“Innovation and Creativity in Marketing Value Chain with Specific Focus
on Social
Services Marketing”
A paper
submitted for ‘NICOM-2008’ Jan 9-11,Ahmedabad
By
Dr
(Lt Col) Mohan Kotwal, Professor, I.M.E.D., Bharati Vidyapeeth University, Erandawane,
Paud Road, Pune 411-038, Maharashtra,India
mob.
No.9890507803
“Innovation and Creativity in Marketing Value Chain with Specific Focus
on Social
Services Marketing”
A paper
submitted for ‘NICOM-2008’ Jan 9-11,Ahmedabad
By
Dr
(Lt Col) Mohan Kotwal, Professor, I.M.E.D., Bharati Vidyapeeth University,
Erandawane, Paud Road, Pune 411-038, Maharashtra,India
mob.
No.9890507803
Abstract
“Marketing
challenges in the new changed paradigms of the intensely competitive
international economies have become more and more knowledge centric wherein
innovation and creativity play a very crucial role in the total Value chain
management. The same is also true for
Social Services marketing such as the health care, mental fitness and
management services, even the spiritual services such as the various Yoga and
related services being offered to the people. There is a dearth of creative
ideas and innovations in these crucial social services where there exist hardly
any yardsticks and benchmarks. It is also necessary to apply some hardcore
marketing concepts in these areas if these non-organized activities of emerging
segments are to be made more customers friendly in terms of value addition as
well as accountability. The paper focuses on these aspects in general and
innovation in particular to highlight some of the strategies which can make
these aspects more efficient and effective. The paper makes use of author’s own
research in Self Development of Managers with a no. of techniques including
meditation being offered to general public as well as managers and their
effectiveness in improving managerial effectiveness.”
1.0 Introduction
1.1 The management doyen Peter
Drucker wrote, ‘the business has two and only these two basic functions:
marketing and innovation. Marketing and innovation produce results; all the
rest are costs’. The Japanese, like all other philosophies discarded by the so
called hard headed American business pundits, took this one also to their heart
and even today the Americans do not know what makes the car giant Toyota come out endlessly
with cars that cost less and are almost defect free. ‘I don’t know why is it
that whenever I ask for a pair of hands the brain comes attached’ exclaimed the
pioneer of American car industry, Henry Ford. Put that against the Japanese
belief particularly popular with companies such as Toyota which consider its 1st line
employees not just cogs in a soul less manufacturing machine but a valuable
asset in the practice of ‘wa’-cooperation and ‘nemawashi’-consultation. At the
heart of any Japanese company is the principles of ‘Zen’ from which emanates
the practice of ‘kai-zen’ or incremental improvements that are the building
blocks of a culture of continual innovation and invention.
1.2 Innovation and creativity are
no more a matter of choice for any business if it wants to survive in the
present day bloody battles of business wits where the mantra is ‘innovate or
perish’. Be it companies like 3M or Microsoft the real challenges are not in
how you manage or strategize or even visualize your business , but in how fast
and effective you are in putting new inventions and ideas into action. While
many U.S. companies are still victims of what Hamel calls ‘intellectual
feudalism’; the ones which are successful have realized that in a knowledge
economy you can not and should not undermine any mind no matter to whom in the
hierarchy of your company it belongs to and to under estimate the competitors
in a strategic blunder of relying on outdated ideas. While focusing on the
aspects and challenges in the field of marketing, ‘innovative marketing’ thus
becomes an imperative that can’t be ignored. Marketing since its inception in
the early 1900’s’ has undergone drastic conceptual and typological changes as
brought out in the typology given by Sheth, Gardener and Garrett ( ref. Sheth,
et al ,’Marketing Theory: Evolution and Evaluation’,1988.)
Some authors such as Cox, Alderson
and Shapiro in proposing an ‘a normative theory of marketing’ where Alderson
likened the firms to biological entities, said that the prime strategy of all
firms is ‘strategy of avoidance’ where the role of an executive is to avoid
malfunctioning in the system and to prevent it falling in the extinction mode.
