Posted by: David Croslin
disruption, disruptive, innovate, innovation, invention
Many companies feel that as long as they continue to deliver new features, their customers will remain loyal, even as prices rise. But at some point, customers seem to ignore new features and loyalty, and their willingness to pay goes out the window. This article discusses how ownership of intellectual property isn’t all it’s cracked up to be. An unseen pressure devalues intellectual property and the transformative value of your products, even to the most loyal customers. Then your competitor owns your customer.
I’m sure that some people wonder why I use food so often as an example when I’m discussing innovation. Well, I’ll tell you:
- I like food.
- Everyone I know eats.
- People have their own opinions about the foods they like.
- People can disagree about food, and yet normally they avoid killing each other over those opinions.
- People can often find at least one food that all agree they love or hate.
- It’s easy to make good food into bad food.
- It’s hard to make bad food into good food.
- Having a successful restaurant is one of the biggest business challenges.
Hot-and-Sour Soup with an Eggroll
Some people love a really good hot dog with all kinds of bizarre trimmings. Some folks are crazy about an out-of-this-world Philly cheese steak sandwich. Some go for more upscale foods. I prefer Asian foods, and I usually crave a delicious bowl of hot-and-sour soup and a crispy eggroll.
It seems as if every time I find a great Asian restaurant, it closes. I don’t tend to try new restaurants (or even notice that they exist) until they’ve been around for a year or so. Once I find one I really like, I try not to get emotionally attached to it, because within a year or so it’ll be gone. Invariably, the most stable Asian restaurants with the best food are small hole-in-the-wall places.
What makes seemingly very successful restaurants fail in that two-year window? I can tell you right now that, at least in my case, it has nothing to do with the quality of the hot-and-sour soup or the eggrolls! The food is still fantastic. But, over time, the number of customers coming in starts to decrease, and then the restaurant closes. And then I’m on the hunt again.
Here’s what seems to happen, in a logical sequence:
- New restaurant opens. (I won’t see it for a year or so. How sad—I missed all that great soup!)
- Food is excellent. (I found them! Especially the hot-and-sour soup.)
- Service is great. Friendly and prompt. (One of those “let’s visit” atmospheres.)
- Customers knock down the door. (Kind of irritating when they take my preferred table.)
- Variety of food expands. Prices increase slightly. (I tend to stick with my favorites.)
- Service starts to falter. (The real danger is the empty water glass and “hot spicy mustard” combo.)
- Prices start to go up. (Not much—fifty cents here, a dollar there.)
- Customers start to vanish. (My table is available!)
- Quality begins to stumble. (Soup and eggrolls still great. But smaller quantities. And less meat.)
- Prices continue to rise. (Now I go just for the soup and eggrolls.)
- Customers are gone. (Sad. I don’t go much myself anymore. The atmosphere is gone.)
- Restaurant closes. (Sometimes I don’t notice for a month or two.)
Now, don’t get me wrong. This is probably not a universal description of the life of a restaurant. But I think it’s pretty darn close.
===> Read the rest of Who Owns Your Customer Now?.
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.