Opinion

What innovation really means to marketing

Catherine Barr Randall What does innovation mean to the media and marketing industries? Are they really doing it? Or are they just talking about it? And what does the word actually mean anyway, and is it being abused?

In a conversation with Mumbrella, Zayn Khan and Catherine Barr Randall, Southeast Asia CEO and Southeast Asia head of strategy and innovation respectively of Dragon Rouge, a design and innovation agency, talk about the definition of innovation, what it means to marketing, who’s really innovating and who’s just saying they are, and why the ad agency planner might be rebranded chief innovation officer.

What do you mean by innovation?

Catherine Bar Randall: My point of view is that innovation is a fresh and meaningful response to a challenge, a consumer need. Innovation is not necessarily about the future. It’s about responding to an unmet need better in the present. Innovation doesn’t have to be about a white space, it’s about doing what you do, just better.

It’s an interesting conversation point that there’s no such thing as innovation, that innovation is just marketing in the traditional sense. Marketing today is so coloured by a focus on marketing communications, and trying to think about what you say and how your brand should be set.

But traditional marketing was really about what you do, and how that product responds to the consumer.

There’s a school of thought that there’s no such thing as innovation, it’s another word for traditional marketing – but marketing in the traditional sense not the marcoms sense.

Now, everyone [in the marketing business] is joining the innovation space at the same time, but from different backgrounds. Everyone has their own agenda based on where they’re coming from before. Innovation hasn’t solidified as an industry in its own right. Everyone wants to shape it in their own way.

Marketing as a discipline is so obsessed with communications at the moment. There is an opportunity to make marketing deeper again, saying ok, this is what you’re saying you are, but make it about what you do. You need to take that brand proposition and pull it through the products and services. If you say you’re fresh and inspiring, then obviously your products need to be fresh and inspiring. All innovation is, is pulling that through the system.

Innovation is often associated with simply using technology. What do you make of adland’s tech obsession?

Zayn Khan

Zayn Khan

Zayn Khan: Sometimes innovation can be as simple as changing the sort of paper for a packaging design that is less expensive or less harmful to the environment. That’s innovation, and it has nothing to do with Silicon Valley.

Catherine Barr Randall: Entrepreneurship is another big overlap where you have to question whether it is the same thing as innovation. A lot of entrepreneurs are responsible for a lot of innovation, but that doesn’t necessarily mean entrepreneurship is innovation.

Zayn Khan: Sustainability and its link to innovation, that’s an example of brand and the consumer need being a driver. But I think the pressure to conduct business in a more sustainable manner can be a driver for innovation.

At the Sustainable Brands Conference in KL recently, one example was Interface, a big global B2B carpet maker. Most of the big hotels and office buildings use their carpets. Most carpets are made from Nylon, which is derived from petrochemicals and is really bad for the environment. In an attempt to embed sustainability into its organisation, not just in a CSR or PR sense but actually innovating its business processes, Interface partnered with London Zoological Society and a local NGO in the Philippines, and worked with local fishing communities to collect and recycle fishing nets.

There are thousands of tonnes of fishing nets that are abandoned in the ocean and cause a lot of problems for marine life. These fishing nets are made from really high quality Nylon. So Interface paid fisherman to collect their fishing nets, they then shipped them to a recycling facility and manufactured beautiful, high quality carpets from them. It’s innovation responding to an environmental concern and yes there’s a sustainability agenda, but it benefits the consumer, the business and the environment.

The innovation officer in advertising, marketing and media land. Have you noticed that this is emerging?

Zayn Khan: On the client side, for sure. On the ad agency side, I haven’t come across it yet, but I wouldn’t be surprised if it pops up soon. Maybe the head of planning will be rebranded as the chief innovation officer.

Catherine Barr Randall: I always wonder why agencies have a digital department but not an innovation department. Because it seems to me everyone is questioning what “digital” means, and what it isn’t. Isn’t it really just what advertising is today, not a separate department?

But then why wouldn’t you have an innovation department? You have planners, creative teams, clients who are crying out for their agencies to give them innovation solutions.

One of the challenges that we have is that we’ll talk to clients with innovation challenges, but they can’t work with us because of their agreements within big agency groups. So they have to work with a provider within the network. But the holding companies don’t have a provider, so why wouldn’t you create an innovation department tomorrow? It’s so rare and I don’t understand why.