Many others such as Thomas, are alarmingly bold in proclaiming that ‘marketing
profession at least in its academic ranks is suffering from ‘epistemopathology’
or the application of ‘diseased, sick, and bad knowledge that is
mechanistically applied to contemporary global market systems, in self serving ways,
to identify and solve immediate problems, problems which are not well understood,
and without any consideration of the ripple effects on society as a whole.’
Sheth et al in 1988 raised also two questions regarding the marketing
philosophy, which are in many a scholars’ opinion still relevant in 21st
century. These are,
a)
Why should marketing scholars even endeavour to develop
a general theory of marketing?
b)
Marketing is undergoing an identity crisis as also a
credibility crisis.
Really speaking
even today the question, ‘what is really marketing’ still remains largely un-
answered and many practitioners of it are not satisfied by the answers given by
the academics.
Without going in
the whole evolutionary history it would be sufficient to mention here findings
of Schultz and Kitchen, in 2000, which are,
a)
Marketing world requires new developmental pathways for
marketers at all levels
b)
Marketers must balance marketplaces with market spaces.
c)
Organizational constraints must be recognized as such,
and overcome over time.
d)
A research rich consumer understanding is vital.
e)
Both marketing communications and corporate
communications are needed to effectively compete in today’s crowded and
turbulent environment.
f)
Marketing training is required at all organizational
levels.
g)
Mind maps – ways of seeing the marketing world – may
need to be revisited, reviewed and re-adjusted to reflect current developments.
1.3
The purpose of quoting elaborately some of the latest
writings and concepts in marketing thought was to define the context for this
paper which tries to focus on the changed paradigms within the intellectual and
practical domains of marketing as a theory and as a profession. Viewed in this
background the context now can be
defined as-
a)
Definition of innovation and creativity and their role
in the changed paradigms of marketing function, with respect to value chain
concept in services segment in general and social services in specific.
b)
Assessing where we are in terms of value addition in
these areas and a critical analysis of the situation.
c)
Defining the future vision and a framework of concepts
within which to make this vision a reality.
2.0 What is innovation
and creativity?
2.1 The National
Innovation Initiative of U.S. ,
defines innovation as, ‘The intersection
of Invention and Insight, leading to the creation of social and economic
value.’ It is also production and implementation of ideas. 3M defines
innovation as ‘an action or implementation which results in an improvement, a
gain, or a profit.’ Sam Palmisano,
President and CEO of IBM says, “The nature of innovation –the inherent
definition of innovation –has changed today from what it was in the past. It’s no longer individuals
toiling in a laboratory, coming up with some great invention. It’s not an individual,
it’s individuals. It’s multidisciplinary. It’s global. It’s collaborative.”
Hence innovation can be defined as using new ideas or applying current thinking
in fundamentally different ways that result in significant ways. (IBM Global
Innovation Studies 2006). There are three ways of innovation that contribute to
wealth creation in organizations—
a) Business Model Innovation: Significantly changing
the structure and/or financial model of the business.
b) Operations
Innovation: Improving the effectiveness and efficiency of core business
processes and functions.
c)
Product/Service / Market Innovation: Creating new or significantly differentiated
products, services or go-to-market activities.
2.2 For
innovation to flourish organizations must create an environment that fosters
creativity; bringing together multi disciplinary, multi talented groups of
people who work in close collaboration together- exchanging knowledge, ideas,
and shaping the direction of the future. W.Somerset Maugham, the famous English
novelist once wrote, “People grind and grind in the mill of truism, and nothing
comes out but what was put into it. A moment’s departure from the tradition and
the past, and art ,poetry, wit, invention discovery everything come to the fore
in a continuous flow of spontaneity and creativity”. The trouble is, that to innovate you need to
traverse on completely un charted territories involving great risks to
everything including your life some time. Real inventions and innovations are
an outcome of daring and boldness in thinking which is very rare.
2.3 As Garry
Hamel aptly puts it in his book, “The Future of Management”, “when it comes to
managing innovations, the more unconventional the underlying principle the
longer it will take for competitors to respond”. He states three principles for
management of innovations to gain competitive advantage—
a) Innovation is based on a novel management
principle that challenges some long standing orthodoxy.
b) Innovation is systematic, encompassing a
range of processes and methods and
c) Innovation is part of ongoing programs of
‘rapid fire inventions’ where progress compounds over time.
