Practical Steps for Business Innovation and Growth

Kathy (host):
Well, hello there, and welcome back to another episode of Help! My Business is Growing, a podcast where we explore how to grow and build a business that is healthy and sustainable. I’m your host, Kathy Svetina, a fractional CFO and a founder of NewCastle Finance, a company where we believe that everything that you do in your business will eventually end up in your finances. And to get to healthy finances is to have a healthy business. Well, the question is, how in the world do you get there? Well, this is where this podcast comes in to help. And today’s podcast episode is going to be dedicated to innovation. And while you might believe that innovation is all about creating new tech or product, it is much more than that. It includes trying out new ideas, looking at things from different angles, and making smart decisions, which means that you’re growing in a smart way. But the question is, how does innovation really look like in a smaller business, especially small business, and are there any special tools and techniques that you can use in your business to innovate more? How is it going to drive success? And what can you do as a leader to create a culture of innovation in your business? That is an especially important one. You can find all the links and the detailed topics in this episode’s show notes. My guest today is Steve Wunker who is the managing director of New Markets Advisors, a global consulting firm focused on innovation. He was responsible for one of the world’s first smartphones, pioneered the mobile marketing and commerce industries, and partnered with a longtime colleague, Harvard Business School’s Clayton Christensen, in building the consulting firm Innosight. He’s also the author of three award-winning business books, and the co-author of a new book, The Innovative Leader: Step-by-Step Lessons from Top Innovators for You and Your Organization. It’s going to be a really, really good conversation, so I invite you to please join us.

Kathy (host):
Steve, thank you so much for being on the show.

Steve (guest):
I am so glad to be here.

Kathy (host):
I’m so glad you’re here, because we’re going to be talking about innovation, and innovation, specifically in small businesses. You know, when you think about innovation, at least when I think about innovation, we think about these big things like the innovation of the internet or the iPhone or Facebook or whatever it might be like in the latest years of technology, but innovation itself also happens in small businesses all the time. Can we talk a little bit about that?

Steve (guest):
Sure. Look, this is a superpower that small businesses have. Big companies, they’re not so great at innovation. Oftentimes, they can be slow, they can be unresponsive to customer needs. The decision makers can be pretty far removed from the day-to-day customers, whereas in small business, usually the owner is directly involved, they can make decisions. They can try stuff. They can see what’s working or not. So absolutely, small businesses. One of the great innovations that we have in our economy started with small businesses.

Kathy (host):
And how would that look like in a small business? Is there like a specific process that you go through? Like, can you walk us through it?

Steve (guest):
So most small business people, I think, are listening all the time to customers, but it does pay to step back sometimes and really think about, what are you hearing? What are trends? What are maybe bigger trends in the industry or in adjacent industries that can impact what a small business is doing? When you step back like that, it’s super useful to frame the problems that you’re trying to solve before you jump to solutions. Time and again, people want to get to the ideas and look, ideas are fun. They’re exciting. We love our ideas, but the real power of innovation lies in a well-framed question, not necessarily in your idea which, look, most likely is going to morph as it gets implemented.

Kathy (host):
It’s interesting you say that, because the one thing that comes to mind was, you know, going back to the whole Apple example and the iPhone example, I don’t think anyone expected the iPhone to go the way how it is. And if you go to your customer, I think they have limited imagination of what is actually possible and what can be possible. I don’t think any of the customers will come up with, hey, we want an iPhone that’s actually going to be a screen. So how do you manage that when you’re thinking about innovation?

Steve (guest):
You know, it’s a great example. I used to work with Clayton Christensen, who wrote books like The Innovator’s Dilemma and coined the term disruptive innovation. And he would chuckle at how he got the iPhone so wrong when it came out. The first week it came out, he did press interviews saying, you know, Nokia is so much bigger and has so many more resources, it’s just going to clobber Apple. And he realized what he got wrong the most was that Apple hadn’t launched a phone. It had launched a mobile internet device, a way to access an app ecosystem. It had launched a music player. Anyhow, it was a phone too, but he had framed it incorrectly, whereas the folks at Apple had done it right. When you really step back and you ask, not what do you want in a phone, but what are you trying to get done? You come to a very different realization. It’s the famous Henry Ford quote. If I’d asked customers what they wanted, they would have told me a faster horse. So you need to step back and really understand the context before you start thinking about, well, I’m selling widgets, so who wants a widget? Sometimes the things that are adjacent to the widget, or sometimes the customer experience of buying the widget, that’s what matters more than the product itself. So take that customer view before you take the company view.