Zayn Khan: I think the large multinational agencies are like big ships, and it’s really hard for them to turn. There’s a lot of inertia. They have entrenched systems, recruiting practices, structures, cultures that make it difficult to reboot and create new teams and new departments. You can’t recruit a head of innovation if you haven’t identified how that person will generate revenue.

We still have to be accountable and deliver, but as an independent the culture in Dragon Rouge is more open to developing new offers and experimentation.

What about innovation from the advertising industry, what have you noticed to be innovative?

Zayn Khan: An agency I came across when I was moderating the Effie Awards in Malaysia was Geometry Global. The client is the mattress brand Dunlopillo. The client asked for a consumer activation campaign to sell mattresses. They didn’t have much money, and it’s a very competitive category. All the brands are shouting the same thing. Comfort, number of coils, padding, better sleep, cheaper, better value. It’s really hard to cut through to drive sales. So instead of a pop-up shopping mall activation they said let’s spend the money on innovating the product itself, and do something breakthrough that will be talked about.

Watch the case study video:

To me, this is a great example of innovation, but also innovation in marketing communications. It created incredible buzz. It was picked up in 20 countries, and resulted in a couple of thousand preorders for the mattress. And now the company is developing the technology to commercialise it. Making it about sex to begin with was a fun idea, but there are health implications – people are able to monitor how they sleep.

That reminds me of a campaign in Australia by an agency, now defunct, called Happy Soldiers, which had the idea of putting a use-by date stamp on the back of Tontine pillows, having explained how much bacteria builds up on pillows over time. Sales were massive…

Catherine Barr Randall: In several hotel chains now, you can buy the bed you slept in, the mattress. They’re trying to make this amazing sleeping experience. W Hotels do this. This is the innovation of a new channel for mattress producers. How do you sell more mattresses, how do you sell the experience to consumers? If the sleeping experience is good enough, you can persuade consumers to change their mattress when many people don’t change theirs in 20 years. Enabling someone to buy a product after they’ve tried it is a good channel innovation.

How does a traditional marketing agency allow that sort of thinking to happen? Culturally, what is needed?

Catherine Barr Randall: These types of conversations only tend to happen upstream when clients are conversing with insights agencies. If you can be involved in that conversation, then you’re involved in how the product is being developed.

Isn’t that the planner in an ad agency’s job too?

Zayn Khan: In an advertising agency, they’re using the insights and research to come up with a great ad idea, most of the time. Because usually by the time a client has approached an ad agency, it’s too late to really shape the product or the experience that the client has in mind that they want to advertise. Planners tend to be very communications focused.

We go in at an earlier stage and at a more senior level, and have conversations about the product or the experience itself, and how that may shape the brand or vice versa, and worry about how you communicate it later.

Catherine Barr Randall: I’ve seen a lot of overlap in briefs that are out there with innovation consultancies. In the past, when I was working in brand consulting and before I went in to innovation, the types of briefs we got were: What does our brand stand for, what’s our value proposition, what’s the essence of our brand? Now those kinds of briefs are going to innovation consultancies, or consultancies with an innovation discipline – because clients are looking for a deeper and more exciting response. When you’re involved in that conversation, that’s when you can have a conversation about the products and services the company should be doing.

Ad agencies want to talk to CEOs too. Isn’t everyone queuing up to have similar conversations?

Zayn Khan: It’s a structural problem on the agency side, but also on the client side. As a communications agency, you tend to be dealing with communications people within a larger marketing organisation. So you might want to get involved in discussions about product marketing, such as pricing or distribution, but most of the time it will be someone else’s problem. They’ll say they have a specialist consultancy that does that, don’t worry your pretty little heads about it and go and make some ads.

When I worked with clients in advertising [Khan was group MD of Ogilvy Malaysia] we would always shoot for the top, and want to talk about actions that the business needed to take rather than just things we should be saying. And they were always appreciative, and it showed our value, but at the end of the day it might help us win the business, but we’d eventually go back and make ads. We’d present 99 things that a company can do, they’d get excited, but it wasn’t really our remit. Because they had McKinsey, Accenture and Salesforce doing various things, so we were relegated and told to be happy in our silos. It’s a structural problem.

