Real Innovation is Within Your Reach (If You Know Where to Look)

Getting a deeper understanding of your customers' needs — not merely offering more SKUs — is the key ingredient needed for your MSP business.

One of my favorite takeaways from the 2019 GlueX conference was from keynote speaker David Robertson, LEGO innovation and technology management professor at MIT. Robertson spoke about a topic that usually makes my eyes glaze over — innovation.  And, while no business owner can disagree with the need to innovate, so many speakers skip answering the follow-up question — How do I innovate? Robertson took this topic in a whole new direction, which I much appreciated.

He started his presentation by citing several examples of innovation, from well-known inventions like the iPod and iTunes to lessor known products like the spin pop, which is literally a lollipop connected to a battery-powered device that makes the candy spin with the push of a button. The inventor of this latter product applied his idea to the toothbrush market and created a product that was much cheaper than the high-end Philips Sonicare and Oral-B toothbrushes. He then sold his company for $480 million.

As an MSP, you might have a response similar to mine at this point: “I’m not going to invent the next iPod or find a niche use for toothbrushes. How is this topic relevant to my business?”

One of the biggest mistakes companies make with innovation, says Robertson, besides thinking they need to invent a new product, is thinking that they need to create more varieties of their core product (i.e., more SKUs). For instance, during the 2008 recession, Gatorade tried to combat declining sales by coming out with several new flavors (e.g., Cool Blue, Rain Berry). The result was that it drove higher costs and complexity into its supply chain and worsened its situation. The solution for Gatorade, and LEGO, which experienced similar challenges, was to “date their customers” by gaining a deeper understanding of why buyers purchased their products.

Gatorade’s marketing team learned that athletes weren’t just using their drinks to perform better during workouts and competitions, but they were doing other things before and after their workouts. For example, many athletes loaded up with carbohydrates before workouts and drank protein shakes after workouts to speed up their recovery. Gatorade reduced its drink offerings and added the “G Series” branding to other complementary PepsiCo products, such as energy chews and sports fuel drinks (pre-workout carbs) as well as protein shakes and bars (post-workout). The net result was that not only did the company earn revenue from the complementary products, but sales of its core thirst quencher products rose as well.

Robertson talked about a similar process at LEGO where the company learned that its core products didn’t compete with the digital world; instead, they’re complementary to it. Star Wars fans, for instance, don’t only want to watch the movies. They want to buy collectible figurines, and they want Star Wars apparel, books, magazines — and Star Wars-themed LEGOs.

So, where do we see this kind of “innovation” playing out in IT? Think about one of the most common IT offerings nearly every VAR and MSP sells — email. Even more specifically, Microsoft Office 365. Some IT solution providers treat Office 365 as a nuisance sale or even a loss leader. Others take the Gatorade and LEGO approach and think about why customers buy Office 365 and all the other complementary IT services that go with it, such as:

  • Data migration services
  • Spam filtering
  • Data archiving
  • Business continuity
  • Data encryption services

Once you understand your customers’ needs better, it’s easier to provide complementary products and services that boost your overall revenue and make your core product more desirable as well.