzbard & Soldow, 1987). There is not a lot of deviation in the definitions.

Innovation however, does deviate drastically from person to person. Innovation to some can mean rocket science, a portable storage device for music or additional features and functions. In general Innovation is an encompassing word. It can do a lot as it has many different understandings. Scott Burkin (2013), I think, describes innovation well. Innovation is significant positive change. It’s a result. It’s an outcome. It’s something you work towards achieving on a project”. To get this type of outcome, a business usually employs an Innovation type, from incremental to radical. An example of incremental would be the Volkswagen Golf with constant refinement of a product via ‘facelifted’ new models and is now on model number seven. Whereas Radical innovations provide something completely new in the world such as Apple’s Mac or Google’s search engine formula. Blue Ocean strategies can also be seen up here such as the ones implemented by Amazon or eBay.

From my understandings and readings, within the innovation type or structure, lies the innovation strategy, such as market led innovation, customer orientated innovation, profit model innovation to even network innovation and so on (Doblin, 2013). These are largely not purposefully chosen but reflect the company’s culture. To make sure the plan all comes together, finally can the overarching innovation end goal be seen. If the goal cannot be agreed then the risk of conflict and failure can arise. For instance Steve Job’s end goal for the Apple’s MAC 2 was to be a revolutionary statement in time, whereas John Scully’s was for the innovation to make the company profitable (Foxnews, 2013) and thus there was a clash where one side emerged being John Scully.

To sum up my own definition of innovation: Innovation is a result or outcome achieved by implementing a logical innovation structure correlating with company intent. Within this structure a strategy should be implemented to be the most effective means of executing the process to obtain the desired result and created value. The desired result should reflect in the company’s innovation end goal regardless if the overarching business is technologically driven, a need seeker or fast follower.

What is Company Success?

There are even more variations on what ‘success’ is than what innovation is. A company that is profitable can be deemed successful or a company who has a loyal customer base, or a company that is growing in size etc. There is very much involved in company success but it can actually be deciphered. To be successful, a company must create a distinctive value proposition that meets the needs of chosen set of customers (Porter & Kramer, 2011). By doing this competitive advantage is achieved and company longevity is sustainable (Porter & Kramer, 2011). Failing to do this arises overlooked opportunities to meet fundamental societal needs and misunderstood how societal harms and weaknesses affect value chains. Essentially a link between corporate and society needs to be recognised and established in order to create value such as GE, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal-Mart— who have already embarked on important efforts to create shared value by reconceiving the intersection between society and corporate performance (Porter & Kramer, 2011).

Balancing Act – (PART 1)

With a clearer understanding of how the two gears can be defined and how they work, processes involved and outcomes. And, a definition of how success is obtained, the question of what drives success in a company, marketing or innovation, is simple. The answer is neither. Both play important roles. With regards to value creation, “firms are finding that value-added is becoming increasingly concentrated at the upstream and downstream ends of the value chain (Mudambi, 2007). Activities at both ends of the value chain are intensive in their application of knowledge and creativity” (Mudambi, 2008). This can be observed in Apple’s strategies. Upon examining Appendix 1, it can be seen that Apple puts most of their efforts into both R&D, creativity, design (Innovation essentially) and marketing activity equally.

It can be argued however that Samsung, who have a completely integrated arrangement unlike Apple, are also a successful company. Nokia have a similar setup to Samsung but could be argued to have now failed as a company. I think Nokia couldn’t balance their corporate strategies and began to fail on the innovation end compared to competitors and were too slow to acknowledge the disruptive innovations around them such as the iPhone, whereas Samsung did notice (Wired, 2012).

Gears Cannot Be Separated Or Else the Machine Stops – (PART 1)

But can a company be successful by focussing on Innovation more so over marketing or vice versa? It’s difficult to comprehend how a company may even do this as companies even have innovative marketing strategies even if they claim it’s all about marketing. Keurig Green Mountain coffee makers were very different to other drip style coffee makers. It was new innovative technology. Yet it was aimed initially at the office coffee market not consumer households. The whole approach to the office became a way to commercialize the design quicker and to gain consumer experience as the company drove the brewer down the cost curve (Harvard Business Review, 2014). So the marketing strategy behind the innovation itself propelled it to success. The HBR article mentions that looking at possibility over profitability is a great way of creating successful innovations and alludes to Google’s self-driving cars and Google Glass. “One of the key ingredients to the possibility mindset is the addition of truly understanding what the consumer wants” (Harvard Business Review, 2014). So marketing knowledge, IE consumer wants and needs, play a large role in innovation creation as well as the possibilities of companies having innovative marketing strategies. They can be played off each other with aims of further enhancement.

