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Parmit Chadha

Pioneering is associated with innovation. Companies that desire to pioneer need to invest their resources to innovate their products and processes.

A human-like robot developed by Sony Corporation. The company has constantly innovated its product offering and has pioneered a few categories.

PIONEER or follow? This discussion has already taken up three issues in this column. It's time now to decide which fits your organization.

In the previous issue, it was pointed out that the choice of strategy is not an absolute. Of course, it will depend to some extent on the industry features. More important, the correct strategy in any given case depends upon a company's competencies, and how aligned they can be to a particular strategy.

Let's begin with pioneering. If you think about it, this is closely linked to innovation, the current buzzword. Almost every company we talk to wants to be more `innovative'. But what does this word really mean? Does it mean just adding more useful features to existing products (like pilfer proof caps)? Or does it mean coming out with `first time' products (like mosquito mats)? What about continually improving existing processes (like using hand-helds for the sales force)? And how about a new media buying model?

All these are innovations. But, the resources, processes and values needed to maximize the return from each of these are widely different, and companies rarely excel at more than one type of innovation. Indeed, it is very difficult to do so. So, if you want to pioneer a market, the first reality check is to understand your product innovation abilities. This is a complex topic (and we will come back to it in future articles), but for now, ask yourself this question: Can we, year after year, come up with a series of truly new products (like 3M and Gillette), or is our product innovation process more suited to incremental improvements in existing products (like a new soap perfume, or a powdered drink with better solubility)? If the answer is the latter, pioneering is obviously not for your organization. Unless you can make a determined effort to alter mindsets and abilities towards innovation.

Closely related, and of particular importance in consumer marketing, is the level and type of marketing skills. For an innovation in an industrial product, the benefits are, or should be, obvious to the end-user. In consumer goods, they have to be communicated strongly and convincingly. For example, a new industrial coating that lasts twice as long as existing ones at a small premium will practically sell itself. But in house paints, convincing consumers to pay a premium for a new technology exterior paint is far more difficult, and needs a different type of marketing skill. The question here is: Can we effectively educate the consumer and create a new market by communicating the advantages of a totally new concept, or are we better at communicating the benefits of our product vis-à-vis competing products?

The fact is that for a majority of companies, pioneering as a strategy is not an easy option. This does not mean that they can never have a `killer' idea, but rather, that such an idea will be the exception rather than the rule. Actually, the 3M or Gillette level of pioneering is extremely demanding, and very few companies can sustain the pace. Most of them fall into the second category, with processes geared towards incremental improvements, enlivened by occasional flashes of disruptive product innovation.

If you are to follow, the obvious question is - how best can you enter a market as a follower? This is where a complex interplay between your resources and innovation ability, and that of the dominant incumbent comes in. Further, it is easier to mount a successful attack if there is dissatisfaction with the current leader, than if it is perceived to be of high quality. In a framework for late entrant strategies, Shankar and Krishnamurthi have proposed eight options. These range from a niche strategy to an innovation-led strategy, with the applicability depending on the challenger's level of resources, ability to innovate, and the dominant incumbent's perceived product quality.

Being a late entrant is not a bad idea - business history is replete with cases where late entrants have eventually outsold pioneers. The point is that what works for one company may be disastrous for another. In fact, the key issue in developing an entry strategy is a dispassionate appraisal of your own weaknesses, a process that is far more difficult than it sounds.

(The author is a Chennai-based consultant. Karate-gy is a proprietary term for strategic exercises conducted by Paradigm Management Knowhow. Feedback can be sent to bleditor@thehindu.co.in)

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