Innovate the Future: Where Did All Your Revenues Go?

I believe that business relationships follow hard-and-fast rules. If your revenue stream is disappearing, it’s possible that your customers are breaking the rules. But it’s far more likely that you’re doing the damage yourself, probably by “innovating” in a way that turns off your customers.

It’s Just Not Fair

When we play football, tennis, or a game of pool, we use an agreed-upon set of rules. When someone breaks a rule, everyone knows it, and there are repercussions for every rule that’s broken. Someone is compensated in some way when the rule is broken. Generally, the compensation exceeds the damage caused by the infraction, in an effort to teach everyone that breaking the rules is bad.

Similarly, the relationship between a company, its products, and its customers operates under a set of rules. Some of these rules may be as follows:

• If my company makes a useful product that’s needed by customers, the customers will pay a reasonable premium to own/use our product.
• If my company improves the product, the customers understand that they must pay extra for those improvements.
• If my product is better than my competition’s products, my customers will be loyal to my company and product.
• If customers want new features, they’ll tell my company and we’ll deliver those features, expecting the customers to be satisfied and to pay for the new features.
• If my company doesn’t maintain the value of our product, our customers will not be loyal.

Business rules are not as cut-and-dried as stepping out of bounds on the football field or sinking the cue ball in a game of pool. Business is far more similar to a soccer match, where everyone starts pointing at the opponents and saying it was their fault.

Have you ever watched a debate between young children? They’re so confident of their understanding of the rules and of their actions that they enter into the infamous “Did not! Did too!” battle. No one ever wins a “Did not! Did too!” battle, because no one ever changes positions. Their assumptions remain the same.

Companies have their own subtle way of playing “Did not! Did too!” with their customers. They see that the entire game is changing right before their eyes: Sales are dropping, customers are unhappy, new competitors are entering the market successfully. Yet these companies continue following the same old rules that made them successful. Eventually, playing fair will cost them the game.

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David Croslin is the author of Innovate the Future, recently published by Prentice-Hall. Croslin is the former Chief Technologist at Hewlett-Packard and Chief Product Architect at Verizon Business. Executive teams are praising Croslin’s innovation process at leading telecom companies including ATT, Alcatel-Lucent and Rogers Communications.

Read a free sample from the book, Chapter 3, “The Innovation Life Cycle“.

Croslin’s LinkedIn group “Innovate the Future” connects more than four thousand leading innovators in eighty-five countries.