The document discusses business innovation and provides strategies and principles for companies to engage in innovation. It defines business innovation as applying innovation to address opportunities that align with a company's vision and strategy in a way that creates customer value and benefits the company's bottom line. It emphasizes the importance of innovation for all businesses given changing technology and competition. It then provides four principles for business innovation: focusing on a company's core strengths, targeting market gaps, expanding based on quality, and adding value to existing offerings. The document provides tips for generating innovative ideas such as talking to sales, customers, and service departments and closely following trends and new technologies.

1. A Strategically Simple Look at Business Innovation
Praveen Puri
Strategic Simplicity℠
President, Puri Consulting LLC
http://www.PuriConsulting.com

2. What is business innovation, and why is it important for
businesses?
Innovation is applied creativity, and is about using new ideas and fresh thinking to find new
ways of creating value for people. Some examples include: treatments for cancer, social media
platforms, consumer products, and movie franchises.
Business innovation is about applying innovation to challenges and opportunities that mesh
with your company’s vision and strategy. It’s about creating customer value that also benefits
your company’s bottom line.
These days, it’s important for all businesses, including small and middle-sized ones, to engage
in innovation because simply continuing to sell the same products and services leads to a dead
end. Technology is changing too fast, and worldwide competition is too strong, to simply try
and ride the status quo.
If you don’t want to wake up one day to find that your customers have deserted you (a la
Blockbuster), or regard you as a commodity (forced to continually lower your prices), then you
simply have to stay on top of trends, and find new ways of delivering value to your customers.

3. Don’t Be Intimidated By Innovation
It’s easy to feel overwhelmed at the thought of being innovative. “But I’m not a creative type!”
you might say. “I have a business to run. I can’t just lock myself into a garage and pound out
code.”
But this is a misleading view of innovation. Popular culture and the media tend to equate
innovation with 20-somethings from Silicon Valley, creating Facebook, Uber, or the iPhone.
I like to equate innovation with a 1930’s jazz pianist named Art Tatum. Whenever Tatum
travelled to a new nightclub, and sat down to practice for that night’s performance, he would
frequently find something wrong with the piano–it could be out of tune, or a broken pedal or
key. Rather than get angry, Tatum would get excited! He wasn’t interested in just fixing the
problem. He focused on the opportunity to give a unique, one of a kind, performance. So he
would work the flaws into the act, highlight them, and use them to his advantage.
This is how strategic innovation is on a daily basis. Work with what you have, and improve it.
Never try to simply fix problems and return to the status quo. Always look for the opportunity
to rise above it! It has nothing to do with coding or isolating yourself.

4. Relationships Rule Business
Before we discus some principles for strategic innovation, it’s important to stress that the key
to long-term success in business is to build long-term relationships–with customers, suppliers,
employees, and referral sources.
Innovative products and services are just the entry point.
Then sales, service, and how you treat people become paramount. All these areas can benefit
from strategic innovation and creative thinking.
Always concentrate on finding ways to provide value to customers and prospects, rather than
focusing on money and making the sale.
Put their interests first and picture in your mind that “they are under your protection”.
This is the secret to being seen as a trusted adviser vs. a commodity provider.

5. Four Principles for Business Innovation
1. Core Strength – What is your company’s base of expertise? Products / services must be
aligned.
2. Market Gaps – Capture an underserved niche in the market. This was the secret to
Facebook’s success.
3. Quality Oriented Expansion – New products / services based on expansion of qualities.
4. Value Added Expansion – New products / services based on adding value on top of
existing offerings.

6. Principle #1 Core Strength
Innovation (new products, services, processes, markets, etc.) must be justified by filtering
them against your company’s areas of strength and expertise.
Enter new markets by using intersections–areas of strength that exist in both the current and
future market. For example, if your company supplies hunting gear, and you want to expand
into the fishing market, you may want to start by making boots for fishermen. You would not
want to start with fishing poles, where you don’t have the expertise or credibility.
One idea is to partner with a company that has expertise, credibility, and brand. Example: an
ice cream company partnering with Mondelez to create Oreo-based ice creams and shakes.
Remember that you must be able to provide customer support for any new products or
services that you create.
Finally, be cautious when entering foreign or regulated (i.e. medical or financial) markets–even
when innovating from core strength.

