Pinto's Prose: Eight Innovation Ideas to Help Drive Automation Companies

Growth is hard in today’s economic environment.

Aw 565 Jimpinto Web
Strategies that worked well in the past are no longer effective. Everyone recognizes that innovation can generate successful growth, but it seems elusive and unpredictable. How does one find innovation?

You remember the story of the drunk who was looking for lost keys under the lamppost, with the explanation, “Because there’s more light over here.” For too many companies, this describes their search for new ideas. They look to improve what they’re already doing, but cannot come up with any new ideas to break through to really new business. New ideas are typically beyond core markets. To be truly innovative, companies must change their frames of reference and extend their search space. New thinking is required—looking away from the lamppost.

Innovation involves more than just a research and development (R&D) budget. It’s a committed plan to create something different. To succeed, companies must look away from their mainstream business to recognize the next big opportunities before their competitors do. This is especially true today, when rapidly accelerating technologies and global competitors have the propensity to upset the status quo.

Industrial automation products, for example, typically have higher gross margins, stuck in the mold of low volume, slow-growth business, with a mindset that inhibits change. Higher-priced products inhibit a broader range of applications. It’s the self-fulfilling prophecy that inhibits innovation and limits growth.

Automation is ripe for “disruptive innovation,” the term coined by Clayton Christensen to describe the process whereby products initially take root in simple applications at the low end, and then relentlessly move up to eventually displace established competitors. The disruption gives a whole new population of customers access to products that were only available for high-end applications.

Disruptive markets

Industrial wireless is a good example of a market that is ripe for disruption at the low end. With all the preaching about rapid investment break-even, wireless products are still being marketed with the bulky, industrial, stainless steel look and feel, catering only to high-end applications with traditional price margins.

Characteristics of disruptive businesses include: lower gross margins, smaller target markets and simpler products that may not appear as “industrial” when compared against traditional instrumentation and field-transmitters. In 2010 and beyond, prizes await those who can find growth applications that demand something other than the price/volume mold of traditional “industrial” markets.

Here are eight innovation ideas specifically for automation companies:
•    Broaden your company vision by engaging employees, customers and suppliers to discuss what future products and markets may look like.
•    Allow innovation to bubble up inside your company by favoring novel or different ideas. Allow time for engineers, sales and marketing people to explore their own ideas.
•    Stop adding bells and whistles to old products.
•    Recruit new people with very different backgrounds and ideas to spice up the knowledge mix.
•    Discourage dependence on a few large customers, which merely reinforces old ways of doing things and makes it difficult to change. New customers bring fresh perspectives.
•    Pursue high volume in new markets through disruptive products and pricing. Make your products cheaper, simpler, smaller and more convenient to use.
•    Stop advertising to the same old customers the in the same old way. Generate new promotions to new customers.
•    Develop global markets through new, global distribution channels and pricing structures.

Don’t wait for the rising tide to lift all boats. Drive your company into leadership through innovation with the 4 P’s of marketing—products, pricing, place (distribution) and promotions.

Jim Pinto is an industry analyst and commentator, writer, technology futurist and angel investor. You can e-mail him at: jim@jimpinto.com. Or review his prognostications and predictions on his Web site: www.jimpinto.com.

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