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Nano- Innovation : Is this the key to Mid-Markets?

Sometimes the inspiration for an idea is a ‘baby matter’. At least that is what inspired me for this post. There was  a post from Scott Anthony in Innovation Insights section of HBR titled Procter & Gamble and the Beauty of Small by Wins 

Today we are hearing a lot about Innovation and I do believe in the concepts around disruptive innovation and the way the industry has benefitted from the game-changing innovations. Disruptive innovations either create new markets or reshape existing markets by delivering relatively simple, convenient, low cost innovations to a set of customers who are ignored by industry leaders. However, is there a scope of little innovations bringing great benefits as well.

The essence of his post was that sometimes it is the simplest of things like altering the marketing message rather than going into innovative and path-breaking business models that are needed in business. Here is the extract from the post -

"The story dates back to the 1990s, when Healey was a brand manager in Brazil. She was responsible for growing P&G's Hipoglos brand of diaper rash ointments. The problem? The product already had 99 percent household penetration.

People claimed they used the product regularly to prevent diaper rash. If that were true, however, Healey knew consumers would buy much more Hipoglos than they did today.So, she dug deeper. By probing when consumers used the product, she found that parents applied it when early signs of rash began to appear. Of course, that's too late if you truly want to use a product for preventive purposes.

Healey had a critical insight. Consumers weren't actually realizing all of the benefits of the product, resulting in cranky babies and sleepless nights. P&G began running advertisements showing how applying the cream to an already emerging rash was too late to prevent the rash from occurring. Not surprisingly, sales soared.

Innovation doesn't always involve new features, functions, services, or business models. Sometimes it can be as seemingly simple as a new marketing message."

Even in the Information Technology sector people have been attracted toward the “bottom of the pyramid” (and have been trying hard to break the code). The essence is that there are number of small players; the market is cluttered and there are one man shops to huge firms across the world who are targeting this segment. While doing so everyone is looking at the factor of cost and seeing how they can help the SMEs to reduce their total cost of ownership (I am sorry I used this word too; which in itself is hated by few now). The line of thought is that if you are an SME you will face problems as you grow and when you have that critical mass to grow; you will need a solution. This mid-market enterprise level solutions including ERP and CRM solutions are “band-aid” solutions to the possible rashes that  you  may face.

In reality, there is never a right time to go in for this investment. That time is always when you start – “to prevent the rash from occurring”. The best-practices of some of the packaged solutions can actually help them in structuring the entire organization in such a way that these ‘rashes’ (problems) do not happen at all in the first place. This is especially true for processes which are not ‘sources of competitive advantage’ but are simply the ‘operation’ , ‘run-of-the-mill’ and ‘basis-for-survival’ processes like procurement, human resources, accounting, reporting, etc. which are necessary to optimize, manage, diagnose and control.

What it means for solution providers is that they need to bring out this message through an active recognition of the above fact and then relaying it out in a manner which is acceptable to potential customers. It is not that people are not providing these services –SaaS, Pay-as-you-use, subscription based services, etc. have been there for long; what is  missing is the convincing story behind this revolution. These are still being sold as solutions for immediate problems without a solid story of how they will relate to the long term growth of the client organization.

Do I have a perfect answer to this? No; because if I had one I would have applied that in the messaging already or is it that a revenue/margin/QoQ growth driven organizations are missing a point in the investment needed in this area which can be a long term revenue driver. I can’t say for sure, can you?

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