By PHILIPPA STEVENSON agricultural editor
Research shows that companies obsessed with their competitors instead of their customers miss chances to be innovative and boost profits.
PA Consulting spokesman Brian Shaw, whose company studied 500 European companies, said many of the things businesses competed on were not those creating value for customers.
"Lots of companies and products compete on the same basis as their competitors. If they are all offering the same thing, then they try to offer more, or in a better way.
"But the real-value, innovation launches are the ones that give customers more of what they want, and less of what they don't. They redefine what constitutes value."
A disproportionate amount of profit could be made that way, he said.
"People who think about how to stay in front of the competitor are in the old category," Mr Shaw said. "If they can redefine what constitutes value for the customer, and do that regardless of what anyone else is doing, they will be more successful."
Customers had been shown to be willing to pay for a product they wanted, even if there was less to it than previously.
A recent example was customers of a French hotel who said their main requirement in a hotel room was an extremely comfortable bed. They did not want desks, chairs or other things, but wanted to pay less than the current room rate.
In response, the hotel ensured it had clean rooms with very comfortable beds of a better standard than usual for a two-star hotel, at a price lower than people were charged at a one-star hotel.
It was able to afford the price cut by taking away the items people did not want.
PA's study of Europe's biggest research and development spenders showed that the ones spending most were not launching the greatest number of innovative products.
Those putting more products on the market were managing the innovation process better by getting products to market quicker, and competing on the basis of what the customer wanted.
Mr Shaw said the time taken from idea to product launch was important. "Generally, companies have 200 to 300 possible products they could launch. The faster they get that down to the two or three they actually launch, the more cost effective it will be, and the more successful."
Small companies like those in New Zealand did have a good track record of launching innovative products, but size worked against them.
If the dairy industry, for example, became a global player competing with the big European companies in their own backyard, it would have to be very good at product innovation.
"Nestle, for instance, would protect its markets strongly, and it has a lot of muscle to do that. We've got to have an approach to developing innovative products that does something different to what they are doing, and makes it difficult to duplicate what we're doing. The more difficult it is for other people to copy it, the longer you stay ahead."
Mr Shaw said visionary leadership and having and developing creative people were critical for highly innovative performance. Business processes and technology were less important.
Good leadership involved having a clear strategic plan for innovation, as well as providing the opportunities for creative people to contribute.
New Zealand companies tended to be good at developing processes but less effective in training and improving people's skills.
"We have some skill shortages - some related to the brain drain - but we need to look at attracting people into the industries, and manage it like a supply chain. There's got to be decisions about what is needed such as links to universities, technical institutions and schools. It needs to be a managed process of attracting people into, say, the agriculture industry, where we have a huge shortage at present."
Give customers what they want
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