Tom Goodwin: brands need to do more than 'gestural innovation' if they want to evolve

Too many large companies waste time making innovation gestures rather than actually innovating, Zenith's executive vice-president and head of innovation Tom Goodwin said.

Speaking to Campaign about his newly-released book, Digital Darwinism, Goodwin (pictured) said he was inspired to write it because so many big companies are not changing fast enough and often lack a proper strategy to do so. 

"The book looks at how tech changes consumer behaviour and what is now possible. It examines business models big companies can use – rather than be beaten by smaller insurgent companies and provides advice about what they can realistically do about this," Goodwin said.

Companies talk a lot about innovation but their "body language" shows they're "just not that excited about change", he said. 

"Airlines are a good example of 'gestural innovation' at work. They know that what they need are much better apps that let you check in faster and change your flight yourself - but instead they rely on software from the 1960s or 70s and put a fresh skin on it," Goodwin pointed out.

Or, too often, they distract themselves with gimmicky, superficial innovations that don't serve the heart of what they do. "Such as Air New Zealand's AR headset which it uses to train people, or BA's 'mood sensing blanket'," he said. "What people really want from them is better customer service. I, for one, would like to be able to email my airline and that simply isn't possible."

Another popular approach by big firms is to "streamline" and opt for cost-cutting measures to gain "efficiencies". 

"This is praying at the altar of the chief executive – it's not about the customer at all. The focus shouldn't be around reducing costs, it should be about delighting people," Goodwin said.

This is why innovative new companies are able to take on large incumbents and win, he continued. 

An insurance company called Lemonade has disrupted the US insurance company by allowing consumers to buy home insurance through an IM interface. They can also make a claim, and record a testimonial all through the same interface. It promises that customers can take out a policy in 90 seconds and it will process claim in 180 seconds. Between its launch in September 2016 to February 2017, the company saw seen its customer base grow an average of 39% a month.

"This is subverting the whole industry which has bee n about making it as hard as possible to make a claim," Goodwin said. 

At the end of last year, Lemonade received $120m (£88m) in funding from Softbank, a large Japanese mobile operator that Goodwin points to as serious about innovation. 

"Softbank has a hedge fund which it uses to invest in other companies that are very different from itself,"  he said. And, it invests serious money, unlike so many other incubators or accelerators that lack scale and seriousness.

"If it's small and external and not taken into the heart of the company, it's a gesture, a gimmick," he said. 

Some of the things these large firms really need to do, Goodwin continued, is to sit down with a blank piece of paper and ask themselves what their business would look like if it was invented for today. 

Then they need to look at their own competitor set, cost base and decide if their size and scale is an advantage or disadvantage.

"They could perhaps let the company slowly die, treating it like a cash cow so they can create an entity that will go on to become the future of the business – which is what Netflix did. But this isn't always necessary. So many of these companies feel weighed down by what they have instead of viewing their employees and assets as an advantage," he said.

After all, he concluded, it should theoretically be easier for Unilever to have invented the Dollar Shave Club or for Nestlé to invent Blue Bottle Coffee than for entrepreneurs with nothing. So why couldn't they do it?

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