How to grow when markets dont

Demand innovation is a transformative approach that leverages underutilized resources within established businesses to create new value-added offerings, thereby generating significant revenue growth. This concept is predicated on the identification and strategic deployment of hidden assets, which are often overlooked in traditional growth strategies. These assets, when skillfully utilized, can drastically reduce customer acquisition costs, development costs, and accelerate business ramp-up, leading to enhanced investment returns and profitability.

Hidden assets fall into five broad categories: traditional intangible assets (such as intellectual property, manufacturing capacities, and brands), customer relationships, strategic real estate, enterprise networks, and information assets. Each of these categories represents a potential goldmine for companies willing to adopt an entrepreneurial mindset and view their asset base through a business opportunity lens rather than a purely financial one.

For instance, traditional intangible assets include well-known intellectual properties and competencies that can be extended or reused with minimal cost, offering attractive marginal economics. Customer relationships, built through frequent interactions and insights into customer needs, provide a competitive edge that can be leveraged to anticipate and meet future demands. Strategic real estate positions within an industry’s value chain, strong enterprise networks, and rich information assets about market intelligence and customer needs are all invaluable in crafting offerings that address new customer demands.

Many companies find themselves at a crossroads when it comes to pursuing next-generation products, often hindered by hidden liabilities within their own organizations. These concealed vulnerabilities can significantly derail new growth efforts, making it crucial for firms to first identify and then mitigate these hidden liabilities before moving forward with innovation. Among the most common hidden liabilities are a corporate mindset biased towards protecting the status quo, a strong corporate culture that discourages evolution with the market, and a company's financial market position that may prevent sacrificing short-term earnings for new initiatives. Additionally, leaders may verbally support innovation but fail to actively enable it, and organizational bureaucracies can block experimentation until exhaustive due diligence is completed. Other obstacles include inconsistent funding allocation systems, a mismatch of staff skills, rigid organizational structures, incentive systems that reward the status quo, brands that cannot extend into new growth areas, distribution channel conflicts, and external alliances that have become barriers to change.

To ensure that new growth initiatives become a sustainable part of a company's operations rather than a sporadic effort, it's essential to develop a business model that institutionalizes the process of growth and innovation. Such a model acts as a blueprint for future leaders to generate continuous waves of new growth initiatives. It must be resilient enough to endure short-term challenges.

While the perfect innovation model varies from one organization to another, there are common principles that successful companies share when fostering a culture of ongoing innovation and growth. First and foremost, it's crucial to have the core business running efficiently before venturing into new territories. A solid foundation is necessary for gaining the confidence of stakeholders in supporting new ventures. Investors and partners are more likely to endorse new projects when the existing operations exemplify excellence. Additionally, the most promising growth opportunities often address higher-order customer needs, and a robust core business broadens the spectrum of potential initiatives.

Embarking on a journey to jumpstart new growth within an organization is akin to preparing for a voyage into uncharted territories. It requires a strategic blend of long-term planning and immediate action. The creation of a demand innovation action plan is a pivotal step that will take approximately three months to formulate. However, during this period, it is crucial to also engage in a series of seven short-term actions that will generate momentum for change and lay the groundwork for the future.

The first action is to re-segment the current customer base, identifying subgroups with unique needs. This can reveal opportunities to generate additional revenue by offering high-margin, premium services tailored to these specific requirements. Simultaneously, it is essential to cultivate deeper customer relationships and develop new services that more accurately address their problems and real needs. This can lead to increased customer spending through innovative offerings.

Another immediate move is to replicate the best customer relationships with other customers. This could potentially evolve into a new general business model. By having personnel who manage top accounts share their successful practices with other staff, the organization can standardize excellence in customer relations.

Introducing value pricing is also a strategic move. This involves splitting an all-inclusive price into parts and charging separately for previously free add-ons. Alternatively, this cost breakdown can be used to demonstrate the tangible value provided by the organization, revealing new pricing options that may have been overlooked. The transition from selling standalone products to offering integrated systems that boast seamless interoperability is another growth lever. Collaborating with a strategic partner to refine products for compatibility can command premium prices and elevate the brand's market position.