Predictable Innovation: The Two-Sided Solution

The best way to prevent promising innovation initiatives from ending in heartbreak is to purposefully marry up big, transformational wins for your customers with big wins for your own company, achieving predictable innovation.

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How can you use the two-sided solution to deliver predictable innovation?

As an innovation champion, you work for two separate constituencies: the customer and the business itself. For all the fledgling innovation efforts going on across a company, the only innovations that actually make it to market and thrive are those that solve both problems.

Obvious, right? Yes, until you look at how most innovation programs are actually run these days.

Being obsessed with consumers is a critical thing. But this healthy obsession often comes with a destructive side effect – too many innovation programs are run as if solving consumer needs is all that matters.

Consumers get poked, prodded and provoked with all manner of elicitation techniques, aiming to extract their unmet needs.

Commercial realities meanwhile are pushed to back of mind or the back end of the process. Or they are overtly banished from discussion as impediments to inventive thought.

This one-sided approach will ultimately exclude predictable innovation. What happens next without this two-sided solution?

First, a false sense of euphoria takes hold as
a consumer solution is identified. Cries of ‘Consumers love my idea!’ and ‘We’ve solved it’ ring down the halls. But in truth, it’s at best half-solved.
The needs of the consumer have been addressed, but the needs of the business and the people who run it, and who ultimately decide what gets to market, have not.

Senior execs start asking tough but obvious questions about the other half of the equation. OK, I get that it’s great for consumers, but why is it great for our company? How does this fit company strategy? What’s our unique right to win here? How can we get this made? What’s our risk profile? How will we actually make money?

In the end, one-sided solutions get blind-sided in
the company approval gauntlet. All that great thinking and passion you’ve thrown at the consumer side is at risk of being wasted. Not because of what you did, but because of what you didn’t do. You could scramble at the back end of the process to retrofit a strategic and commercial case to an idea built without one, but it’s a bit like shopping for
a caterer on the morning of your wedding day.
You might get lucky and pull it off, but odds are you won’t.

So how do you head off that heartbreak and position your program to clear all those internal hurdles?
It’s actually quite simple: run a two-sided methodology.

From day one, pour equal passion, time and talent into the problems of both constituencies that count here – the consumer AND the business – and build ideas that marry up an answer for each.
Working this way, those tough questions that slow down or derail your peers’ projects in the approval gauntlet won’t be tough for you at all. Before we
go deeper on ways to get there, let’s soak up inspiring examples of what a two-sided solution looks like.

Progressive Insurance has brought multiple two-sided innovations to market, each ingeniously melding
a meaningful consumer need together with a key pain point of the business, solving both in one
bold move.

The first great double play was its online rate comparison tool. Consumers think the insurance business works in mysterious ways, using tricky sales techniques to sell them coverage they don’t need, or obscuring competitive choices by comparing apples to pineapples. Suddenly, Progressive steps up with an online rate comparison tool that turns a bit of customer information into a comparison of rates on similar coverage plans from multiple companies.

The win for consumers is convenient, objective one-stop shopping in an industry that lacked it before.
The amazing proof point is that it often spits out results that show a competitive offering to be cheaper than Progressive. But behind this consumer proposition sits a solution to a key challenge for the company. Paying out big claims to risky drivers hampers both profitability and Progressive’s ability to charge attractive rates to win over the safe drivers it covets.

Over time, it will steadily reduce the risk profile of Progressive’s customer base, meaning fewer claims, better profits, and an ability to price more competitively for the kind of drivers they want.
Progressive’s next two-sided leap was its Snapshot driver behavior monitoring device.Wrapped in the compelling consumer promise of reducing rates
for safe driving behavior, the in-car device gives Progressive the insurance industry’s holy grail – a way to spot dangerous drivers before the usual clues of speeding tickets and
accidents appear.

Another wonderfully simple example of two-sided innovation comes courtesy of Korean Air. Asia is a big region with diverse climates.When South Koreans feel the bite of winter, they head south to Bali or the region’s other tropical hot spots.

They pull on a bulky down parka for the trip to the airport, and carry it everywhere they go, car to plane to taxi to beachside hotel, despite having no use for it until they leave the airport on their return home.

Korean Air stepped forward with what at face value appeared to be a delightful bit of customer-coddling innovation: a coat valet service. Flyers could check their coats at the gate in Seoul and collect them
on return. No more schlepping of useless bulk to the beach. But this innovation was actually 
an answer to a big operational and financial pain point. On every winter flight, travelers would tuck their carry-on bags in the overhead bins, then stuff in their bulky coats, filling the bins prematurely with many customers in the queue yet to board.

The inevitable result? Chaos, stressed out customers and staff, and delays as flight crews scramble to rearrange bags, optimize bin space and eventually carry bags off the plane against the flow of the boarding queue to gate- check the excess.

