Cultural Innovation

Cultural Innovation is not just about building a better mousetrap, rather it is driven by deeply connecting customers with a brands ideology, which in turn has transformed the the value proposition and reinvented the category.

Why is innovation so hard?

Why do companies who have have incredibly talented teams struggle to innovate and create a sustainable innovative new product?

This article explores the challenges with large corporate innovation. Procter & Gamble a company renowned for driving what it refers to as ‘constructive disruption’ has designed a process that aligns closely to a startup with venture funding, support from tech entrepreneurs and a lean probe and learn prototyping process. But even with this best in class approach to corporate innovation the process is not exactly delivering huge results – the most recent P&G offering was a ‘Smart Pampers Diaper’ (nappy) that signals a change is needed!

“Build a better mousetrap, and the world will beat a path to your door.”

Ralph Waldo Emerson

There are numerous examples of this Starbucks, Patagonia, VitaminWater, have all used this approach and the cultural innovation is not just embodied in the distinctive product. It is also in packaging, ingredients (organic, sustainable, ethical), design, media, philanthropy and even the founders persona.

These brands do not compete on the same playing field. Traditional innovation (the build a better mousetrap type) is all about quantitative improvements – beat your competitors based on existing notions of value. Cultural Innovation is instead about creating differentiation and a different playing field, it operates on qualitative ambitions, changing the understanding of what is considered valuable.

Douglas Holt spent more than 20 years researching and advising organisations on cultural innovation, here he has identified the strategic principles required.

Step 1: Deconstruct the category’s culture

To understand the culture of a specific category you need to think like a sociologist. Break down what is the underlying ideology of that category and what are its organising principles.

Step 2: Identify the Achilles’ heal

Every category has a fatal flaw even if it takes a little while to develop sometimes. Strong cultural innovators identify these flaws early as they are emerging and use it to create points of differentiation.

Step 3: Mine the Cultural Vanguard

When the early flaws are forming it is the evangelists and cultural vanguard who often arrive at the opportunity before any larger organisation has noticed the opportunity.

Cultural innovators study what is happening with subculture brands, consider opportunities for how a challenger ideology and its associated symbols could be brought to life.

Step 4: Creates an Ideology that Challenges the Achilles’ Heel

A deeper understanding of what motivates the subculture leads to making this the point of differentiation. Hold writes about how various pet food suppliers had evolved for years based on the idea of kibble being nutritious and the point of differentiation being scientists said so.

Pet owners as a subculture are passionate about providing the best for their animal friends and the example quoted is where Blue Buffalo produced a pet food that was made with the same ingredients as a good human diet, enabling the customers of the product claim an enlightened identity associated with feeding their pet truly nutritious food.   Blue Buffalo built a business (now worth $8 billion), in a segment heavily dominated by three incumbents.

Step 5: Showcase Symbols that dramatise the ideology

“Cultural innovations are brought to life by a combination of symbols that dramatize them in the most compelling manner. They select symbols from the marketing mix that work together, attack the Achilles’ heel, and draw a clear contrast with the category’s dominant culture.”

The symbology of the brand needs to tightly align to the values of the segment. This cultural innovation links up how a product looks, with how the consumer looks and feels buying the product and the social connection associated between the product and an aspirational goal.

The article this synopsis was written from covers a number of case studies and is well worth reading in full in the Harvard Business Review magazine or on the HBR website.

Three pitfalls to avoid

  1. Working in the present – companies are deeply connected to the roots of their own culture, as a result managers percieve what made them successful as a ‘immutable reality’ rather than being built on a ‘fragile consensus’. It is a blinkered mindset that reinforces those attempting to innovate inside a company to look closely at what is right in front of them and avoid the areas of adjacency.
  2. Being wedded to a products features – the idea of building a better mousetrap is actually about improving the features of the product. This creates products that are built with a stack of features that feel more like building blocks than cultural symbols of ideology associated with the customer base.
  3. Ignoring the value of identity – brand association with an aspirational connection has created some of the most innovative products. Starbucks convinced Americans to consider a different kind of coffee and linked it to an aspirational lifestyle. Patagonia connects the purchaser to environmental sustainability. Brand Identity is a cultural innovation.

Clay Christensen introduced the concept of disruptive innovation in 1995, he asked the question why great companies fail? His answer was that incumbents focus on serving the most demanding customers with the best products because margins are high. That focus leaves areas of opportunity wide open for others to attack, cultural innovators look at the opportunities and then consider how to transform it into something else entirely.

Key Takeaways:

  • Building a better mousetrap will only build more product features and not help address what is driving consumer behaviour.
  • Cultural Innovation requires you to study and understand the dynamics of the segment its motivations and buying behaviours. Before seeking to deliver creative market alternatives.
  • Brand Identity is deeply connected to the cultural vanguard, it links the motivation of the company to the aspiration of the end consumer and establishes brand loyalty.
Synopsis of an article from Harvard Business Review
Cultural Innovation
by Douglas Hold
Published: September 2020
https://hbr.org/2020/09/cultural-innovation

Douglas Holt is the founder and president of the Cultural Strategy Group and was formerly a professor at Harvard Business School and the University of Oxford. He is the author of How Brands Become Icons: The Principles of Cultural Branding (Harvard Business School Press, 2004).

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