Kathy (host):
I think there’s a concept in business called jobs to be done, which is like, especially in the marketing thing. So this resonates a lot, because even I myself, when I think back when devices like this were starting to be popular, I could not wrap my head around it. And in those times, I had a, and I’m gonna date myself here, not only did I have, you know, an iPod, I also had, I also had a Microsoft Zune. So I could not understand, why would I want to have two separate devices, one for my phone and one for my MP3 player? Like, why wouldn’t I want to have that? Why would I have all of that together? And I am not a lot of it, obviously, you know, I am very much into technology, but I’m not an early adopter, and it’s interesting to see, like, how you’re training your customers, because it was so much more convenient to actually have it in just one device. And again, that goes back into the jobs to be done. I wanted something that I can easily browse the internet, but also, you know, have the MP3 player, whatever, in there, on there. So that’s an interesting way to, like, solve the problem, right?

Steve (guest):
Jobs to be Done was actually the title of my second book, and this one has done very well since 2016, and it builds on a theory that Clay actually originated called Jobs to be Done back around 2003. And the book is about, how do you go apply that? How do you deploy that? But you’re exactly right that if people are not looking to buy a phone, they’re looking for a way to stay connected or entertained. So let’s take that example further. I think, you know, I was responsible for one of the world’s first smartphones back in 1999-2000, and I mean, it was so early that we didn’t even have the word smartphone, right? We didn’t even have a name for this thing we were creating. So the concept of Jobs to be Done hadn’t really come out yet. But looking back, that’s what we did when we went to our target users, who were the sort of upper-income people who could afford what then seemed to be an outlandishly expensive price for a phone. And we understood that messaging was really important, maps and navigation were really important. Games were really important too. They were all needing different jobs to be done. So at that time, we didn’t even have an idea about what a basic smartphone would do. Now I’ll tell you our biggest mistake we made is that we didn’t choose. We should have done what BlackBerry did, which was just do messaging and do messaging really, really well. Instead, we tried to do a lot of things, which is often so tempting for a small business person, but it’s hazardous when that just compounds your risk, exposes you to, in our case, a lot of different suppliers who all had to work together for the first time. That was not a very wise choice. We should have just picked our shots and then had a stepping stone strategy on one job and then another job and then another job, which is how actually smartphones ended up evolving.

Kathy (host):
So if you have an idea and you know what the customers want, what I’m hearing is that you don’t put everything at once, you build on top of it, right? And it’s almost, it becomes an evolution versus we’re going to create this, and because you’re creating this, it just might not be as viable as you thought it would be. Because obviously, you know, as you’re going through these iterations, you figure out what’s better and what can you do better. So you’re actually doing it in steps. Is that the way you should be thinking about innovation, is more an evolution than here it is?

Steve (guest):
That’s right. So start from the customer and maybe a little bit about your competitive strengths versus the rivals that you have out there in the marketplace. That’s a very objective look at the marketplace before you get into your economics, what you’re good at, all which matters. But that comes later. I once interviewed Jeff Bezos, and he said some of the worst marketing advice I ever got was to really focus on what you’re good at, because if we did that, the world would never change. So there’s a succinct and profound way to state the case for looking first at what the market demands, then you can think about what you’re good at. And of course, you need to look at the feasibility and economics and everything like that too. As you develop a stepping stone strategy, you want to have a few things in mind. You want to understand not only how your competencies build, but how do you establish your identity with customers around something? There are all sorts of businesses out there that do one thing really well, and they try to expand, and they get hammered because customers have just associated them with doing one thing. So have that longer-term roadmap in mind, while you also take those short-term steps.

