What exactly is 'brand-led innovation'?

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More than a buzzword, it's integral to the health of a brand

It’s unfortunate when a potentially valuable word reaches "buzzword" status, as is the case with "innovation." (A quick Amazon check shows almost a thousand new books on the subject released in just the past 90 days.) Yet ironically — or perhaps as a direct result — few companies can agree on a definition.

Yet understanding what innovation is and how it works at large companies is important to those with brand expertise. Organizations clients turn to for brand oversight may also be uniquely qualified to help lead their innovation efforts. After all, a company’s brand is a key asset in innovation.

At Finch15 we define innovation as "the introduction of the relevant new." This builds upon the simple, but too-broad-to-be-useful, Merriam-Webster definition. Working backwards, it provides a three-step process for corporate innovation:

  1. Concept something new (for your company)
  2. Ensure it’s relevant. (Relevance varies by industry, by company ... and over time)
  3. Introduce it. (It isn’t innovation until it leaves the lab)

Each of these three steps is relevant when thinking about brand-led innovation. Creative organizations that deal in growing brands are culturally suited to concept new ideas. In fact, most companies engage agencies for this creativity, which can be hard within corporate walls.

To understand what role brand expertise plays in steps Two and Three, it’s helpful to view the landscape of innovation across the spectrums of risk vs. reward. Most innovation dollars are currently spent in vertical innovation (i.e., lower risk and lower reward), and things will likely remain that way for the foreseeable future.

Vertical innovation is best defined as innovation that optimizes a company's current offering. Investments in things like longer battery life, more miles per gallon, new flavors and customized production epitomize this form of innovation. It’s been around (and studied) for a long time. There’s a wonderful example from a company that’s been at the forefront of innovation for almost 200 years: GE. Just look at this "documentary" it released in 1955 about automation.

On the other end of the spectrum is lateral innovation, which is best defined as innovation outside the current context of a company’s offering. The company isn’t just doing new things within the same space; it’s introducing completely new things in an effort to pursue a fast growing opportunity (i.e., higher risk but higher reward). Most lateral innovation involves new fields or new models within established fields.

GE — the same innovative powerhouse touting the automation age 70 years ago — is now working with crowdsourced invention platform Quirky to create networked appliances like the Aros Air Conditioner as we begin to live in "smart homes." Although appliances are a key vertical for GE, the pursuit of a networked home is an investment in lateral innovation.

Lateral innovation requires venturing into the unknown. What better compass than its own brand can a big company like GE have as it heads into such uncharted waters? In other words, its brand helped determine what innovation was indeed relevant. The GE brand is already welcome in millions of homes. Not only that, GE has a number of incredibly important and relevant patents that it was willing to offer to the Quirky community for help with these networked products. Those are key assets that can help guide GE as it pursues "the relevant new." Innovation that’s built upon partnership and that leverages brand equity among consumers? That sounds exactly like the type of effort a company would want its brand agents involved in.

To truly capitalize on a brand as an innovation asset, though, a good partner should do more than guide its client on lateral innovation opportunities. It should also ensure the brand serves as a safety net as the client pursues these new ventures. It’s impossible to ensure a new business will be successful, but it’s certainly possible to ensure that if it fails, it will fail smartly.

If a company’s new product or service drives brand benefits for its core business, irrespective of its financial success, that’s a worthy form of insurance. Just look at the Nike Fuel Band. The business unit shut down last year, but it’s arguably the most successful, mainstream "marketing" effort Nike has ever had in evolving its brand from a "shoe" company to a "sports technology" company. That shift in brand perception gave Nike a soft landing, even when it didn’t successfully cross the chasm. The brand helped lower the risk of introduction for Nike in its innovation efforts.

This emerging world of innovation is one in which marketers can play a key role in new offerings. That sounds like the days of yore so many agency management teams long for ...

... and like the ultimate agency innovation.

Saneel Radia is Founder of Finch15, a Publicis Groupe innovation firm that offers incubator services for brands.

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