This wasn’t just bad for the customer experience, it was bad for the business, driving poor on-time departure rates, inefficient labor utilization and delays on incoming flights as outbound planes were late out of the gate. Coat valet was a great two-sided solution – putting big smiles on the customer
and the operations team alike.

Another great double-barreled innovation is the Mini Cooper. From a consumer standpoint, it stepped in to solve a big unmet need. Before the Mini Cooper came along, affordable efficient cars were deadly boring, devoid of fun behind the wheel and lacking any kind of bold personal statement at curbside. Enter the Cooper.

Customers could liberally personalize their Mini with an array of paint combinations, interiors, door configurations and special accents. Suddenly a small car could be a blast to drive and could make a big personal statement. Great as that was, it wasn’t enough to make it a great business. Commercial success would lie in something customers never knew or cared about – a solution to a key pain point in the way the car business had approached individual customer needs.

The old automotive paradigm said that covering
a broad array of consumer segments required a broad array of models – big ones, little ones, fast ones, slow ones, pricey ones and cheap ones. Each of those models came with its own assembly line, labor force and massive tooling costs each time a model was updated.

Mini broke that mold.They built the proposition from the ground up to ensure that a high level of customization could be delivered on a single platform running down a single assembly line with a single set of tooling and labor. Customer problem solved. Business problem solved. Through a single double-barreled innovation.

Another great example of a double-barreled innovation is the vertically-integrated decade-long entertainment juggernaut called American Idol, and all its global siblings. From a consumer perspective, Idol scratched the public itch for a new form of televised entertainment beyond the hackneyed genres of the sitcom, drama and talk show.

By marrying reality show competition, audience participation, inspirational rags to riches tales of contestants and celebrity judge star power, Idol was compelling viewing, placing it among the most popular TV shows around the world for over a decade. But that was just half of the story of this two-sided innovation. Idol was a head-on assault on the broken business model of the music industry. That model was predicated on record labels placing dozens of high-risk, hunch-based bets every year on unknown artists. A label would spend millions on production and promotion before getting any real read on a new artist’s ability to win fans and sell recordings.

The commercial genius of Idol
 was to completely invert the model, turning the public into one big Artist & Repertoire department, vetting artists before big bets were placed.
Idol guaranteed a pipeline of upcoming talent, validating public interest ahead of investments in production, and reducing the eventual need for promotion once a new album was readied for release.

Suddenly, new artists were household names before they’d ever recorded
a note. Add in the other revenue streams of tours, lucrative sponsorships and even monetizing the voting process, and you’ve got the quintessential two-sided solution – solving the entertainment needs of the public and the broken business model of the music business, all in one bold move.

Here’s a six pack of helpful hints on how to bring the hit rate and impact of two-sided innovation solutions to the challenges you’re working on:

1. Two-sided starts day one.
Form follows function. You won’t get to two-sided solutions by running a conventional one-sided
program that’s dominated by either a consumer
perspective or a commercial one. Design a two-sided program with the capabilities to match, exploring the pain points of the consumer and the business with equal intensity before you start building ideas.

2. Pick big problems, not just interesting ones.
The value of an innovation is usually proportional to the size of the problems it solves.As you scan across those arrays of consumer and company problems, pick out the biggest on each side and start there. Guessing right on driver risk profiles is a huge issue in the insurance business, not
a peripheral one. Starting with small problems will likely result in small solutions.

3. Connect across the dots.
Creativity is about connecting dots no one has connected before. Use the respective pain points of the consumer and the business as two sets of dots and try to forge connections across them. Look for your moral equivalent of the way Korean Air found an intersection between consumer frustration and an operational nightmare. You’ll be amazed by what ideas you’ll ignite by looking for intersections like that.

4. Build win-win ideas at the crossroads.
Go in with the explicit intent of finding ideas that deliver big value to both sides of the equation. As you shape, filter and hone ideas, know that anything that fails to solve both sides of the equation probably won’t make it to market.

5. Sweat more at the front end, less at the back.
Taking a two-sided approach means more work at the front end than just putting the blinders on and working on one half of the equation. But it makes life much easier at the back end when decisions get made on what goes to market. Bring the extra capabilities and sweat to the front end and you’ll save yourself sleepless nights on the back.

6. Nail your two sided elevator pitch
A two-sided approach sows the seeds of the most clean and compelling elevator pitch you’ll ever deliver. The consumer has a big problem with X. Our company has a big problem with Y. This idea solves their problem and ours.

So there you have it. Marry up a big win for the consumer and the business. Cue the wedding bells, throw the rice and watch your hit rate soar. Leave the heartbreak of disappointment to folks who only work one side of the equation.

Predictable innovation delivers big, transformational wins for both your customers and your own company.