TransformaTion

The Question of
Transformation
A perspective on the pursuit
of breakthrough innovation.
There’s a rarely-discussed but fundamental
truth about the pursuit of growth-driving
transformational innovation:
the likelihood of an innovation project
landing on transformational answers
pivots almost entirely on whether it
starts with transformational questions…

After years being delighted
by the diversity of the
innovation challenges
coming over the transom—
in our case, a decidedly
mad mix spanning wellness
to whiskey, soft drinks to
software, money to music,
hotels to haute jewels,
microchips to potato chips,
and literally soup to nuts—
you suddenly find yourself
gob-smacked by the thread of
similarity running through it.
Across companies, categories and countries, an
armada of innovation teams sets forth daily, each
with great promise, an aggressive, growth-minded
leadership team, a formidable body of knowledge
about its market space, and a tangible asset base
spanning brands, infrastructure, technologies
and market presence. Yet the majority struggle
to unlock the transformational answer.
The struggle triggers a call for help from
outfits like ours, and a conversation that,
in one way or another, dances toward the
same big question:
So how will you guys crack
the transformational answers
we haven’t managed to
unlock ourselves?
What they mean of course
is: C’mon guys, what’s the
big answer’s proverbial
secret sauce?
What’s the repeatable rain dance that allows you,
or anyone else for that matter, to crack the lightning
strike transformational answer that we somehow
can’t quite see for looking?
What we tell them, and offer here to anyone in
innovation with transformational ambitions, is that
they’re asking the wrong question.
The real alchemy of transformational innovation
isn’t about the answers at all.
The answers are, believe it or not, the relatively
easy part.
The tough bit is what
comes before:
Finding
transformational
questions.

A QUESTION OF
Competitive
It’s about framing big, high altitude questions
that pack a healthy disrespect for present reality,
that dare to challenge the fundamental nature of
the categories, businesses, behaviors, experiences
and companies around which we’re asked to innovate,
and that ultimately define a path to positive
market disruption.
Advantage
What becomes clear in a long march across
dozens of companies and categories is that a
staggering amount of competitive advantage
lies in the definition of fundamentally
new questions around which to engage
the marketplace, and mobilize your team’s
pursuit of breakthrough innovation.
We’re not talking about
clever new probing techniques or the familiar
‘what if…’ questions—which are, in truth, just
potential answers with question marks at the
end—it’s much more fundamental and strategic.
In our experience,
transformational questions
have superhero powers.
They materially change the conversation, both inside
a company and with the customers it’s out to serve.
They challenge underlying assumptions that have,
artificially and unhelpfully, come to be mistaken
over time for immovable category truths.
And above all, these transformational questions
spawn transformational answers—breakthrough
innovations and the new competitive advantage
that comes with them.

A QUESTION OF
PERSPECTIVE
Before we go deeper on the pursuit
of those transformational questions,
let’s understand the innovator’s life
without them.
Assume you and your competitors
are chasing the same consumers. So, sensibly
enough, at the outset of your innovation program,
you round up a bunch of them, and probe what
they like and love, dislike and barely tolerate about
their current category experience.
You tease out their pain points and unfulfilled
aspirations and conjure sparkling new offerings
that do away with the bad and usher in the good.
It works for a while, but eventually you find the
thrill is gone. Everyone in your category, it turns
out, is rallying around the same questions, and
chasing marginal builds on the prior answers.
Some better, some worse—but subtle differences
do not a breakthrough growth engine make.
You’re left relying on fleeting advantages in
technology and design rather than sustainable,
highly differentiated and scalable strategic and
conceptual market-making platforms. In the
long run, the commonality of questions becomes
strategic gravity, begetting narrowly clustered
innovations across a competitive set.
Of course finding new answers to age-old questions
isn’t a bad thing. You’ll occasionally pluck a tasty
helping of low hanging fruit that way, and that kind
of innovation has an important role to play in a
balanced innovation portfolio. But, as a general rule,
a same-questions approach will tend to make future
growth a function of execution rather than strategic
differentiation, which can lead to margin erosion
and sleepless nights for your CFO.
Enter the transformational question.

The way a transformational question changes the odds
of a big answer is that it shines the klieg light on something
we call the problem behind the problem—not the surface
level challenge the project was initially chartered to solve,
but a big hairy thing lurking behind it in the shadows.
More often than not, the surface problem
is just a symptom of the bigger one.
For instance, where a beverage company
once engaged us around the question of how to reignite the interest
of 21-year-old guys in a once-hot category on the wane, the problem
behind the problem was that the powerful underlying technology
platform had been leveraged only against a narrow and fickle
segment of society. Solving that background issue would open
bigger growth opportunities, and ensure a similar problem wouldn’t
resurface in a few years when 21-year-old tastes took their next
inevitable u-turn. Finding the problem behind the problem takes
some practice, but experience says it’s always there, and solving it
does two big things.
Since the foreground issue is
usually just a symptom, solving
the problem behind it makes
the first one go away.
And since the problem behind
the problem is usually far
bigger, its resolution opens
bigger opportunities.
A few examples
show how this plays out.

