Unlocking Hidden Assets – Innovation’s Most Ignored Gold Mine
With the world tipping off its axis, even the mighty are getting crushed. Innovation has a huge role to play in getting out from under this recession. But where do you start? Where do you look?
The answer is thrilling and confounding at once. The fastest, most profitable innovation opportunities are right in front of you, yet go unnoticed.
Most companies recognize incremental ways to innovate their existing portfolio – all hail new flavors, scents, designs and the like. Many intermittently entertain blue-sky initiatives – bigger ambitions, looser definitions and longer gestations along with higher costs and uncertainty.
But there is a third innovation bucket that is stunningly attractive, massively cost effective and typically speedier to market: Innovating to unlock hidden value from existing assets.
This third way is virtually ignored by most project teams for reasons that have more to do with human nature than commercial strategy. Incremental moves are so straightforward; they don’t require much lateral thinking. Excited blue-sky teams aim for the moon, rather than rifle through company closets. And familiarity blinds everyone from spotting the treasures behind the umbrella rack.
Now more than ever, innovation’s sweet spot is when nothing but the idea needs inventing. In seeing potential in what’s already here, but taken for granted or underleveraged. It’s simple, but not easy. Fresh eyes can help.
Outsiders see the wood for the trees. At Fahrenheit 212, we not only see the wood, we know how to transform every pulpy bit into top-line growth. How?
We practice an innovation discipline that works with any transformational ambition. We uncover new ways to enhance commercial value – crucial during recessionary periods like this one. And we help firm up strategic value – ensuring a better competitive position when the uptick comes.
Chris Zook’s research at Bain & Company demonstrates how pivotal such undertakings can be.
Zook found that a staggering 9 out of every 10 companies that successfully renewed themselves built that renewal on their hidden assets.
Getting there is not a Herculean task, but a step-by-step method. One that can move markets and that tilted earth off your shoulders. Best of all, you don’t have to do all the heavy lifting.
Know What You’ve Got. Including Your Dead.
Every day, accomplished executives walk right past assets with enormous potential. They either don’t know about them, or simply cannot see them. So the first step toward exploiting hidden assets is to uncover what you’ve got.
We often start with our clients’ R&D guys. We say, “Bring out your dead. Show us all your best, coolest stuff that marketing couldn’t figure out what to do with.” Out of the cupboard come ideas that dazzled their colleagues, but never went anywhere. We take another look.
What should you be looking for?
Most big companies’ hidden assets inventory includes:
• Underleveraged technologies – formulate, engineering specs, manufacturing schemes and more could be valuable in categories you’d never considered, with partners you haven’t met yet
• Unreleased products – whether orphaned, neglected or stuck, many potential winners are but one degree away from market-ready
• Sleepy brand equity – consumer perceptions never slumber; refreshing brand equity can awaken new revenue
• Undervalued distribution networks – find someone who wants to be where you are
• Underused research, other sunk R&D costs – consumer data, clinical testing, oceanic expeditions, whatever – solid research has market value for companies targeting the same audience in a different category
Once uncovered, hidden assets need a value role, an innovation rationale. You’re in hot pursuit of killer ideas. More detective work is in order.
Interrogate Your Assets. Relentlessly.
Instead of waiting for a lightning-bolt insight, methodically mine asset value opportunities through relentless interrogation.
Asset cross-examination starts by asking:
• Who has a problem bigger than ours that might be solved with this asset?
• What happens if we bundle this asset with others inside the company? Outside it?
• What if what we currently do with this asset was no longer possible, what’s the first thing we would do with it?
• What five companies would want this asset? Why?
• What is holding this asset back? Is our strategic focus too narrow? Our grip too tight?
Such questioning should also determine:
• How can we make leveraging hidden assets fundamental to every innovation project?
• How could scouring assets be a separate work stream?
• How do we ensure this process gets measured and gets done?
Move the Camera.