Kathy (host):
And as you’re trying to be more innovative in the company, how would you go about doing that? Would you take a look at the market as a whole and try to figure out where the problems are? Would you do any customer research? How would you go about doing that?

Steve (guest):
Yes. So start with the customers and be really open-ended. I use in one of my talks an example of an automaker I worked with when I was a consultant at a big global strategy firm in the 90s, and we went out trying to design a specification for a new sedan, and we had this survey of 300 variables. What’s important to you? What’s frustrating you? People came back and they said, brakes. Brakes are really important. So we took that to the company, and they laughed us out of the room because they said, nobody buys a car based on the brakes. Of course, they were right. I certainly never bought a car based on the brakes. At the same time, BMW was out there trying to revive the Mini brand, which had been defunct since the 1960s, and the way they framed their research, they didn’t even say they were working on behalf of a car company. They wanted to understand what was important to their target consumer, who, at the time, was a woman in her 30s. And what they kept hearing was, I am still fun, I’m spontaneous, I’m unique. And so they decided to create a car brand based around that. Oh yeah, it also drives, right? It normally has decent brakes, but hopefully, it’s that bigger job to be done that the other automaker wasn’t even thinking about because they didn’t frame it first of all, from the consumer’s perspective. So start with your customer, and then think about how your product might relate to those jobs to be done.

Kathy (host):
And this is a great example, because, you know, as you were talking about this, would it be possible to, as they got the feedback on what is important to women in their 30s, could they have just taken one of the car models that they’ve already had and just rebranded it so that it would match the consumer’s idea? Could that have been a strategy?

Steve (guest):
They certainly could have. And I imagine that’s what some of the other automakers did, like Toyota with the Scion brand that they tried to launch after the Mini was a bit of a copycat of that. I don’t know if it had the same chassis as a Toyota Yaris, but I wouldn’t at all be surprised if it did, and then they just created something very different on top of that.

Kathy (host):
And the reason why I asked this, if you’re thinking, if you already have a couple of products or services in your business, when you take a step back and figure out, do I need to create something that is new, that it’s actually going to be more appropriate for this type of consumer, or do I just take the existing products or service that I have and just rebrand it? Just basically do some marketing behind that, like, what is, how should you be thinking about that?

Steve (guest):
So oftentimes you don’t need to invent something totally new. I have a paper that I wrote with Deloitte years ago called Beacons for Business Model Innovation. Find it out there on the web, Beacons for Business Model Innovation, and it looks at 10 different types of innovation. And actually, there was an assessment done of 5,000 innovations, and the average rate of return on those innovations was abysmal. It was four and a half percent. But 100 of those 5,000 innovations, so just two percent of the sample, were responsible for the overwhelming majority of the cumulative returns of the whole portfolio. And here’s the punchline: all of those innovations involved at least five or six different types of innovation – the customer experience, the brand, the service, the internal processes, the business model, those sorts of things were at least as powerful as the product. So people keep focusing on product, but oftentimes product is a very time-consuming, expensive, and competitive place to innovate. Let’s take the example of a gym. Gyms have been around for a long time. And yeah, you’ve got some really fancy gyms with the saunas and the pools and everything else. And then you have Planet Fitness, which is basically just cardio machines, few weights, but really, really basic gym. And yet, Planet Fitness has the highest customer satisfaction ratings in the whole industry. It is the fastest-growing gym chain in the industry. So how does it do that? How does it have such a basic experience and be so wildly popular? It’s because of how it’s packaged. To your point, it has a very clear target consumer who is the casual exerciser, not the jocks, but the people who just want something basic. It has a very clear positioning out there in the market. It calls itself a judgment-free zone, so you can be 40 pounds overweight and go to Planet Fitness, and that is okay. Nobody’s going to be criticizing you. In fact, a lot of their gyms even have a free pizza night on Tuesday. I mean, think about it, pizza night at a gym. Yeah. So that is a brilliant execution of knowing who your target market is, how you’re conveying that message to the target market. You’re not inventing anything. There’s no new machine you’re only going to find at Planet Fitness. It’s all about having a very clear target customer strategy and way to fulfill on what that customer really wants, which in this case is psychological as well as functional.

