‘Industry’ advice worth taking: Innovation versus renovation

Advice from “the industry,” especially when it’s unsolicited, is one of my biggest pet peeves. The advice is usually tactical in nature versus strategic, and it’s usually a tactic that’s been copied from some other company that has a completely different set of objectives than your school. But then there’s industry advice that’s strategic in nature from people who actually know what they’re talking about–people like Sergio Zyman, former CMO for Coke.

In an interview, Zyman talks about innovation versus renovation, and it’s sound advice for those of us on college campuses where innovation is becoming all the buzz–from new academic programs to new admission strategies to new alumni initiatives. Zyman puts things in perspective. My highlights are in bold.

There’s nothing wrong with innovation. But most companies that think innovation usually end up making one or several mistakes. They get hung up on core competencies instead of their core essence (I’ll explain what this means in a minute), or they pursue creativity at all cost, treating all new ideas as potentially equal; or they limit their innovation to new products, forgetting that innovation is about creating new value; or they chase horizontal instead of vertical growth; or, and this is a plague, they try to innovate through acquisitions, instead of organic growth.

This sounds silly, but its really rather simple. You’d be amazed at how many companies confuse what they know how to do, their core competence, with what consumers will buy from them, what I call their core essence...It’s easy to buy or develop new competencies, but it’s much harder, if not impossible to develop a new core essence

Do you remember when Porsche came out with an automatic transmission? That’s not their essence…Which reminds me of innovations like Pepsi Blue, or Nestea’s yellow tea drink called “Tea Whiz,” or Kimberley Clarke and Proctor & Gamble’s “wet toilet paper,” or Las Vegas’ “family friendly” campaign. The list goes on and on. Innovations that fail.

Innovation says “start with what you can make and see if you can sell it.” Conversely, “renovation” says “start with what you can sell and see if you can make it.”

Innovation is also much more expensive and risky than renovation because it often requires you to build new assets/infrastructures and competencies and to source new customers and consumers. Remember, securing a new customer often costs six times more than retaining a current one.

Read the entire interview at the Zyman Institute of Brand Science, which is part of Emory University’s Goizueta Business School.