Done right, relentless interrogation generates multiple perspectives on a given asset: What’s in it for the consumer? Product developers? Retailer? Suppliers? How would this work in that other industry? Or that one? Could it apply to that emerging trend? And what about Company X’s troubles? Could this improve their business?
However, moving the camera to another part of the room ¬– seeing value through the eyes of various constituencies ¬– is an almost impossible task for established managers or market-led consultancies. Insiders are blinded by past success; consumers cannot know what could be.
Our Idea-led Innovation™ approach breaks through those barriers. We first interrogate what’s commercially possible; this leads to the ideas that attract consumers. Bigger, faster wins come from understanding multiple commercial ecosystems and seeing where your asset has value.
Often, it’s in places you would never have considered on your own.
Fonterra: Moving Beyond Milk
Fonterra Co-operative drives more than a third of international dairy trade. However, dairy demand is decreasing in many global markets. Fonterra asked Fahrenheit 212 for new ideas to leverage its dairy-derived portfolio.
During our Fonterra inventory, we uncovered an underleveraged technology – a clear, taste-neutral whey protein isolate – and interrogated that asset. Where would that be valuable? What category is undergoing more augmentation and fortification – with escalating price points – than any other? Water.
Big technology. Big business to drop it into. Big opportunity. Putting the protein into water posed no technical issues. The challenge was in defining a consumer benefit. We found it in the mirror.
More consumers in more markets than ever are concerned with weight control. With this protein and some soluble fiber, water could deliver new levels of satiety. Hunger pangs ¬– banished.
Suddenly, a milk company had a role to play in water. Our next innovation? Developing a brand around that benefit.
Enter “WH2OLE – the water that quenches your hunger.” WH2OLE recently launched in New Zealand, providing consumers with a new tool to bridge the hunger gap between meals. Commercial expectations for WH2OLE are quite high.
Strategically, the bandwidth created by Fonterra’s technology may prove more valuable than the water business itself. Other companies might soon be inquiring, “Where else might it work? How do we get in on this?”
Moving any asset from dead meat to cash cow requires looking at it differently, asking different questions and, sometimes, finding a partner with bigger problems.
Samsung: Networking Vivifies Vending and LCD Market
Samsung had exhausted its LCD screen market and sought new applications for the technology. To unlock the value, our interrogation centered on finding companies with tougher challenges than Samsung’s.
The moribund vending machine industry sure needed help. Inventory was a pain. Marketing was antiquated. Customers were often disappointed by out-of-stock messages.
We knew that putting a LCD panel on the front would be cool, but hardly transformational. Our innovation was in seeing a whole new capability – networked vending ¬– by bundling an Internet connection with Samsung LCD technology.
With networked vending, Samsung’s vending partners:
• Never disappoint a customer – the LCD panel only displays items in stock
• Maintain precise inventory – sales updates are sent to stocking teams
• Deliver high-impact marketing content to consumers when they are most likely to buy
• Can instantly customize that content via centralized control – seizing opportunities whenever a refresh is right on the money
The humble vending machine has now become a media platform, inventory control device and customer satisfaction team. We introduced the Samsung idea to Coca-Cola. They jumped at the opportunity and launched Samsung uVending at the 2008 Beijing Olympics.
In March 2009, both Coca-Cola and Kraft Foods announced their plans to roll-out Samsung uVending machines across America.
Move or Be Moved
Whether it’s boom times or tough times, it’s no coincidence that the world’s biggest companies orchestrate the biggest innovation projects.
Fonterra is New Zealand’s largest company, yet still seeking new revenue streams, new categories, new partners. Samsung flouts stagnation and consistently finds growth from its existing assets by being open to novel opportunities.
Who’s helping you see your hidden assets? Who’s gone out to the garage and found the Mona Lisa behind the mower? Mona’s creator, Leonardo DiVinci, offers some wise counsel:
It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things.
Substitute “innovation” for “things” and you get the picture.