Kathy (host):
So you said about customer experience. So that’s one way to innovate. What are some of the other innovations that you can have in the business, besides creating something new in a product or a service? Is there anything else that you can be looking at?

Steve (guest):
So let’s go all the way back. So I talked about a recent automaker. Let’s talk about an automaker a little while ago, Henry Ford. All right, so Henry Ford dominated the industry in the 1910s – huge economies of scale, more than 50% market share, by far the lowest cost position. And yet, by the end of the 1920s, this upstart company called General Motors had totally knocked Ford off his perch, and it did that without almost any product innovations. But the auto trade-in is an invention of General Motors. Auto financing is an invention of General Motors. Even the way that modern companies are organized, with line functions and staff functions, is an invention of General Motors. The multi-brand strategy of Chevrolet all the way up to Cadillac, that’s an invention of General Motors. So they did all that without inventing anything really on the product. It was in the way that they sold and the ecosystem of offerings that were around it, and the branding and how they did dealerships, and all sorts of stuff that I didn’t mention, that was the genius of what General Motors pulled off, and it’s a playbook that other people can follow too.

Kathy (host):
Yeah, that’s interesting. I did not know that. That’s definitely something that I would want to take a look at, because it’s such an opportunity that you can tap into that other, you know, your competition hasn’t yet. So when you’re thinking about this, is there anything that you, any questions that you might be asking yourself, or any frameworks that you have out there that would be helpful as you’re thinking about this in a broader scope of what can I do to be different from the competition and to innovate in that way? Anything that would be helpful?

Steve (guest):
So in my new book, The Innovative Leader, we lay out a four-step process. We can talk about this in a little bit. The first step is about your own leadership style, but let’s focus on the company, which are the latter three steps. So step number two is Aspire, then you Build and Cultivate. So let’s really focus tightly on Aspire. In a survey we did recently of company innovators about their biggest obstacle to innovation, 52% said it was a lack of clear goals. That was shocking. I knew it would be high, but 52%. So that’s fine. You need to have a very clear goal, or set of goals, not just for yourself, but for the rest of the company too. What problems are you trying to solve? What jobs are you trying to address for your customers? How are you going to be competitively different? What are some examples that might already be out there of something that would be an on-target innovation for you, versus discussable versus unthinkable? That really helps both you and the people who work with you to know what the sandbox is that you can play in, and then you can come up with the ideas.

Kathy (host):
So you talked about the ABC acronym – Aspire, Build and Cultivate the innovation. So that’s the Aspire. Can we talk about the other two, the Build and Cultivate the innovation too?

Steve (guest):
Okay, so once you have a clear aspiration, people often fixate on, “I need ideas. I need ideas.” In reality, ideas are one of the easiest parts of innovation. Only 6% of our sample said that their biggest obstacle was having too few ideas. If you define the problems and the strategy well, the ideas will come. What you need to have are places for those ideas to go. So, okay, you’ve got an idea. How are you going to go execute on this? People are busy. It’s a small business. People are busy. So there needs to be a little bit of bandwidth with somebody to go explore this idea and to iterate. If you don’t do that, what happens is one of two things: either the idea just goes nowhere, it dies. People get frustrated. They get cynical. That’s course number one. Course number two is you want to do something about it, but it needs to be easily implemented. And so what you end up doing is you make big ideas small, which is really insidious, and you see it all around us, making big ideas small. And that makes it not only more easily implemented, but maybe it’s more easily funded, more easily approved. It doesn’t disrupt the operations of the company. But often those big ideas are going to be your growth engine. And so you want to keep the big ideas having a little bit of bandwidth, whether this is one afternoon a week you reserve for yourself to explore the big ideas, or there’s somebody on your team who’s going to be exploring the big ideas with some accountability, right? They can’t be out there forever lingering in the zombie stage. But just like a startup would, okay, we got some ideas. Well, we can’t just sit here forever on our venture capital fund. We gotta do something, otherwise we’re not gonna get funded in our next round. So get on with it and start really building this out, exploring, getting some real-world feedback if you can.