Question
Spending
We were asked by a bank to frame up an innovative new way to teach
people to save more. Racking up savings deposits is a big win, both for
the bank on the receiving end, and for consumers’ hopes of a comfortable
retirement. Based on prior research, the client team had concluded that
the enemy was ignorance—consumers weren’t saving enough because
they didn’t fully understand the consequences of not saving: namely,
an inability to retire comfortably and retain their homes.
A quick glance around the category
revealed no shortage of attempts at this same sort of
thing—stacks of brochures, interactive tools, seminars
and even games. Clearly everyone in the category was
having similar conversations with their customers,
resulting in similar questions, and similar answers. The
un-thrilling truth was that better execution of the same
type of answer was the best this project could hope for.

Enter the
transformational
question
We kick-started our thought process
by questioning the question—was ‘How do we make
financial education more palatable and effective’
the right thing to be asking? Rather than begin in
the narrow space of financial education and views
on retirement, we started at a much higher altitude.
We asked everyone we knew—from the mailman to
the pizza delivery boy to the stock broker to the
soccer mom—something far more fundamental: did
they think they were saving as much as they should?
A funny thing happened. No matter who we asked,
their social stratum or level of financial acumen, we
couldn’t find a single person who said yes. What this
meant was that whether they were financial black
belts or white belts, they all knew enough to want to
save more, but weren’t getting there.
Then we asked them why they weren’t saving
more. Here, the answers were vague, varied,
delivered with little conviction and tending
toward post-rationalization.
In fact the loudest thing in the conversation
(and something you need to train your ear to hear if
transformational innovation is your calling) was
what wasn’t being said at all. No one ever described
having made a conscious decision not to save.
The big picture, and the
transformational question,
suddenly snapped into view.
In the go-go consumerism of the past few decades,
saving had gradually been transformed from a conscious
thing to little more than a derivative consequence of
dozens of decisions to spend, and the feelings in play in
those moments.
The problem behind the
problem was that saving
competes with spending
and loses almost every
time they go head to head.
As simple and obvious as this sounds, it’s actually
a profound statement that completely reframed the
challenge and approach to this initiative. The shift
from ‘how can we make financial education palatable?’
to ‘how can we give saving a fighting chance against
spending?’ changed everything about the approach.
If you begin to look at spending as your archrival,
you see the world differently. Do a SWOT analysis on
saving vs. spending and you see that saving is brutally
disadvantaged. Spending is impulsive, hedonistic,
emotional, instantly gratifying, fun, rewarding to
the senses, and irrationally layered with feelings of
freedom, power and self-reward. Saving, on the
other hand, is premeditated, rational, moralistic, and
synonymous with saying no.
The transformational question, ‘how can we transform
saving to give it a fighting chance against the
ubiquitous joys of spending?’, can only be answered
through transformation.
Not a me-too attempt to educate, but rather a disruptive
new model for capturing deposits that imbues saving
with the new dimensions of hedonism, impulsiveness,
and immediate gratification it needs to make
meaningful inroads in day-to-day life in a pleasureseeking
society.

CONDITIONAL
LOYALTY
Flying in the cash-spinning jet
stream of the first Frequent Flyer Card
launched in 1979, loyalty programs have
proliferated across everything from
travel to soft drinks to your neighborhood
hardware store. And with good reason.
The economics of getting the proverbial
‘one more purchase’ from an existing
consumer are very sexy.
A client at the forefront of the loyalty
game engaged us to define their next move, hoping to
up the ante over the competition, which had fast-followed
their prior innovations and narrowed the gap.
They came armed with everything one would ever
want to know about the ins and outs of the category’s
programs today, and even their customers’ rankings
of potential new features they would value most. The
client team had brilliantly framed up the possibilities
and was equipped with sophisticated modeling
techniques, segmentation studies and payout analyses
showing how moving the loyalty metrics on various
consumer segments would lift company profits.
It all seemed poised for a straight march to success, but
as we began our consumer discovery phase, talking to
the coveted top tier road warriors that loyalty programs
were built to woo, we began to detect something in the
background that we hadn’t expected at all.
Fundamental
disdain.

