In a recent article discussing marketing I wrote about two important quotes from Peter Drucker, which are:
- “The purpose of business is to create and keep customers”
- Business has only two functions – marketing and innovation
Why did he say there were only two functions?
Because marketing and innovation produce results; all the rest are merely costs!
Terms like Innovation and marketing are both broad and sweeping statements where it’s easy to get lost in the trivia and details and completely miss the big important picture.
So what can we say about innovation that is to the point and worth considering?
The first concept of innovation to be understood in regards to your business is to have a strong value proposition that has meaning to your customers because the fundamental purpose of marketing is to deliver your value proposition.
Attempting to market to your customers without a strong value proposition leaves your business vulnerable to be trampled over by your competitors; so create a strong value proposition and learn to use it.
Creating a strong business value proposition is the most important task any business, including yours, will ever undertake.
When you have a value proposition that resonates with your prospective customers, and you know how to use it, it then gives you a seemingly unfair competitive advantage against all your competitors.
How much time should you be thinking about this innovation activity?
The first problem with the concept of innovation is that it is not well defined; everyone has their own meaning, if any. If fact innovation, like the concept of marketing is far too often simply put into the too hard basket and ignored.
So let’s agree on a fairly simple and understandable definition before proceeding any further.
“Innovation is the execution of new ideas to create value.”
All three parts are important, to innovate you have to do something new, you have to actually execute the idea, and in doing so it must create value.
There is actually a fourth part and that is keeping this idea in the forefront of every activity you do in your business, every day. In other words you need to be constantly thinking about how to innovate your business, because you can be sure your successful competitors are continually innovating theirs.
You can see why Peter Drucker made that initial statement: Business has only two functions – marketing and innovation, because they are so intertwined, each feeds on the other.
Having “innovated” a new idea, how do you decide if it has value and how do you execute it so it will move your business towards increased turnover and profits?
The tactic to do this is your value proposition.
The key is to understand whether your value proposition is in fact valuable.
The way to test this is to determine whether it is in fact valuable to your customers, and whether it is expressed in a way that that they understand it and agree with it.
It’s not just the product or service you sell; it’s everything potential buyers perceive as being valuable in your offer!
As long as potential customers believe you are the best option for them in at least one important way they now have a reason to choose your business instead of your competitors.
Your value proposition has to make them believe you can deliver what you are promising, fail to do that and they will move on to look at your competitors.
Your value proposition is not an advertisement. It is instead the single idea your advertisements and marketing efforts should convey. The main reason people struggle to get results from marketing is that they really don’t know what they’re trying to communicate.