Kathy (host):
And when you say that, does that mean having, like, a pilot that you give out to, for example, I’ve seen this a lot of times in stores that they do, that they put together like a little test experience, or maybe they roll out that in just a couple of stores versus nationwide? Or maybe you’re just doing, like, a small pilot, if you have a service and you’re offering it specifically to one group of customers? Is that what you’re thinking of when you’re doing, when you’re exploring and you’re figuring out, does that actually make sense where we want to go towards in terms of innovation?

Steve (guest):
So sometimes you can go do that. It is what it is, right? If you’re a food company, yeah, you can do that. Or a fragrance company. Yeah, you can probably do that, but there are a lot of things you can’t just pilot. So what you need to do instead is look at your idea and really rigorously think about what are the key assumptions and risks that are embedded in that idea – risks that might be related to market acceptance, or maybe it’s about the availability of a component or the price competitiveness of a supplier, or competitive response, regulation, you name it, right? But get really comprehensive about those, and then try to take the key risks off the table first. So think about, what is that easy win, right? High ROI, easy win to take off the table. Maybe it’s, do customers understand this concept? All right, that’s easily tested. You don’t need the product. Just talk to people about the concept. Maybe it’s about the price sensitivity or the availability of a key component. There’s a case study in the Wall Street Journal a few years back about McDonald’s and how it thought about making a shrimp salad. And I use this sometimes with an audience, and I say, okay, so we’re McDonald’s, we have an idea for shrimp salad. What are we going to do? And a lot of people jump right to, okay, let’s do a test market and see about, do people like shrimp? Wrong. That is going to take a lot of time and be very expensive. Can the McDonald’s supply chain handle the type, temperature requirements of having shrimp in its supply chain? Is there an availability of shrimp at the scale and price needed to work in a McDonald’s restaurant? These are things you can figure out at your desk in the course of a day, which McDonald’s did, to actually discover that no, even if consumers loved this idea, it was just not going to happen at McDonald’s.

Kathy (host):
That’s a great example, because you get so excited about these new ideas, especially if the customer wanted it, but is it actually feasible? It seems like it’s more, it’s coming up with the idea and then testing it. Is it actually feasible?

Steve (guest):
That’s right. Sometimes that’s the big risk. Sometimes it’s easy. You know, it’s feasible. Will the customer actually want it? So in design thinking, we often talk about three buckets for analysis. There’s desirability, feasibility, and viability. Is it customer-wanted? Is it going to make sense competitively? That’s desirability. Feasibility is, can you produce it? Can you do that at scale or with the quality standards that you need, maybe in the time frame that you want? And then viability is, can you actually make money doing this? And look, that has to be analyzed too. It does not need to be this gigantic exercise. I once worked with a company that was in the medical product industry, and it insisted on a 10-year analysis of the net present value of cash flows for any new product. And that had such an incredibly harmful effect on innovation in the company, because the fact is, for big innovations, you don’t know. You’re just kidding yourself if you’re projecting out 10 years. And so what people would do is be super cautious in their assessment, and they would also put most of the value out in years like nine and 10. And because they discounted their cash flows back to year one, those far out cash flows looked not very meaningful compared to all the costs that were going to come early on. And so the company ended up playing real small ball, going after these little incremental improvements and missing out on a lot of the big stuff until it finally changed that system.

Kathy (host):
That’s a great example of where finance can actually hold the business back. And I’ve seen this a lot in, you know, in the businesses that I work with, especially in the corporations where you’re either too cautious or you’re too optimistic, and neither of those is actually good, because if you’re too optimistic, you, you know, you end up throwing darts. You could lose a lot of them. And when you’re too cautious, you end up in a scenario where you have good opportunities, but because your finance people are so, so conservative with the money, you end up just not doing it. So there needs to be a good balance between the two of that. So let me ask you this, if you’re working with you as an innovator with the finance department, to come up with that, what would you want them to know about the innovation part? So that would be helpful?