The two gears can be very much interlinked unknowingly. “WARC’s Innovation Casebook 2015 identifies an emerging trend within the industry – that a common theme among cutting edge marketing campaigns is not to produce a communications campaign, but to focus innovation on the product or service, and then use communications to amplify that innovation” (Clickz, 2015). Perhaps 20 30 years ago, it may have been easier to separate marketing and innovation as what was involved in each gear may have been more crudely defined. Business is evolving, specifically the growth in innovative technologies and newness due to society becoming ever more technological and digitised as a whole. This mirrors what Porter and Kramer (2011) mentioned previously. Innovations and newness that are out there right now are only there because they are reflecting societies change. Uber, Netflix, Airbnb and Spotify are aware of society’s changes. Those companies do not separate innovation and marketing because if they did, their business model would fail.

But Can You Rage Against The Machine? – (PART 2)

With the findings from WARC and the newer types of companies in mind, can a highly innovative technology actually be successful without a marketing team? Looking at the High-Tech sector in Israel, the technologies are often developing; applications may be unclear and the markets not yet established. Nonetheless, the potential value of these high-technology companies can generate is sought after (Chorev & Anderson, 2006). So innovations are very much welcomed yet Chorev & Anderson (2006) point out that many academics including themselves identify strong market orientation—a market driven and customer focused New Product Process is a key success factor for new products. “Great ‘devices’ are invented in the laboratory, but great ‘products’ are invented in the marketing department” (Davidow, 1986 p245). That statement, I think holds through to highly innovative products, or at least the vast majority of highly innovative products. In general a company that creates highly innovative high tech products will have a culture geared towards innovation. That culture will understand how necessary marketing is and how important people both in and outside the company are towards innovation.

But, highly successful high tech innovations do arise as innovation can vary greatly. Youtube, Facebook and iTunes were created with no marketing department. Largely because of problem recognition, which led to radical innovation which can transform the relationship between customers and suppliers, restructures marketplace economies, displaces current products and often creates entirely new product categories (Leifer, 2000 p2). These types of examples don’t appear throughout all of business however. There is only a select few Googles, Microsofts, Apples and Amazons. Google and its five hundred billion valuation (Vox, 2016) has gotten to the stage where it can essentially do pretty much what it wants. Many argue that profit stifles innovation and even if that may show in Google, they are still powerful enough to implement any innovations they want as they have such a presence in our global society.

No? Create a Different Machine (PART 2)

What must also be understood is that the people who invented these innovations are the exceptions. They managed to bypass humans’ dislike for change and created accessible new value. Accessible how though? Surely accessibility would be linked to awareness and then hopeful desire and this is where marketing makes it all come together. Problem recognition doesn’t necessarily mean marketing needs to be involved. Henry Ford realised this. Society at the time was shaped in such a way that if someone could conceive faster transportation, it would add value that previously would not have been thought of. But, Once again this is an example of radical innovation. The gears in the machine were not changed around to create something different, instead the machine itself was changed. If the machine is changed, society will notice and become aware because these are ground-breaking changes to the status-quo.

To answer the question can a company create a successful high tech innovation with essentially no input from a marketing team. Yes, if the problem solved creates such a change that previously unknown value becomes a necessary value offering. This is most apparent in the above examples, IE radical innovations that create a new business (a new machine). Radical innovations are far rarer as we know due to high risk for example. Risk can be described as a three-dimensional concept, involving: outcome uncertainty, level of control and perceived impact on the desired project performance (Keizer & Halman, 2007). Just focussing outcome uncertainty, it is associated with gaps between available and required knowledge, skills and experience, whether concerning technological, market, operational, or financial factors (Keizer & Halman, 2007). Elements of marketing can still be seen here. So the above examples and the people who created them, the Jobs’, Musks and Fords must have had marketing knowledge to some degree to be able to change the machine. This is why the question is harder than it seems.

Conclusion

The way business functions today and the way it looks to continue offers an environment where marketing and innovation will not be separated as value creation (success) demands it. Even if a company does create a breakthrough technological innovation, the problem recognition and ideation will have marketing elements incorporated. Not necessarily from a marketing team or department but from the company’s innovative culture itself permeating throughout the processes. As pointed out, high technological companies are here due to our ever growing technological society which is becoming more and more connected. If society becomes more connected, companies (machines) and their structures (gears) should also do so. The reason why the question is difficult to answer is it assumes marketing and innovation as separate when they are becoming more connected even where you might not think.

 

Appendix 1

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References:

Books

Davidow, W. 1986. Marketing High-Technology. 1st ed. New York: Free Press.