7. Principle #2 Market Gaps
Existing products/services – What client needs are not being met by your current
offerings?
Business demographics – Example: your software serves big law firms but not small
ones.
Market subsets – Facebook started this way: First, they connected Harvard students.
Then, Ivy League colleges. Next, all college students. Finally, opened up to the public.
Special needs – Examples: Kosher, vegans, diabetics, and the elderly.
Special situations – For example, a landscaper offering a service to hang Christmas tree
lights.

8. Principle #3 Quality Oriented Expansion
Colors and materials – Offer existing products in different colors and made from
different materials. Example: white chocolate Kit Kat.
Mix and Match – Combine products / services to create new ones. Example: Kellogg’s
milk/cereal snack bars.
Increase one or more aspects – For example, extra-strength bleach or more
comprehensive auditing.
Decrease aspects – Example: an easier to use, less functional version of a software
program.
Multiple market tiers (low end, middle, luxury) – Example: Mercedes. With the caveat
that you differentiate your offerings so you do not dilute your brand.

9. Principle #4 Value Added Expansion
Create packages – Example: selling a book with audios, videos, and seminars.
Customization – Create versions of generic products/services that are tailored for
specific needs or audiences.
Move from passive to active (or vice versa) – Move back and forth among the
continuum from passive (products/books) through mentoring (being on retainer) to
active (coaching/consulting).
Teach and learn – Create live events and training to help customers get more out of your
products and services.
Investment vs. cost – Charge more for products / services. The best firms focus on
strong ROI, not cost.

10. Five Tips For Generating Innovative Ideas
1. Talk to sales – Your salespeople know what clients want.
2. Work with your service department – Analyze data to find gaps, teaching areas.
3. Read the news – Keep up with the latest technology and trends.
4. Talk to customers – build relationships, listen to their needs.
5. Fail quickly and often – Continually test new offerings. Cancel or expand.

11. Tip #1 Talk to Sales
Ask sales force for ideas – They talk to customers.
Best interest of customers – Avoid encouraging or incentivizing sales people to push new
products or services unless they truly add value for the customer.
Eliminate or don’t create – Listen carefully if sales advises to eliminate or don’t create an
offering. Sometimes the best innovation is the one you don’t do.
Feedback – Encourage sales to provide you with feedback (theirs and their customers’) for
new offerings.

12. Tip #2 Work With Your Service Department
Look out for trends - If multiple customers call up reporting the same issues, then you may
have an opportunity.
Demographics – Are certain subgroups of customers reporting the same issues?
Gaps – Are multiple customers reporting missing functionality, or is something too complex or
require too many steps?
Education – Are customers struggling to use your products or services? Do they underutilize
portions of it? This might provide an opportunity to create educational products or services,
such as manuals or classes. Think Apple’s Genius Bar.
Advanced – Are there customers who want to get “under the hood” of your product / service,
and customize / fix things themselves? There might be an opportunity for offering advanced
training and tools.

13. Tip #3 Read / Study Voraciously
Newspapers – On a daily basis, read the Wall Street Journal, plus your local newspaper and/or
New York Times. It should take you a maximum of ½ hour to go through the papers. Scan
headlines, then read the first and last paragraphs of articles of interest. If still interested, then
read the whole article. Approach reading from an abundant mentality–don’t worry about not
reading the majority of the paper. One idea sparked by one article can more than pay for the
yearly subscription.
Business magazines – Examples: Forbes, Fortune, Crain’s Chicago Business, The Economist
Industry publications – Specialty newsletters and magazines
Events – Seminars and conventions.
Cast a wide net – Be open to ideas from other fields and industries. A big part of innovation is
cross-pollination and transplantation of ideas.

14. Tip #4 Talk To Customers
Listen – Ask them provocative, open-ended (not yes/no) questions to get them to do most of
the talking.
Value – Rather than asking for feedback on specific ideas, find out what they value.
Future picture – Have them describe what a perfect future for them would look like, X years
out.
Best Interest – Always focus on their best interest. Don’t be afraid to throw out your cleverest
pet ideas if they won’t serve your customers. Remember, have an abundant mindset–you are
not a “one hit wonder”. With practice, you can exercise and develop your innovation muscle
and turn on the spigot whenever you want.
Respect their viewpoints – If a customer’s thinking is different from yours, never assume
they are damaged or irrational.
Distinguish – Be able to separate out mundane support issues from genuine, innovative ideas.

