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Why Success May Be Holding Your Company Back

Why can’t companies spot great opportunities for growth? According to Erich Joachimsthaler, author of Hidden in Plain Sight (Harvard Business School Press, 2007), “The more successful a company becomes, the more it becomes blind to ideas. The occasional brilliance may bubble up, but it won’t be enough to help the organization grow and advance.”

Why don’t companies identify opportunities? Joachimsthaler believes that success prompts companies to look from the inside out, not the outside in: “When they do the former, they look from their own perspective of their products. Even when they look at customers, they always do so with their own products in perspective.” This makes them blind to real opportunities—what Joachimsthaler calls opportunities “hidden in plain sight.”

Joachimsthaler, the founder and CEO of Vivaldi Partners, partially attributes the blindness to opportunities to pride in past successes. He also says that growth requires that a company to divisionalize, to create an SBU or strategic business unit, and to appoint category and brand managers. This creates silos within the organization, causing employees to become single-minded, caring only about their own product line and disinterested in others.

How do you open the company’s mind? According to Joachimsthaler, the answer is to look at customers differently: “The secret is to look at how people behave in their everyday lives. From that vantage point, the company needs to look back at the organization. The secret is to do this without ‘the product tucked under their arms.’”

The Seven “Beyonds

Joahimsthaler has identified seven “beyonds” that allow an organization to view the marketplace from a broader perspective:

  1. Beyond existing customers. The focus is on unserved customers or noncustomers, not just existing customers.
  2. Beyond existing brands. Looking at products and services in terms of how they fit into and add value to customers’ everyday lives.
  3. Beyond the category. The category as a unit of analysis is becoming blurred, so evaluating brands by category isn’t as helpful as it once was.
  4. Beyond the industry. Industry boundaries also have blurred. As Joachimsthaler puts it: “From a customer viewpoint, the question isn’t ‘Whom are you competing with?’ but rather, ‘What is it that you want to accomplish in terms of customer advantage’?”
  5. Beyond silos and functions. Businesses that are organized around functions miss out on great opportunities because of the barriers inherent in the structure. Introducing a demand-first, outside-in perspective helps unite functions by providing a common perspective, making barriers between silos porous and identifying opportunities across silos.
  6. Beyond the boundaries of the Strategic Business Unit. Even at the SBU level, the perspective may still be too narrow to permit awareness of opportunities.
  7. Beyond habitual domains. New opportunities, ideas, and innovations originate from those who can cross-pollinate ideas from different areas. Marketers and product developers are responsible for making that happen.

Joachimsthaler has identified a process to identify creative ideas, a model he calls “the demand-first innovation and growth” (DIG) model, which composed of three interlinked parts:

  1. Demand landscape. Stemming from an enhanced understanding of how people behave and live their lives, pursue work processes, and consume, apart from the company’s existing product offerings or capabilities.
  2. Opportunity space. Structured thinking to identify opportunities that customers can’t actually articulate.
  3. Strategic blueprint. A blueprint of how the company will pursue newly identified opportunities effectively and make them relevant in the social-cultural context of the daily experiences of people. “Just having some great ideas or visionary thinking really won’t get you anywhere,” says Joachimsthaler. “You need to formulate a strategy around the opportunity space.”

All three parts of the DIG model are essential to find and execute the next innovation and growth strategy. “Most companies conduct very good customer research,” says Joachimsthaler. “Many have a solid understanding of the demand landscape that surrounds them. But few bother looking for the real opportunity space on that landscape. They gain insights from consumers or customers but do not know how to quantify the opportunities or translate them into actions and results.”

He continues, “A big mistake is to conduct solid customer research based on identifying opportunities from the traditional product perspective, missing the boat on connecting with or fitting into a part of customers’ daily lives. Consequently, companies miss identifying and capturing the full spectrum of opportunities for innovation and growth that exists along the entire value-generating process—from customer insight to technological development, to marketing and action.” The biggest mistake occurs when the DIG model is focused only on a piece of the major business processes of a firm—when it becomes a part of a functional silo or specialty.

The DIG model clearly encourages research to look outside rather than inside for opportunities. “Looking at customers and seeing the world in which they live from outside your company’s bandwidth provides a unique viewpoint about your business—it is a way to see what couldn’t be seen in plain sight or to do away with the smoke screen, a way to create future breakthrough growth.”