A couple of weeks ago I was reading Gillian Tett's column in the Financial Times. She typically writes about the financial industry, and I enjoy the way she is able to make complicated ideas clear and understandable.
As I started reading this particular column I was surprised to see that the first two paragraphs described some work I led with P&G as a client. This was some excellent emerging markets work, and P&G is a great client to have as they are usually willing to explore directions that will shake up their categories. The bulk of the article, however, discussed a more important point which is how companies need to learn to understand new cultures before they try to expand current product offerings into new markets. It then goes on to suggest that the rewards, in addition to success in entering the new market, can include "reverse innovation" opportunities. The term "reverse innovation" is used to describe innovations developed for an emerging market, that can then be used in existing markets. Two things struck me as I read the article.
First, useful innovation is not achieved by solely understanding a culture, but by translating that understanding into meaningful products and services that will benefit the culture. Tett identified that this type of understanding is important, stating that she draws from her background in social anthropology to understand the financial industry she writes about so well. She is correct in that social anthropology tools and thought processes are important. I have also seen people make similar analogies to the design industry. In my opinion, both types of skills are important - yet both alone are insufficient to create meaningful innovation. From my experience, the particular tools used to make sense of a new culture are less important than the ability to translate what is learned into their implications in a different domain. In the example in the article, understanding what motivated people with little means in Brazil was only the first step. The most important step was to translate what this meant for a specific type of product to be useful in their lives. Because it is difficult to observe and often intuitivey accomplished, this step is often overlooked by those who study innovation and market research processes from the outside.
Second, it's important to note that this project was very similar to many innovation projects, regardless of the specific culture in question. It's important to understand that a company has its own culture which is different from the culture of its market. As such, every innovation project requires a study of the culture of the market, even in a market that's within the company's native geographic region. Sure, the outcomes from studying what's important in a Brazilian culture of little means will be different from the outcomes from a different culture. But the bigger difference is between the culture of the company and the culture of a market in general. Companies are great at understanding their current products. They often confuse this expertise with their ability to understand how anyone would perceive their products. This is the real reason behind the success or failure of any new product, regardless of the location of the market.
I was happy to see that these issues and the results of the work are getting noticed. However, there is still great confusion about what it takes to achieve innovation success. It's important to observe behaviors, point to tools from various fields of study, and glean critical thinking skills from successful innovation efforts. But let's not forget that the magic happens in the translation of what is learned into a relevant new offering. I'm sure Tett possesses excellent intuitive translation skills as she studies and writes about the financial industry. There's not a rule book for how to do that, but I'm working on it.