Catherine Barr Randall: They’re looking for a solutions provider. When a client picks up the phone they’re looking for a solution. And they don’t pick up the phone to an ad agency thinking how can they make my business better.

What do you make of the startup world’s influence on the marketing sector, and language such as “fail fast” being used by marketers, and how Silicon Valley is affecting agency culture?

Zayn Khan: One of the things that has had a big impact on our industry, which isn’t typical Silicon Valley startup culture or language, but came out of California is often called ‘design thinking’, which was a term coined by IDEO, who are based in San Jose and work with Stanford University. Now, design thinking as an approach isn’t new. It’s the way that any good designer, architect or engineer will work. It’s a way that you will work in those fields to deliver something that is concrete and robust.

I studied architecture and was an architect before I went into advertising. When I came across design thinking [being talked about] I was like, er yeah, that’s how I was taught to work. IDEO owned it, branded it and merchandised it. But it’s a good thing, because they’ve certainly championed the cause. And a lot of innovation and design consultancies have picked up on that term, and some have started to implement it. And they way we work is very much based on the same approach. We just don’t call it design thinking.

It’s a big buzz word that’s spilled over to the client side. When innovation consultancies and design agencies talk to clients they start using the term design thinking to get clients excited, although clients don’t usually know what it means, but it sounds cool and very California.

Which brands do well at innovating beyond communications, with innovation that runs through the company?

Wall Street Journal piece on the secrets of creating a better hotel room

Wall Street Journal piece on innovation at Marriott

Catherine Barr Randall: Marriott. They have a dedicated innovation lab in the US, where they’re constantly testing how to make the branded experience with them better [WSJ ran a piece on how Marriott’s Innovation Lab is re-thinking the hotel room] So if their branded experience is about great night’s sleep, they are testing how to make a night’s sleep better with things like better bedding or a late night check-in facility.

Marriott is constantly iterating, which I think is what makes a brand really good at innovation. It’s less about having the right foundations in place, it’s about a continual assessment of working out a true north – what the brand can give people – then constantly checking back with that true north, adjusting what we do to make sure we’re getting better all the time.

What about Asian brands?

Catherine Barr Randall: It’s hard in Asia to find examples of brands really doing innovation well, and really pulling innovation through their brands. On one level you have a brand that is just consistent. They have a strategy, and they don’t only communicate that, but it’s pulled through their products and services. The next level is to do that and be at the forefront of your category.

It’s hard to find good examples in Asia, because of two constraints. One is budgets. Unless you’re a global multinational, it is hard to be at the forefront of your category implementing really meaningful things. Secondly, even if you are an MNC, those meaningful new things are happening at headquarters where the budgets are focused.

WeChat logoWeibo logoWhat about the Chinese social media brands such as Weibo and WeChat? Some say they’ve copied Facebook and Twitter. Others say they have micro-innovated to produce better products. What’s your view?

Catherine Barr Randall: Yes, they’ve been innovative in that they’ve created a different version of the original product. Innovation is not only about white spaces, it can be about iteration. If you create something new and better, and meet a consumer need that is more focused, then that’s innovation. Very rarely is there something completely new – leapfrog innovation.

Zayn Khan: GrabTaxi and their car pooling service, that’s a leapfrog innovation. It’s completely new, it feels like a white space. But without knowing the statistics, I would imagine that leapfrog innovation is a small portion of all innovation. In Malaysia, GrabTaxi have kiosks in shopping malls where you can order a cab, if you don’t have the app.

GrabTaxi have expanded rapidly as a company, and their marketing has been at times conflicting. What do you make of them innovating as a company and their marketing?

Catherine Barr Randall: They’re focusing on what they do, not what they say, rather than what a lot of big brands are doing.

Zayn Khan: Partly because of social media, but also because of the daunting availability of data, a lot of big brands are spending a lot of energy on consumer engagement and managing the conversation with consumers. Now, there’s nothing wrong with that, but I think it does in some cases happen at the expense of good old fashioned product innovation and product improvement. That kind of innovation can become the story, and can spread under its own momentum, it doesn’t always require lots of money spent on marketing.

Ice cream delivered via drone

Ice cream delivered via drone by Uber

What about Uber? They’re an innovative company. But what about their marketing. What do you make of delivering face masks and ice creams via drone?