Steve (guest):
So the first thing I want them to know is about their own core business. What’s the baseline? Is it today, or is it maybe declining? Is it going to be disrupted by something, or is it just in secular decline for whatever reasons? Oftentimes we look at the baseline as zero, when in reality, it’s not zero. It should be negative. So that’s number one. Number two is, rather than come up through the crystal ball and say the net present value of this innovation is $16 million, I would much rather say, what do you have to believe for either the net present value, or maybe it’s the IRR or the ROI, name your financial metric of choice, to hit some threshold amount? And then how do we deconstruct that back to the underlying assumptions? Okay, if we needed to have revenues of $20 million in year three, then we need to have however many million customers buying it at this price point, and we expect to have this kind of margin. Okay? Now we can go look much more specifically and say, do we believe that? Do we believe we can get half a million customers? Do we really think we can sell that at $20? Now we’ve got something really tractable as a problem to work with.

Kathy (host):
Yep, I like that you’re stress testing the assumptions, because I always say that just because you put something on a spreadsheet, it doesn’t make it true. So you always have to have that curiosity of, yes, it might look good on the spreadsheet, but is it going to be really true? Or it might look super pessimistic on the spreadsheet, but is that really going to happen or no? So having those conversations is so important, versus just, you know, this is what we think it’s going to be.

Steve (guest):
I wrote in my first book, it’s called Capturing New Markets, and I wrote a story there from when I was leading efforts to get a license in Liberia, in West Africa, to operate one of two cell phone networks. And the parent company, which was a big mobile network in Europe, had sort of a templatized spreadsheet, 2000 lines to fill out, all about the financial analysis. Nowhere in that spreadsheet was there a line item that said “competition are gangsters.” And that was, in fact, what was the case – competition were gangsters, and that is why we abandoned that effort. So yes, financial analysis is so comforting, but you can miss what’s actually important.

Kathy (host):
Yeah, and that’s why those conversations about what’s actually happening in those numbers, what might be the issues, whether that is, that is such an important conversation to have, not just among the finance people, because a lot of times just the finance people talk among themselves. It’s like you have to go out, talk to the people who are innovating, talk to sales, talk to marketing, versus just being in that silo of, you know, this is a spreadsheet. This is where it is, right?

Steve (guest):
They can also be candid about what their assessment criteria are, right? Are they looking for revenue? Are they looking for profitability? What’s meaningful enough? What is a realistic amount that could be invested in this? And then they can stage it out. It’s what a venture capitalist does, right? They don’t invest $100 million off the bat. Maybe, unless your name is Sam Altman or something, you’re not going to get that if you’re in your first funding round. So they will stage those bets. That’s what a good finance department should do as well.

Kathy (host):
So let’s go back into the small business world. You had a great example when we were preparing for this episode of the laundromat that was actually using innovation in their business. Because I want to bring this back into the businesses that are between, you know, 5 to 50 million, like, how do you actually use what we’ve been talking about in this specific market? And I thought, I thought that laundromat example was such a good one. Can we talk about that?

Steve (guest):
Sure. So for the book The Innovative Leader, we interviewed 50 great, innovative leaders, and some were big company CEOs, like the CEO of Microsoft, but a lot of other ones. One of them was a guy named Rafiq Karimi, who runs a dry cleaning business of about 20 stores in the Chicago area, called CD One Price Cleaners. And I thought of Rafiq as sort of the Henry Ford of dry cleaning, because he has thought through everything and reconsidered the process. So for instance, he showed me, if he has shirts to launder clean, he will tie them together at the waist, because the waist is seldom dirty. What you want is a lot of flopping around of the other parts, and that will promote a lot of cleaning of the other parts. But it’s not just in the cleaning processes. It’s called CD One Price because for most items, there is one price. It is very simple. If you go, I don’t know what the price is today, but it’s incredibly simple. There is one price for what you bring. They have same-day service on their dry cleaning. Other people do not do same-day service. His volume of business is actually so high that he would not be able to cope without same-day service. He doesn’t have the room to keep all that inventory of clean clothes. So it’s rapidly in, it’s rapidly out. That also means that he doesn’t do certain types of garments, complicated, expensive garments, like suede. Nope, not for CD One Price. So he has a very clear proposition. It’s distinctive. And then he’s aligned a business model and a process model and a whole operational model around that. He will also do things like even having coffee in his places, because he realizes that people are often dropping off their dry cleaning on the way to work or on the way home from work. So he’s thought through the customer experience as well. There’s so much he could do. He has not created a new dry cleaning machine or a new solvent, right? The product is the same, but everything around it has changed.