15. Tip #5 Fail Quickly and Often
Prototype – Create a “quick and dirty” basic version with limited features.
Test market – Roll out quietly to a small subset of customers.
Pull plug – If sales/feedback not strong, end quickly.
Expect failure – A high success rate means you are not pushing the envelope.
Play time – Give key people time each week to play and create.
Collaboration – Encourage sharing ideas within the company. Stress that the most valued
employees are the ones who freely share their ideas / expertise, not the ones that hoard
knowledge.
Reward failed innovation – Reward some failed ideas that demonstrate cleverness /
creativity.

16. Business Innovation and Marketing
All parts of business can benefit from innovation–not just product and service creation. Let’s
take a quick look at marketing innovation.
Today, we are no longer in the Information Age. We have a glut of information. There are tons
of websites, blogs, books, etc. out there. We are now in the Attention Scarcity Age. Attention is
the new scarce resource. If we try to traditionally market or advertise a product, it’s easy to
get lost in the noise.
Give enough value that they can’t ignore you = the new art of marketing boiled down to one
sentence.
To give away valuable content (and not just an informercial), we have to innovate by realizing
that we are in the “edutainment” business. We are our own HGTV or Food Networks.
We have to give value through both education and entertainment. We have to have online and
offline events and offerings that cross-promote and feed off each other, creating a positive
cycle.

17. Marketing Innovation Example: A Restaurant
Let's say that you own a restaurant. Then, don't consider yourself in the restaurant
business. Think of yourself as your own Food Network - your job is giving value to people
through entertainment and education. The actual food and dining experience is simply one
part of it.
Here are a few ideas:
1. Theme nights at the restaurant. An example is kid's game night, where kids can also win
"food bucks" to be used in the future.
2. Cooking classes–both live (in the restaurant) and online (You Tube videos).
4. Special nights - for example, a performance by the award winning local high school orchestra
or a wine and cheese party at a local luxury car dealership to see the latest cars, mingle, and
hear live music.
5. Secret menus and special limited-time dishes only listed online.

18. General Do’s …
Focus on customers’ best interests – more important than selling more stuff.
Err on the side of too much value – Always create high quality products / services.
Have a strategy – New offerings should be aligned with strategy and strengths.
Diversify – Have a spectrum of offerings: from low price products through to high price, high
touch services.

19. Don’ts
Clutter – Don’t provide too many offerings that overlap and confuse.
Be discouraged by failure – Keep pushing the envelope and you will have long term success at
innovation.
React to one-off feedback – Pay attention to trends and multiply-reported feedback, not
individual gripes.

20. Conclusion
Business innovation is an important part of business success. It can also be the most fun and
interesting part.
It’s exciting when you realize how much it evens the odds between old and new, and big and
small companies. Innovation’s disruptive power means that a firm’s (or person’s) past isn’t as
important as it once was.
One idea, conceived in one instant, can catapult a firm, or an individual, in front of leaders who
have been entrenched for decades.
We are in a post-Information Age. We are drowning in Big Data and have access to more
information through Google than ancient philosophers had in all the ancient temples and
libraries.
We are in the Attention Scarcity Age. What we focus our attention on is the new scarce and
precious resource. We have also moved from atoms to bits. Hardware prices are dropping like
rocks, 3D printing is establishing itself, so value is now in abstract things such as algorithms,
data, ideas, strategies, and plans.

21. More Information and Resources
I hope you have found this white paper to be interesting and informative.
I started Puri Consulting after a 30-year career in strategic simplicity℠ and innovation, in both
the corporate and start-up world. I love sharing insights and ideas with others, as well as
helping companies turn problems into opportunities.
I have a monthly column in the “Chicago Business Journal”, which you can access at
http://www.bizjournals.com/bizjournals/bio/37222/Praveen+Puri.
You can also read my blog at http://www.praveenpuri.com, visit my website
(http://www.puriconsulting.com), or email me at mailto:PraveenPuri@PuriConsulting.com.
Finally, please feel free to call or email me if you would like to set up a meeting to talk.
Even if you aren’t currently looking to improve your business, or create new products or
services, I’m always looking to connect and build relationships with interesting people.
Thanks,
Praveen Puri