Perils of Unstructured Innovation in Asia

by Marianne Mai

Perils of Unstructured Innovation in AsiaI’m a big proponent of innovation using a structured process, as opposed to a few execs converging behind closed doors and brainstorming without form or format. Or maybe you visualize geeky bespectacled types, in their garage, caps worn backwards, coming up with the next big thing. Whatever and wherever you create products or solutions, if your purpose is to commercialize this idea, then idea creation should take on a more structured format.

You may argue, wouldn’t structure limit creativity?

The answer to that really lies in understanding the purpose of idea creation, and also the environment in which it’s implemented.

Purpose of Idea Creation

Companies brainstorm to come up with solutions. Perhaps an in-house problem that needs to be solved, or a new product or service that needs to be created & put to market. Whatever it is, this idea needs to be commercialized : if it’s an in-house problem, then in-house stakeholders need to buy into the solution; if it’s a product/service to market, then consumers need to buy it.

The next question then is:

When do people buy into a solution?

If it has VALUE…

This is something that people subconsciously calculate as being the price they pay for the solution, minus the amount of perceived utility they receive from it.

An unstructured idea creation process, that doesn’t address all factors contributing to value creation, runs the risk of value reduction. To illustrate, many organizations associate raising certain key competitive elements to buyers as an increase in value. That is in fact an increase in utility, ie. the happiness/usefulness factor that buyers get from this product. If the organization cannot find a way to provide this increase in utility at a lower cost, then increased costs can only be recuperated by passing these costs on in the form of higher pricing to the consumer…which would lead not to value creation, but status quo (no change in perceived value to the consumer), or even value reduction, if the price hike is higher than the perceived utility received.

In creating solutions for my clients, I find that Blue Ocean Strategy, as created by Profs. Chan Kim and Renee Mauborgne, provides an excellent framework by ensuring that all factors of value creation are addressed : What are your key competing factors? What utility do buyers receive from your product and what pain points do they encounter in the process of purchasing and using your product/service? Who are you NOT targeting and what value can you create to reach out to them?

Environment of Implementation

The other reason why it’s so important to have a structured innovation process in Asia is because we operate in an imperfect economy that is simply not governed by the forces of demand & supply. If you came up with the perfect product that consumers wanted to buy, you risk not being able to bring it to market because:

1. Government Corruption

  • Another company with links to the government may beat you to it, even with a copy or imperfect version of your product/service, or
  • You’re free to commercialize your product, as long as kickbacks are paid to government officials for licensing, or importation, or anywhere else along the chain of logistics; this translates to much higher costs which are either passed on to consumers, resulting in lower sales volume, or else costs need to be absorbed by the producer.

2. Imperfect Labor Market

  • Organizations are finding it more & more difficult to fill the labor gaps with the right talent, as countries tighten labor imports

Organizations that do not address these and other factors specific to the Asian market may find themselves having spent much time and money on great ideas that can’t be commercialized. Blue Ocean Strategy may have been created using research data from western companies operating in western economies, but if used correctly, its tools and methodology can be very powerful in allowing companies to unleash demand for their solutions here in Asia.

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Marianne MaiMarianne Mai is the Principal of Aria Strategy Asia, a training & advisory company specializing in creating innovative solutions specifically with the Asian market & economy in mind. Marianne is also the author of Innovation Asia.

No comments

  1. Marianne,

    A most interesting read and I recognize quite a few factors you address in your article. Working in a, mostly, engineer driven company which develops analytical X-ray equipment I notice that, besides the points mentioned in your article, in our company value creation (read R&D) for our customers is hindered by the tendency by engineers to keep on “engineering”. In other words, we keep on developing as engineers will always find something to improve on but in the process we loose track of marketability, which, in my opinion should be an integral part of value creation and R&D. How do you see this as being part of the value creation process?

  2. Peter,

    It’s not uncommon for companies to overengineer products in the belief that it increases value to the user. To the contrary, this is risky practise as it oftentimes results in a more complicated user experience, or an enhanced experience that the user can’t afford. The company is forced to either increase the price & accept reduced sales volume, OR absorb the costs & accept reduced profits. It’s critical that research into user experience & needs is incorporated into all stages of development or product improvement, especially for products incurring high R&D costs.

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