Leifer, R. 2000. Radical Innovation: How Mature Companies Can Outsmart Upstarts. 1st ed. Boston: Harvard Business Review Press.

Journal Articles

Chorev, S. & Anderson, A. 2006. Success in Israeli high-tech start-ups; Critical factors and process, Technovation, 26(2), pp. 162-174, Available from: Business Source Complete, EBSCOhost [viewed 20 March 2016]

Cooper, R. 1994. New products: the factors that drive success [online], International Marketing Review 11(1), pp. 60–76, Available from: http://www.emeraldinsight.com/doi/abs/10.1108/02651339410057527 [viewed 20 March 2016]

Dahlquist, J., Davidson, P., Wilkund, J. 2000. Initial conditions as predictors of new venture performance: a replication and extension of the Cooper et al. study [online], Enterprise and Innovation Management Studies 1(1), pp. 1–17, Available from: http://www.tandfonline.com/doi/abs/10.1080/146324400363491?journalCode=ceim20 [viewed 20 March 2016]

Keizer, J. & Halman, J. 2007, DIAGNOSING RISK IN RADICAL INNOVATION PROJECTS, Research Technology Management, 50(5), pp. 30-36, Available from: Business Source Complete, EBSCOhost [viewed 20 March 2016]

Kurzbard, G. & Soldow, G. 1987. Towards a Parametric Definition of Marketing, European Journal Of Marketing, 21(1), pp. 37-47, Available from: Business Source Complete, EBSCOhost [viewed 20 March 2016]

Mudambi, R. 2008. Location, control and innovation in knowledge-intensive industries, Journal Of Economic Geography, 8(5), pp. 699-725, Available from: Business Source Complete, EBSCOhost [viewed 20 March 2016]

Porter, M. & Kramer, M. 2011. The big idea: Creating shared value [online], Harvard Business Review, 89(1), p.2. Available from: http://www.philosophie-management.com/docs/2013_2014_Valeur_actionnariale_a_partagee/Porter__Kramer_-_The_Big_Idea_Creating_Shared_Value_HBR.pdf [viewed 20 March 2016]

Online Articles

Clickz, 2015. Marketing and Innovation: Made for Each Other [online], Available from: https://www.clickz.com/clickz/column/2420421/marketing-and-innovation-made-for-each-other [viewed 20 March 2016]

Doblin, 2013. Ten Types Of Innovation – The Discipline Of Building Breakthroughs [online], Available from: https://www.doblin.com/ten-types [viewed 20 March 2016]

Forbes, 2006. Peter Drucker On Marketing [online], Available from: http://www.forbes.com/2006/06/30/jack-trout-on-marketing-cx_jt_0703drucker.html  [viewed 20 March 2016]

Foxnews, 2013. Here’s why Apple once fired Steve Jobs [online], Available from: http://www.foxnews.com/tech/2013/09/09/here-why-apple-once-fired-steve-jobs.html [viewed 20 March 2016]

HarvardBusinessReview, 2014. For Breakthrough Innovation, Focus on Possibility, Not Profitability [online], Available from: https://hbr.org/2014/06/for-breakthrough-innovation-focus-on-possibility-not-profitability [viewed 20 March 2016]

LondonSchoolOfMarketing, 2016. From product innovation to marketing innovation [online], Available from: http://www.londonschoolofmarketing.com/blog/from-product-innovation-to-marketing-innovation [viewed 20 March 2016]

Scott Burkin, 2013. The Best Definition of Innovation [online], Available from: http://scottberkun.com/2013/the-best-definition-of-innovation/ [viewed 20 March 2016]

SmartInsights, 2015. Digital Marketing Trends 2015 [online], Available from: http://www.smartinsights.com/managing-digital-marketing/marketing-innovation/digital-marketing-trends-2015/ [viewed 20 March 2016]

Venturebeat, 2014. 80% of marketers agree innovation is important — but disagree on what it means [online], Available from: http://venturebeat.com/2014/11/25/80-of-marketers-agree-innovation-is-important-but-disagree-on-what-it-means/ [viewed 20 March 2016]

Vox, 2016. How Google passed Apple to become the world’s most valuable company [online], Available from: http://www.vox.com/2016/2/4/10911364/google-apple-most-valuable [viewed 20 March 2016]

Wired, 2012. 5 Reasons Why Nokia Lost Its Handset Sales Lead and Got Downgraded to ‘Junk’ [online], Available from: http://www.wired.com/2012/04/5-reasons-why-nokia-lost-its-handset-sales-lead-and-got-downgraded-to-junk/  [viewed 20 March 2016]

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