^{April Issue, 2008, Vol 10}

An Interview with Adrian Slywotzky, Co-author of How to Grow When Markets Don't.

What is “Demand innovation?” And how can you use it to grow your business?

“Demand innovation” is an innovative strategy for driving significant, sustained new growth. AMA’s Members-only Website spoke with Adrian Slywotzky, managing director of Mercer Management Consulting, about how it can be applied. Slywotzky and co-author Richard Wise coined the term for their book How to Grow When Markets Don't.

What is the no-growth zone?
During the past decade, most companies have moved from a past of strong growth for their base businesses into a future of low or no growth. Very few have figured out how to move beyond this point.

Why are so many companies stuck there?
Most companies have relied on traditional product-centered strategies for growth; that is, create innovative products, expand the market for them globally and make acquisitions to gain market share and create efficiencies. But today, most markets are saturated with products that are barely differentiated. To get out of the low-growth zone, a new strategy is required.

So how should companies start?
A few smart companies have figured out how to create new growth with the same product and the same customer. Instead of investing in an improved product or finding new customers, they address the issues and hassles that surround their product. We call this “demand innovation.”

For example, a few years ago, GM introduced OnStar, a vehicle communications service that now brings General Motors around $1 billion annually in high-margin subscription revenue. Instead of innovating their cars or introducing a car that served a different customer, GM created a platform for new growth that surrounded its existing products and served an unmet need of its established customers. There are many other examples. Installation, maintenance, financing, training or outsourcing—all can serve unmet needs of your established customer and create a platform for new growth.

How can companies choose which new-growth strategy is best for them?
First, they must anticipate the next-generation needs of their customer. Equally important, they must identify their company’s hidden opportunities for growth. For some companies, the hidden asset might be unique customer access; for other companies, it might be their technical know-how or their unique window on the market. By connecting the next-generation needs of your customer with your hidden assets, you have the foundation for a plan.

Aren't the biggest companies and those in mature industries least likely to achieve growth? 
Not at all. The broad and loyal customer base of most large, mature companies is often the perfect platform for new growth.

How long do new-growth strategies take?
They can take from two to four years as the organization learns how to create truly new growth.

Are there short-term options?
One way to start is to improve the way you observe and respond to the needs of your customers. The deeper your relationship with your customers, the better you'll be able to identify their unmet needs. Think about what you do differently with your best customer. Chances are you can replicate this with your other customers to expand your base of deep customer relationships.

How can a company shift from traditional growth initiatives to demand innovation?
Much is a matter of attitude. You have to stop viewing your business through a product lens and begin to study your customers through an economic lens. It also helps to stop thinking about company size as a growth inhibitor and begin to think of size as a multiplier of growth opportunities. Those companies that worry about cannibalizing their base business need to recognize that building new-growth initiatives can reinforce and strengthen their base.

Maybe most importantly, companies have to stop looking for blockbuster products that will revolutionize their market and, instead, think about a trajectory of evolutionary, customer-centric moves based on structured creativity and operating discipline.

From How to Grow When Markets Don't by Adrian Slywotzky and Richard Wise (Warner Business Books).

If you would like to learn more about improved customer satisfaction, consider these AMA seminars:

• Developing and Executing a Customer-centric Strategy 
• Customer Service Management: Delivering Satisfaction & Profit
• Customer Service Excellence: How to Win and Keep Customers

For six key principles for developing new-growth initiatives, click here.