Cultural Innovation
The Secret to Building Breakthrough Business is Through Cultural Innovation
COVID-19 will transform how we manage our supply chain, as well as where and how production lines are operated. In Onilog, we are studying our new reality and how may we adapt to it and how to create value through the innovation. After reading the article “Cultural Innovation” by Douglas Holt, I found a guideline to companies as agile and entrepreneurial as we are to create value in a more efficient manner.
The reality is that in most service or consumer markets, innovation is a slow, incremental grind. This problem is not an organizational one. Companies struggle because they put all their chips on one innovation paradigm, which is to “build a better mousetrap”; meaning an improved version of a well-known item, a race to create a killer value proposition.
This paradigm works well for a tech company, but what about companies that operate in markets where new technology is less consequential or impossible to defend? For many of them, confronted with a pattern of poor return on investment, chasing better mousetraps seem like an exhausting and expensive matter of running in place.
Fortunately, building better mousetraps in not the only way to innovate. In service or consumer markets, the innovation often proceeds according to a logic called cultural innovation. It means it is perceived as a major innovation, although a better-mouse-traps perspective would reject that assessment. All Cultural innovations are embodied in distinctive products or services, but also in founder’s speeches, packaging, ingredients, retail design, media coverage, and even philanthropy.
The result? Brands like Starbucks don’t compete in the value-proposition race, trying to lead the category as it’s currently defined; they play a different game. The innovation of better-mousetraps is guided by quantitative ambitions: Outdo your competitors on existing notions of value. The Cultural innovation operates according to qualitative ambitions: Change the understanding of what is considered valuable.
The Cultural Innovation Model
Step 1. Deconstruct the category’s model
Market are beliefs systems embraced by those who participate in a category: companies, consumers, and the media. To understand your category’s culture, think like a sociologist. Step back and make the familiar strange. What are the category’s taken-for-granted organizing principles? What is the dominant ideology?
Step 2. Identify the Achilles’ heel Categories’
All cultures eventually develop a fatal flaw, and cultural innovators pinpoint the emerging vulnerabilities.
Step 3. Mine the cultural vanguard
Category transformations are usually prefigured by ideas and practices worked out at the margins. When cracks form in the culture of a category very often appears a cultural vanguard before big companies show up. The Innovators study the vanguard closely, and even participate in it, to find a strategic direction for their challenger ideology and the symbols required to bring it to life.
Step 4. Create an ideology that challenges the Achilles’ heel
The cultural innovators source materials from the vanguard to build a new brand concept.
Step 5. Showcase symbols that dramatize the ideology
Cultural innovations are brought to life by a combination of symbols that dramatize them in the most compelling manner. They select symbols from the marketing mix that work together, attack the Achilles’ heel, and draw a clear contrast with the category’s dominant culture.
Since our foundation in 1999, we decided our vision is to be a Strategic Ally of our customer instead of being just another supplier. I am convinced that the approach will be a huge differentiator and creator of value during this post-COVID period. Regionalization of production and supply chain allows companies like Onilog to adapt faster to satisfy the needs for a more local solution.