Beneath the seemingly
reasonable discussions about
future features, we began to
sense an adversarial posture.
These most ‘loyal’ players saw
the programs as little more
than ways to actively use and
abuse the companies that use
and abuse them. We abruptly
redirected the line of inquiry
from features to feelings.
We were struck by how these things called loyalty
programs actually had nothing at all to do with
genuine loyalty. They were merely transaction
incentive programs doling out de-facto bribes in the
form of freebies and status to those who transacted
most, and punishing those who wavered with
downgraded status. We realized again that we had
been asking the wrong question. The question of
‘what’s the next breakthrough feature?’ would at best
have spawned incremental change and a program
that was disliked slightly less than the others.
The transformational question was ‘what’s the difference
between the prevailing paradigm of loyalty programs and
the bonds of loyalty formed between people through their
lives?’ This change of perspective transformed the upside
potential of the project from mere one-upmanship toward
a transformational step-change in what a loyalty program
could be and mean. We dove into understanding the
characteristics, color and deeply embedded, unarticulated
behavior codes that pivot around human loyalty, and
found amazing flint to spark disruptive innovation.
Human loyalty is emotional rather than transactional,
characterized by ongoing give and take rather than
mutual abuse, and continually built over time as the
cumulative body of interaction grows—without
intermittent resets based on ‘what have you done
for me lately?’
The problem behind the
problem became clear:
loyalty programs actually
bear no semblance at all
to human loyalty.
The transformational answers based on this
understanding will not merely fulfill the immediate
problem of restoring leadership, they will define
a whole new path for loyalty program innovation,
transforming the loyalty program experience and
even the underlying algorithms by which loyalty is
measured and rewarded, setting a new standard for
decades to come.

WAYS TO GET TO
Transformational Questions
And The
Bigger Answers
They Open Up
While the specific
transformational
questions
that unlock
transformational
answers on
your innovation
initiatives will be
specific to category
and task at hand,
here are some
principles that can
guide you toward
finding them.

Assume
transformation
1is necessary.
The only way to get to transformational questions is to
purposefully chase them, and this starts with assuming
that transformation is necessary rather than an option.
Assuming transformation is necessary changes the
conversation in the team from ‘should we transform
something’ to ‘what will we transform?’
Consciously try to identify things
in your category, consumer experience,
products and business that just are
the way they are, without needing to
really be that way. In most businesses,
you’ll find a long list of these things
and transformational questions
hidden inside them. In an age of
2personalization, when there is such
tremendous breadth in consumers’
financial means and trajectories, why
do mortgages come in only 15 and 30-
year increments? When less than 15% of
the population finds full-strength spirits
palatable, why is 98% of the category
sold in a way that requires compensatory
behavior? For inspiration, just look how
far architect Frank Gehry was propelled
by simply questioning the need for walls
and roof lines to be straight.
Cultivate a healthy
disrespect for
present reality.
Knowledge is a potent form of competitive advantage, but there is often a razorthin
line between a knowledge base and the entrenched paradigms that have been
attached to it over time and permeated innovation in your category. Know that
knowledge is power in certain moments in the journey, but kryptonite in others if
not properly harnessed.
3
Temporarily forget
what you know.

? ?
?
? ?
?
4
?
Ask yourself how
likely it is that your
competitors aren’t
working on the same
questions you are.
?
?
?
?
Literally picture yourself right now sitting in the
room with a similarly-chartered project team at your
key competitor’s office. If you can readily imagine them
working around similar questions, you probably haven’t
cracked the transformational questions you’ll need to
get to transformational answers. The point is not to
second guess what your rivals are up to, but simply
to gauge your own conviction that you’ve uncovered
transformational questions. Big thinkers find big
questions exciting. So if you don’t viscerally feel that
you’ve broken new ground, you probably haven’t.
5
Move the
camera
around
the room.
Finding big transformational questions usually happens by distancing
ourselves from the prevailing category context we live in every day and
approaching it from a fresh angle. This doesn’t just work metaphorically,
it works literally too. Looking at your ice cream business not through the
eyes of the consumer seeking indulgence, but from the perspective of the
product behind the frosted freezer glass watching consumers go by, like
an orphan hoping for adoption, may open a powerful new set of questions
to ignite transformational innovation. If that doesn’t work, deconstruct
the life cycle of an ice crystal born in the churn at the factory, or ask what
the spoon would say as it’s bent in the act of scooping.

6Learn to hear
the thundering
sound of the
thing that
ISN’T being said.
Paradigm-creep isn’t just a company phenomenon. It happens to consumers
too. They often become so accustomed to embedded characteristics and
compromises that they don’t even think or talk about them. (When’s the last
time you got to work and said ‘boy, how about that gravity today?’) The great
innovator needs to ask at every touch point what didn’t we hear that was
interesting. We didn’t hear a single consumer say they had consciously
decided not to save. We didn’t hear a single hint of loyalty in a conversation
about loyalty programs. The unsaid is often the most telling thing on the
journey to transformational questions, and the answers they unlock.

Fahrenheit 212 is an innovation
consultancy that is engaged to
deliver top line growth. To learn
more about our transformational
approach to innovation, visit
www.fahrenheit-212.com.