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How to do it
 
Not all innovation need be revolutionary 
 Tuesday, 1 May, 2001 
Everyone’s talking revolution. Whether it’s Edward de Bono on stage at Auckland’s ThinkingConference, Helen Clark in parliament or sheep farmers in
Unlimited 
, the talk these days is aboutescaping the “commodity trap”, creating “paradigm shifts” and “thinking outside the square”.I’m all for the basic message, but talk is cheap; talk of revolution, I seem to recall from my days ofyouth, is the cheapest. There are many ways to innovate, and not all require the sort ofrevolutionary paradigm shifts spouted by visiting management gurus. One way to innovate is tothink in terms of category development. There are four routes you can take — each has anincreasing risk attached, and each increasingly relies on instinct, but each also has a higherpotential return.In order to choose the right route for you, you need to assess your appetite for risk — or, moreimportantly, your company’s appetite for risk. If it’s low, go for routes one and two. If it’s high,choose routes three and four.
Route 1Route 2Route 3Route 4RepositionExtendRedefineCreate Anew•Diet cokeakaCoke Zero•H
2
GO•Lucozade•Wrigley•P&G•Unilever•Nike•Virgin•Easy•SouthwestAirlines•SonyCybershot•McDonalds?•Dyson•ipod•YouTube.com•flickr.comHigh RiskHigh RewardRoute 1Route 2Route 3Route 4RepositionExtendRedefineCreate Anew•Diet cokeakaCoke Zero•H
2
GO•Lucozade•Wrigley•P&G•Unilever•Nike•Virgin•Easy•SouthwestAirlines•SonyCybershot•McDonalds?•Dyson•ipod•YouTube.com•flickr.comHigh RiskHigh Reward
 
Repositioning 
Route one is to shift the category by showing brand leadership. Take UK energy drink Lucozade.By relaunching the old health tonic in a can, Lucozade unexpectedly created a new category:energy drinks, now worth billions of dollars worldwide.The success of bottled water was more contrived. Up against soft drinks and energy drinks, waterwas boring, the stuff of fine dining and health shops. But through daring advertising and hipproduct design, brands like H2Go and Pump have dragged the water category into new places:dance clubs, gyms, the workplace and the school ground. Now both Coke and Pepsi are focusingtheir US efforts around developing water brands; the category’s growth in the US was a storming20% in the last quarter.
Extending 
 The second route to category innovation is fusing product with its purpose. “After decades oftelling consumers to clean their own clothes,” writes
Advertising Age 
, “detergent makers Proctor &Gamble and Unilever now want busy consumers to send their clothes to them.” Both companiesare trialling valet laundry services in the US and Europe. Unilever is going further, with housecleaning. The sums are attractive, says
Advertising Age 
. According to one US cleaning franchise,Molly Maid, the $US20 billion house cleaning market is growing 20% a year. Home drycleaning isestimated at $US9 billion.Another version of brand extension is to cross categories. In its bid to own the “sports energy”market, the energy drink Gatorade is launching an energy bar in the US. Gum-maker Wrigley isspending $US45 million on an antacid chewing gum called Surpass — a rival for antacid pills. Inthe UK, Cadbury is launching a range of shops to enhance the “Cadbury experience”.
Redefining 
 The third route is harder and riskier, but has greater rewards, if successful. In short, redefiningmeans operating within an existing category in an entirely new way. Richard Branson’s Virginbrand is a good example. Branson breaks a category’s rules: an airline became a door-to-doortransport service, insurance became an over-the-phone transaction, record shops became placesto listen and hang out. Often compared to Virgin is the European mobile phone operator Orange,founded by Branson clone Hans Snook. The company launched into a technology-driven, plan-oriented mobile market six years ago, where the only brands were the phone-makers Nokia et al.Snook’s offer? A brand with a simple promise, an emotional appeal and straightforward pricingstructure. Few backed Snook and his team but Orange now occupies second-equal place,alongside BTCellnet, and was sold last year to France Telecom for £25 billion. By contrast,Deutsche Telecom bought third-placed rival One2One for just £8.4 billion.
 
Create anew 
 The fourth way to innovate is the most stereotypical and gets the most publicity, yet is the mostdangerous. Call it “blue sky” thinking, call it visionary, this sort of innovation is done by those onthe periphery of sensible business practice — which probably means they’re not working for alarge company. (This sort of garage innovation
creates 
large companies.) A good example isJames Dyson and his revolutionary vacuum cleaner. For years, Dyson struggled with failure,financial ruin, doomsayers and court injunctions to get his dual cyclone cleaner to market. Theresult is a product so revolutionary it has created a new category of household devices, and isBritain’s biggest-selling vacuum cleaner.
 
For New Zealand to live up to all the talk of revolution, marketers will have to spend more timethinking in stages three and four. Relying on intuition and entrepreneurial vision is a hard road tofollow, but it’s not impossible. Start small. You don’t have to be a Dyson to be an innovator.
 
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