Kathy (host):
And I don’t know if you know this, but do you know how he came up with these ideas? Were they all implemented at once, or was it one at a time as he got more information? Do you have the info on that?

Steve (guest):
It was certainly one at a time. He’s been in this business for a while. It started out as just Cleaners Depot. It was not one price. And then he figured, okay, nobody cares about a name like Cleaners Depot. They care about one price. So we’re going to be CD One Price as the name. And you know, the coffee came later, for instance. So yes, it was bit by bit, but he knew from the get-go that in a crowded and declining market – dry cleaning is a declining market in the United States – that he needed to be different in order to thrive.

Kathy (host):
That’s a great example. And I really like this example, one, because, you know, I know the company. I’m actually from Chicago, so I live in Chicago, so I know the company, but it’s such a great example of, like you said, he did not, he did not invent a new cleaning machine. He did not invent a new solvent. But there is still opportunity to actually grow, even if there is a declining market, and that is such a great example.

Steve (guest):
Yes, sure, we want growing markets. But Clay Christensen once pointed to a study of carburetors, and as catalytic converters came into play and carburetors were no longer relevant, people thought, oh, doom and gloom. The surviving carburetor players actually did pretty well. Competition reduced. They got very good. They were very efficient at what they did. And sure, the market ultimately disappeared. But it took a while for that to happen, and in the meantime, the remaining players made a whole lot of money.

Kathy (host):
So Steve, we’ve talked about all this innovation. We’re at 37 minutes into this podcast. And if someone is listening to this, and they have a smaller business, they say, okay, I understand this conceptually, but if I really want to start innovating, what is it that I can do in terms of an action step in the next, you know, couple of weeks to get me closer to that innovation that I need in my business? What is the one thing that they can do?

Steve (guest):
So it starts with being connected with your customers, which doesn’t, market research is great, and we do market research, and we love that stuff, but you want to be out there yourself with customers and really talking with them, not “how can we serve you better?” This is not about customer satisfaction. This is about understanding deeply where you fit into their lives, and are there some adjacent places you can go that would be relevant? We use an acronym in the book called CREATE for innovative leaders. A great innovative leader CREATEs, which is, they are Connected. It starts out, be connected. R is Role model. They are a role model for how they want their organization to innovate. E is that they Evolve with the market. A is that they’re Audacious. They push people to be innovative. T is they’re a 360 Thinker – General Motors in the 1920s, great example of 360 thinking. And then the last E is that they Enable – it’s not just about them, it’s about the people in their organization too, that have the great ideas. Innovation thrives in an environment of diverse ideas, diverse perspectives. So make sure you get those diverse seats at the table where people can look at these problems from an operations perspective, or marketing or finance, whatever it might be, there’s a lot of richness in looking at things in that sort of really rounded way.

Kathy (host):
Yep, and I definitely agree with that, especially, you know, coming from a finance perspective, what I know and I could bring a lot to the table when we have those conversations with sales and marketing, and the other way around, those conversations with sales, marketing, ops can bring a lot to the finance as well. So it’s, we’re not in silos, like we’re all working for the greater good in the company. So having those conversations is so important. Steve, this was a really great conversation that we’ve had, and I learned a lot. It gave me ideas for my own business. Please tell us, where can people find you?

Steve (guest):
So they can find the book at innovativeleaderbook.com and pick it up on Amazon or other sorts of retail outlets. They can find me at Steven, with a PH, Wunker, W-U-N-K-E-R on LinkedIn. Or my company is New Markets, with an S, Advisors, and we consult for a wide range of companies on how they can go put these thoughts into action.

Kathy (host):
Great. So we’re going to have all of those in the show notes. So if you’re interested, I am right now, I’m reading Steve’s book, and it’s really great, so I highly, highly recommend it. And we’re going to have this in the show notes, so please go take a look at it. Thank you so much, Steve, it’s been a pleasure.

Steve (guest):
Oh, for me too. Thank you.