Cultural Trends & Innovation: Overview

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For the past two years I’ve noticed certain trends that been building up steam:

  • Minimalism
  • Customization & The rise of craftsmanship
  • Sustainable & locavore shopping
  • Paleo/Primal & The ‘Art of Manliness’
  • Geek/Nerd Culture

As you can see, there is a lot to cover – but these are all tied together under the common themes of:

  • Understanding what ‘quality’ means (durable goods v disposable goods)
  • Getting in touch with our roots
  • Questioning conventional wisdom & consumerism
  • and ultimately – living a better ‘sustainable’ life.

Instead of writing one long post, I decided the best way to tackle this is by breaking this up into a series of posts. This way I can briefly talk about each topic and have some space to discuss some really interesting products/companies/groups that are currently working in these areas.

While most people think of innovation as increasing technology and adding more bells and whistles, this is innovation that is inspired by the past. The crazy thing is, these insights have either not been spotted by larger companies, or they are being disregarded because they dont fit in with their current business models.

Either way, there are huge opportunities in this area, and I see it as a game changer that can shake up industries and be the future of innovation.

The Perfect Time To Shake Things Up

Small businesses are the life blood of our economy. It’s easy to get caught up looking at the Fortune 500, but at the end of the day, it’s the smaller organizations that keeps our country running. Some wont find this shocking, but here are a few interesting facts about small businesses:

  • Responsible for 50% of the GDP
  • Make up more than 99% of all employers
  • Produce 13-14 times MORE patents per employee than larger firms
  • Create 75% of new job growth

The strength of small business is that they are agile. It’s easier for a smaller company to adapt to changing work environments because new ideas are faster and easier to implement. There is less red tape to go through – information is absorbed faster. If a customer is happy or dissatisfied, not only do employees know, but so do the owners. It’s these idea’s that allow small business to thrive, but unfortunately the outlook is grime.

This graph echoes what I’ve heard from a variety of business owners – that things are doom and gloom, and to cut back as much as they can. To not to try anything new to stay afloat. This is really disturbing.

Businesses that play it safe disappear. The customers who want cheaper products will go to a larger store that has better economies of scale and lower margins. The stores that are just average or have no direction have no way to separate themselves from their competition. Scale back what you offer, or even worse, dont change anything at all and not entice loyal customers to keep coming, and you’re a goner.

These businesses have it wrong, because right now is the PERFECT time to grow, to explore, to try something new! Businesses that haven’t reacted are starting to disappear, leaving a lot of customers searching for somewhere else to go. If you aren’t doing anything remarkable, then there is no reason for them to go to you instead of going to the company that is closer or does it cheaper.

Growth doesn’t have to mean dropping thousands of dollars into new IT. There are literally hundreds of ideas out there that businesses can implement that are virtually free. You can give back to the community by donating products, offering educational courses, lectures, or speaking engagements. You can engage your customers more by creating a better experience, whether on your website, in your business, on the phone, or through email. There are a variety of ways that you can engage your customers, and that is the best thing to do right now.

Look for innovations for your business, talk to your employees, your customers, your competitors, talk to as many people as you can, and then do something! Right now is the worst time to tread water. If all you are doing is trying to stay afloat, be ready for a rude awakening when you lose your customers to someone else when things get better. So stand out from the crowd, shake things up!

Soft v. Disruptive Innovation

Soft innovation is innovation that anyone can do, and is typically incremental improvements. In my previous post I mentioned Jerry Murrell at Five Guys Burgers and Fries. His business plan is a soft innovation because he solved a problem based on what his product is about. Some examples of this would be:

  • Rewards cards – they’re common place now, but when they first came out they were unique and the idea was simple.
  • Silly Bandz, rubber bracelets that come in a variety of shapes and are now all the rage with kids.
  • Free WiFi
  • Comfortable chairs and coffee shops in bookstores, encouraging customers to read before purchasing

On the other end of the spectrum we have Disruptive innovation – ideas that shake up an industry and cause paradigm shifts, with companies collapsing and even new markets emerging. These are costly ideas, typically involving large companies with massive R&D budgets. Some examples of this would be:

  • Trains replaced by Commercial Airlines
  • For watching movies at home there were Projectors, VHS, DVD, and now Blu-Ray (there are others, but I’m only listing the main ones)
  • In music there was Vinyl, Cassettes, CDs, and now MP3

While soft innovation can be copied (but the results not always replicated), disruptive innovation has more drawbacks, the biggest being cost. Most disruptive technologies cost a lot of money, and the return on investment isn’t there.

A Venture Capitalist told me that he learned the hard way to not invest in a disruptive product if you’re the first to bring the idea to market – and thats because there isn’t a market. Humans by nature are comfort creatures … we don’t want to be disrupted. Unless something can be made more enjoyable, or easier, we’d rather not want to deal with change.

The irony of disruption is that it usually comes off of the back of others. Scott Berkun wrote an article in BusinessWeek where he highlights this. Like that fact that iPod came off of the back of a bunch of clunkier devices once Apple was convinced the world was ready for it.

The point of this post isn’t to say that dreaming big and going the harder route is wrong, because without that there would be many medical and technological advances that we would have missed, and people would have suffered. There is a place for both soft and disruptive innovation – but remember that great ideas are built off of others. To quote Isaac Newton, “If I have seen further it is by standing on the shoulders of giants.”

Confluence

The first time I heard the word “confluence” was during a televised NFL game in Pittsburgh. The broadcaster Al Michaels remarked that the junction where the Allegheny and the Monongahela Rivers combined to form the Ohio River was known as a “confluence”. I came across this word again the other day, and the visualization of those rivers drew out a deeper understanding. Just as the rivers joined together to form something new, so should we be striving to do the same in business.

What does it mean to innovate? It’s not just to create something new, but to create something unique that makes a difference. Something that is remarkable. In the end that is what adding value is all about – finding ways to stay ahead of the competition by having a product that people want to talk about.

Inc.com had a article recently about Jerry Murrell, the creator of Five Guys Burgers and Fries. In 2002 Jerry decided to franchise his business, and now 8 years later there are over 570 franchises located across the US & Canada, with $483m in sales last year. How did the company grow so fast? It stuck to what it knew. They dont sell fish sandwiches or chicken – they specialize in burgers, and you bet they do it damn well.

Jerry’s confluence was mixing high quality ingredients with a culture that creates workers that care, resulting in a product that has people talking. Think un-empowered workers don’t make a difference? Talk to my friend who spent 10 minutes at a sandwich shop trying to explain to the employee that he wanted both sausage and meatballs on his sub. That employee was stuck in process and couldn’t make a decision on his own, and now they lost a customer (and maybe more).

Can Jerry’s idea be copied? Sure – it’s a soft innovation and the blueprint can easily be followed and possibly even done better, but the point is that Jerry thought of it and followed through. Innovation can take many forms. Small changes can be even more effective than large, costly ones. Make a difference – how can you create your own confluence?