By LINDA NOWAK
Business Journal columnist
Adopting innovative ideas from other growing industries can help your business grow and become more productive. The creation of innovative products, services and processes is a key factor in the creation of new and better jobs, increased market share and a resilient organization.
Businesses do not have to have expensive research and development departments to be innovative. Sometimes all it takes is looking at best practices in other industries to see where they have been innovative and then creatively adopting those innovations for use in your organization. Other times a great, innovative idea can come from the expertise and perspective within the organization.
Igor Ansoff is well known for the Ansoff Matrix, which analyzes business growth opportunities based on the organization’s existing or new products, or its operations in existing or new markets. This matrix can also be used to look at opportunities to adopt innovations from other industries in order to grow your business.
- Market Penetration – Market penetration involves increasing market share with the organization’s current products and services in markets in which it already operates. This low-risk method of expansion can be accomplished in numerous ways:
- Strengthen current customer relationships to increase their rate of product/service utilization, improve customer service, initiate awards and loyalty programs, and be extremely responsive. USAA has been doing a stellar job of making the lives of their customers easier through their online banking products, preapproval for car and house loans, and even car shopping websites that will negotiate a great price for you with the dealer.
- Attract competitors’ customers. Provide better value through a combination of product quality, service and pricing. Pay the competitors’ customers to switch to you (e.g., free service for six months). Once they are your happy client, then you are able to cross-sell them on other products and services.
- Attract non-users of this product or service category to start using it. For example, many homeowners do not use landscape maintenance services. Making special introductory offers and providing free trials and tips for greener lawns may convince some people to let the experts handle the maintenance.
- Market Development – Market Development is a strategy in which there is no need to develop new products or services. It involves taking your existing portfolio of products and services into new markets. Three ways to accomplish market development are to:
- Further segment the market and find new groups of customers. Maybe you are primarily serving baby boomers and could develop a market strategy to appeal to an audience under 40.
- Identify new uses for your existing product or service. Look at what Arm & Hammer did with the box of baking soda in the refrigerator.
- Expanding regionally or internationally. If you do not have the resources to take this on by yourself, look at strategic alliances with complimentary companies.
- Product Development – Product development involves the development of new or improved products or services for your existing markets. Since you already have a loyal base of customers, this is another low-risk option for increasing market share. For example, Hilmar Cheese Company has increased its market share by finding other innovative uses for the whey protein and lactose found in milk. Food, beverage, confectionary and pharmaceutical companies around the world use their whey proteins and lactose in their products. To achieve product development, consider:
- Improving product ease of use. Can it be easier to assemble and maintain? Could the packaging be better?
- Expanding your portfolio of services. Should you add an automatic tracking service or product distribution services?
- Improving product quality. Can it be faster, more efficient or more durable?
- Variations on the old. Can it be fresh, frozen, dried, pickled, in sauce, without sauce?
- Diversification – Diversification is the tricky one. It can mean entering an entirely different line of business with unfamiliar products, services or markets. This involves taking a risk and moving away from what you know well. However, sometimes it is a prudent plan to diversify if you think your existing business may be threatened. Options for diversification include:
- Developing totally new products for new markets.
- Acquiring an existing company that would broaden your portfolio.
- Forming a strategic alliance with a company with a successful track record in a new field. This is the toughest option. Do your research. What can each of the parties bring to the alliance to create value for the company and its customers? Hire experts to help you research the financials and facilities of your potential partner, and have a well-drafted contract that gives you an exit clause.
If you are thinking about how to increase your market share, I hope some of the above growth strategies will get you thinking “outside the box.” For more information on growing your business, SBA.gov is an excellent resource. In addition, the CSU Stanislaus College of Business Administration has a cutting-edge program in strategy and entrepreneurship. The program is designed to help entrepreneurs start their own business, grow an existing business and plan strategically for an uncertain and ever-changing economic environment.