Cost-o-vation Examines Business Innovation While Watching Your Costs
When it comes to innovation, entrepreneurs must learn how to apply processes to extract value, not just sit with the idea in their mind. But once a product or service is being offered, entrepreneurs must look at how they can manage expenses. That kind of decision making becomes tricky when you are trying to innovate for customers — what expenses are worth the budget?
One book that can help with that decision making is Cost-o-vation: Innovation That Gives Your Customers Exactly What They Want and Nothing More by Stephen Walker and Jennifer Luo Law. The book offers the right blend of bringing forth innovative ideas with managing costs that support the effort.
Both authors, leading execs at New Markets Advisors in Boston, bring a wealth of business acumen and leadership on innovation initiatives. Walker is a managing director of new markets advisors, a longtime collaborator with Harvard Business School Professor Clayton Christensen. He publishes frequently in Forbes Harvard Business Review and Financial Times. Law is an associate principal at New Markets Advisors and a former Fullbright Fellow. She has lead innovation initiatives across a number of industries.
What Is Cost-o-vation About?
The main idea behind Cost-o-vation is determining how to cut costs while still providing surprising innovations to delight your customers. The book’s focus is timely given the pressures to constantly innovate to keep up with competitors. Fortunately, Walker and Law assert innovation does not necessarily mean give customers the world.
In the book, they write, “Innovation is typically thought to mean more: more options, more features. What makes cost ovation so radical is that it flips this understanding on its head and says that sometimes the winning approach is to do less.”
The chapter summaries explain the process needed to put this understanding into practice, while case studies examine successes including brands ranging from LegalZoom to Planet Fitness. Readers will hear success stories from various industries and from less well-known companies, such as Bridge International Academies. This company provides operation services for educational institutions in emerging markets. A checklist at the end of the book is super handy for business readers that need a primer on where to start with innovation planning.
What I Liked About Cost-o-vation
The book puts wheels to the road when it comes to innovation by providing clear-cut examples. It’s a good book that forces entrepreneurs to think without feeling like heavy-handed, dry, PhD-like research. In fact, Walker and Law explain how they used the book’s process to innovate while creating a problem solving methodology of their own:
“We’ve adopted Altshuller’s TRIZ methodologies into five lines of inquiry that can help you see your industry in a new light.
- Examine your industry through a pair of binoculars
- Study your offering through a microscope
- Look through the customer’s eye
- Reframe the way you look at customers
- Rethink your approach to the value chain “
The authors note how each inquiry aids your strategy. Examining your industry can protect you from competitors:
“Avoid surprises from savvy competitors by continually reassessing how your industry has changed over time, and by questioning the relevance of long-held industry traditions,” they explain.
The authors also note the need for relentless focus on costs. A whole chapter is dedicated to “relentless prioritization”. Walker and Law say it best:
“If you are trying to cut costs, you can’t have it all — and you better have some vision and consistency in the way you prune.”
Cost-o-vation is reminiscent of another innovation book I read years ago,Service Innovation. Both books delve into operational concerns, but Cost-o-vation differs by providing a stronger emphasis on identifying where operations blur cost considerations. That perspective is critical given the rise of various software that alter product features, service delivery and consequently operations.
One would expect technology to be used as as solution. Walker and Law do highlight this, but they wisely also spotlight examples where deploying other kinds of resources are also key to success. The chapter Twenty Strategies and Tactics epitomizes this approach best. Check out this quote as an example:
“Technology is enabling cost ovation at an increasing pace, and we are seeing it across all industries and business model types. Keep an open mind about how you or a savvy competitor — could change the industry with breakthrough technologies.”
However buying the latest software isn’t the only soolution as in this example from James Allen, an online jewelry retailer.
“How do online retailers manage to pull off such steep discounts? For JamesAllen.com the secret is that there is no grand diamond vault … Instead they run a modified drop-ship model.”
Specific examples like this make the book worthwhile and should spark the imaginations of even the most unsure entrepreneurs regarding where they can apply innovative processes.
Why Read Cost-o-vation?
Managing cost is a major to business success, but innovation can challenge that management. Read Cost-o-vation to gain insight into exciting ways to use the right innovation to be profitable for the long haul.
This article, “Cost-o-vation Examines Business Innovation While Watching Your Costs” was first published on Small Business Trends