Beat the Competition through Process Innovation
May 20, 2013 | 7:01 pm UTC

Beat the Competition through Process InnovationInnovations in products, technology, design, and engineering have pushed society forward and made the world a better place to live. Companies spend fortunes on product development and research to ensure that they are on the cutting edge, supplying consumers with everything that they want and need. How can your small start-up, and minimal R&D budget, compete with that? You must change how your industry does business, or start a new industry entirely.

It is very expensive for companies to develop new products. Companies literally spend fortunes on prototyping, facility redesigns, retooling manufacturing equipment, testing markets, conducting focus group studies, and a slew of different “tests” to make sure their new product is the hottest flavor of the week. Once a product is finally given the green light, companies still have more time and money to invest in marketing and advertising to generate buy- in from the target market. All of this is done before a company even sees a single dollar of income from the product, and years before that new product could actually make a profit! Who in their right mind would want to innovate? An organization can spend thousands of man hours and millions of dollars to develop a product that is obsolete in a year, or shunned by the consumer in an instant.

For large companies, that happens every day. Sometimes the products pay off (think iPad) and sometimes they don’t (think Pontiac Aztek) but in order to stay relevant, innovation must take place. Innovation is essential to leadership. It is the art of being proactive, creating your own path for your company and your industry, and having the unwavering vision to see it through.

So you want to be an industry leader but you don’t have the resources to develop groundbreaking products? Then don’t. Innovate the process. Innovate the way in which your industry’s goods and services go to market. Too many entrepreneurs assume that in order to beat the competition they have to offer better quality and service at a lower price. Well part of that is true, a top notch product and exceptional service are required, but it won’t beat the competition. You must innovate, and if you can’t afford to innovate the product like your competitors do, then you must innovate the process. You must develop a new way to get your product to market, or a new way to beat your competitors pricing without sacrificing your margins. Remember to look at this dilemma as a puzzle, all of the pieces are there you just have to figure out how they go together. There is a way to do it. Instead of trying to lower your price to beat the competition, could you do something to make the competition’s price higher? Could you totally eliminate the competition by positioning yourself in a different market through creative marketing?

A spectacular example of process innovation is with the company Luxottica. I first discovered this company while watching an episode of 60minutes. After doing a little digging on the company’s website I became very inspired at what I found. Luxottica began as a manufacturer of Luxottica brand eyewear in the 1960s. They saw there really was no “best practices” for the eye care industry, so they took the lead and structured the industry how they saw fit. They not only began making their own brand of glasses, but approached other brands about private labeling their glasses. Before long, Luxottica was making glasses for Ralph Lauren, Coach, Tiffany, Gucci, and many more. Now a successful manufacturer, the leadership team at Luxottica wanted to continue innovating and growing their business, so they branched out. Luxottica got into the retail business and began controlling how the products they manufactured got to market. Ever heard of Pearl Vision, Lens Crafters, Sun Glass Hut, Sears Optical, or Target Optical? That’s all Luxottica. They didn’t just innovate the process, they wrote the book…and probably published it, printed it, and built a store to sell it in! Do you think they stopped there? No. They then bought the brands that they weren’t already making such as Ray Ban, Oakley, Persol, and Revo to name a few. To add icing to this already coma-inducing cake, they also own the biggest vision insurance companies in the world! Talk about maximum control of a market!

Did they spend millions on product development and market research? Why would they? They had their customers doing it for them. They just developed the process, taught everyone how it worked, and structured it in a way that made it simple for customers to buy their product and no one else’s…you can only do that if you innovate the process. They took the industry to a point where price, competition, quality and service were irrelevant. What credentials did they have to write that process? None, they just stepped up and did it because no one else did. Continuous product development can drain a company’s budget, but if your organization puts a new process in place, you just set it up once and manage it for growth.

Luxottica was able to take a medical device that people used to wear only if they were prescribed, and turned it into a high-end fashion accessory that people pay big bucks for. Their product also overcame the technology barriers of contacts and Lasik surgery. How did they overcome that? They put a process in place that placed an entire industry at their fingertips, to innovate and develop new products and designs without the burden of having to pay for it. That’s what I call process innovation! Innovation is needed in every facet of developing an organization, especially in its processes. It is essential to leading an industry. What are you doing to innovate your industry’s process?

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