TransformaTion

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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.

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