A business which is serious about competing in fast changing markets with fast changing technology must make things happen – it must innovate. If it does not innovate it risks being overtaken by competitors. Sometimes a business underestimates the competitive challenges it faces. The risk of this happening is high when competitors react to potential challenges in much the same way. It is then – just when traditional industry players feel comfortable with each other – that a business faces the risk of competition from non- traditional suppliers. Non-conventional competition is more and more common. Once stable and regulated industries, such as insurance for example, have in recent years become fragmented by new players such as banks, brokerage firms, retailers, telecommunication and computer services firms. Many of the new entrants in the insurance industry and also in other once stable industries have used market innovation to achieve startling novel results. Before considering market innovation in detail, it is useful to consider briefly the two other main types of innovation which contribute to organic business development – product innovation and process innovation.
In times of fast changing markets and fast changing technology, businesses which want to safeguard their future must innovate. If they want to be proactive and develop further by organic means they must engage not just in occasional bursts of innovation, but in continous change. Three main types of innovation can be pursued for this purpose. First, market innovation – improving the mix of markets and how these are served. Second, product innovation – improving the mix of offers. Third, process innovation – improving the mix of internal operations.
In order to achieve and maintain competitive success in today’s turbulent marketplace, top management must spend at least as much time thinking about customers’ needs and how these might be met innovatively as thinking about internal operations. The assertion “experience is becoming irrelevant and even dangerous” is probably a deliberate exaggeration. But, to compete effectively in the future, a business needs to focus beyond the markets it serves presently and to concern itself with market innovation and the “total imaginable market”. Aggressive suppliers from other industries are adopting this wider approach. This is why retailers, brokerage firms, telecommunication and computer services businesses have entered financial services markets.
Not to be surprised by new competitors, incumbent suppliers in all industries need to concern themselves with market innovation. All businesses need to understand the changing needs of their customers. They must develop accurately targeted offers quickly and cost-effectively. Market innovation can help guide this quest by combining product line management with market opportunity analysis. When market innovation is bold and imaginative it provides not just a means for developing new business, but a revolutionary means for safeguarding existing business.