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German companies taking radical innovation steps

This article has been taken from The Gen newsletter - Summer 2008. Click here to download the pdf.

German companies are renowned worldwide for their technology-driven innovation and strong customer orientation. This combination has led to pre-eminence in many markets, and a reputation for product excellence. However there is a growing realisation that the customer-led, incremental change which worked so well in the past is no longer sufficient to sustain future development. A key driver is the rapid emergence of Asia-Pacific based competition, and an understanding that real success can only be achieved through highly innovative differentiation. This step-change in approach and behaviour for German companies is happening across the region – even the smallest, family owned business now has an 'innovation manager' or equivalent in place.

As a result, we are experiencing a significant rise in the number of German companies coming to us looking for ways to discover new opportunities for more radical breakthroughs, and even to explore new market sectors altogether. Over the years we have developed an innovation toolbox. It comprises well-known methodologies and strategies developed in-house which include; ethnographic research, 'lead user' analysis, function-to-benefit analysis, opinion leader interviews and ‘day in the life’ analysis. This tried and tested innovation toolbox can be tailored to any client's current position and future goals.  We select the appropriate mix of approaches and coach them in the art and science of innovation.

For one particular German company we used our own 'function-to-benefit' analysis, where we considered the fundamental chemistry or function of a product with the aim of finding cross-market opportunities for them. For example, construction materials could perhaps be used in the medical sector. For these German companies, looking outside their own in-house skill and expertise can reveal these opportunities and how best to exploit them.

For German companies wanting to reposition their products as market leading – especially those products which have become increasingly commoditised –'day in the life analysis' can prove invaluable to understand how end-users interact with a product or service. For example, we employed this strategy with a German building materials manufacturer. Close observation of tradesmen in action over a short period of time, coupled with in-depth analysis of the findings and the technology and market opportunities, led to a number of specific recommendations. The result is a product which now leads the field.

In Germany, the company-customer relationship is of the greatest importance, and the ability to address known customer needs has been a significant strength. But the challenge for these companies now means a change in mind set and potentially strategy. They need to start capitalising on those needs that the customer cannot yet articulate or might not even realise exist, or which could reside in completely different markets. We help generate a range of options for our clients, together with strategies to exploit these options. German companies need realistic solutions that will enable them to approach these new markets and make step changes with confidence, in order to maintain their prominence and reputation in the global market.