Catherine Barr Randall: It’s about how much focus they put on meeting consumer needs that is critical. Marketing gimmicks is one thing, but delivering masks in the haze and ice cream when it’s hot serves a need for the consumer and Uber attaches a business needs to it.

Can you give examples of brands who are claiming to be innovative in their messaging without justification?

Catherine Barr Randall: This is where a lot big companies are challenged… We were having a conversation the other day with a telco provider, and they were saying how the innovation category is so new, they don’t know the best strategy to take when it comes to innovation.

So they place bets on several different paths. One is taking innovation in-house. So they have people who in their day jobs run innovation projects, and that could be in tandem with innovation consultants, but they have a dedicated role.

Another approach, which is experiencing crazy growth in Singapore, is the open innovation lab. It’s about taking innovation out of the organisation under the belief that the organisation’s structure, its approval gates, and the levels of assessment and scrutiny they have to go through, either block innovation or water down an idea beyond recognition of the original.

Under that belief, people say you can’t innovate in-house. So you’ve got to innovate outside, in a different business unit in a different location. We’ve seen many of these labs mushrooming across Singapore. These companies recognise that they are great at marketing and getting things done, but not innovation.

This telco also has a third model for innovation, and where they’ve placed their third bet is to assume that they can’t innovate, because they’re not innovators, and they’re not startup guys, that they’re not creative. But that other people are really good at it, so let them do it – and then buy them. It’s an accelerator program, or a venture capital programme, where you look to nurture, incubate and identify organisations that will be relevant to your business, and then buy them out.

Those who are doing innovation badly tend to be really challenged internally. They are saying everyone is in charge of innovation. But this requires a massive cultural change that is often unsupported. The culture might not be up to enabling innovation, for example a place where you’d need a business plan that can demonstrate the ROI before you’d even know how to quantify the opportunity.

Many organisations are stuck in a culture that doesn’t allow for innovation, and they’re not doing anything else. They’re saying everyone should innovate, and also have their day job. And we’re not going to give you any pathways, and it’s all going to be in the building.

Their talent and structures are built for that, so they can’t respond to the market. Or they come up with a response, that is a copycat and get it to market three years too late.

Which category in particular is struggling to innovate?

Catherine Barr Randall: Insurance. It’s in a tragic hole. The industry can’t get off the starting block to innovate. But that’s not to say that there aren’t insurance people who want to innovate, but it’s in a really bad state of affairs. Almost all insurance companies are in that place. They want to innovate, but they don’t know where to start.

The first barrier to innovation in insurance is culture, which is always an issue. Insurance companies tend to be conservative and risk averse.

The second barrier is regulation. It’s in the nature of finance and risk management for these businesses to be highly regulated. You still have to meet a broker face-to-face in insurance and sign a bunch of forms and answer questions you’ve already answered in a day when you can open a bank account with your mobile phone. And after that there’s a period of processing and it can take a month to sign up for a product you know you want.

The other structural challenge in insurance is the sales force. I think insurance companies would love to offer electronic platforms from which customers can buy their product; perhaps there are legal constraints, but they can be overcome. This, however, would make their sales force obsolete, and they’re the ones who hold the clients, and they’re the ones who make the money. So they’re a massive barrier to innovation.

Zayn Khan: They also hold a lot of the client data.

Catherine Barr Randall: It’s a question of how you leapfrog the agents and into… today. Think about banking by comparison. The difference in experience when you’re trying to pay a bill, or check your balance – you can even buy life insurance or travel insurance on your phone through your bank. But then if you want to buy medical insurance, the length of conversations, and the lengthy process you have to go through, notwithstanding a medical check… the system has not been designed with people’s needs in mind at all.

Zayn Khan: It’s opaque and not user friendly. It seems to be an issue with the financial services sector, its lack of innovation.

I can’t say I’ve had a great experience banking with HSBC… 

Catherine Barr Randall: Please, don’t. I tried to close my account [with HSBC in Singapore]. I sent them a message, but they said I couldn’t do it [electronically]. I had to visit them in person. So I went into the branch, and they said you have to submit the request in writing on headed paper. I said you have to be joking. I am standing here with all my identification but you need headed paper? So I demanded a piece of paper and hand wrote the notification that I was closing my account. It was a bizarre experience.

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