2.4 Innovations
thus are products of calculated risks, daring in thinking something new, and a
complete departure from the past. As will be amply clear in the discussion on
creativity, our brain is conditioned to think in set patterns which are formed
over years in our neural networks. Real challenge of an inventive and creative
mind is to transcend these and create an altogether new way or pathway in mind.
3.0 What is
Creativity?
3.1 Rollo May,
in “The Courage to Create”, defines creativity as “the process of bringing something
new into being… creativity requires passion and commitment. Out of the creative
act is born symbols and myths. It brings to awareness what was previously
hidden and point to new life. The experience is one of heightened consciousness
–ecstasy.” Edward De Bono, who has authored a no. of books on Creativity, calls
it an outcome of ‘lateral thinking’ a technique developed by him to enhance
human creative abilities. Robert Galvino, CEO of Motorola says, “Creativity I
fear is a void in many of our organizations, we simply do not know how much
more creative we all can be.”
3.2 One of the
earliest thinkers on serious creativity was Arthur Koestler who in “The Act of
Creation” described it as ‘Bi-sociative’ thinking. He calls bi-sociation as
release of ‘Tension’ or the ‘Aha!’ or ‘Eureka ’
feeling. Koestler gives three domains of creativity as Humor or ‘Haha!’
Discovery or ‘Aha!’, and finally Art or ‘Ah!’. He outlines the process by eight
I’s viz. Imagination, Insight, Innovation, Invention, Ingenuity, Intuition, Inspiration
and Illumination. It is not intended here to go into the full details of
creative thinking process and acts but only to outline the major conceptual
formats.
3.3 In business,
Creativity can be deemed to be generation of ideas within an organizational
context that is capable of understanding, amending and taking the ideas to a
further level of sophistication and adaptation. It is much more than just
having ‘Eureka ’
moment or a blinding insight. Ideas are cheap and plenty, to be effective they
have to be in context, transmissible, and viable in terms of tactics or
strategies…. Creativity as we see is a business skill, a vital competitive
variable in thousands of industries, advertising, fashion, entertainment,
bio-technology, software, publishing and many more.
3.4 Intuition-
is there something like it? Intuition
which is probably the most intangible quality of mind is quite well known to
every one and yet not taken much seriously. H.A.Simon, a U.S. Psychologist
says, “Intuition is a quality everyone has. It is as simple as recognizing your
friend or a relative in a crowd.” Easier said than done, since not all of us
can be intuitive at will. For those who are doubtful about its rationality,
Carl Jung has this to say, “The term (intuition) does not denote something
contrary to reason but something outside the province of reason.” In a foreword
to Jagdish Parikh’s book on Intuition, Warren Bennis has this to say, “If there
is one thing that successful leaders seem to posses, it is that capacity to
foresee future events, what I call the ‘Gretzky Factor’. This world-famous
hockey player once said that ‘what is important is not where the puck is, but
where it is going to be.’ Further, ‘If I can generalize from my 15 years of
observing leaders, I would say that the most successful ones are those who have
recognized that we are moving to a stage of idea-intensive production and away
from material intensive production. They realize that if a leader is going to
be successful it is going to be through intellectual capital. That is what
creates wealth; that it is people with ideas who are going to make the
difference.” Said somewhere in 1994, but what a visionary and insightful
statement as is evident from today’s market space full of only new ideas and
thus products. What it reiterates is the importance and recognition of the
intuition and its role in business success.
3.4 From the
above discussion we can safely deduct that no matter what business you are
managing, creativity, intuition and innovation are imperative soft qualities which
are essential for the success. Even Einstein said, “Imagination is more
important than knowledge.” A whole science of ‘Synectics’ i.e. making sense out
of non-sense has evolved and managers of future may have to be well versed in
it.
4.0 Innovation and
Creativity in Value-chain of Marketing
4.1 While
innovation and creativity are vital in all the areas of business, in marketing
probably they are the most important factors in the context of value-chain. In
the present day scenario of market driven economies and customer driven
businesses the whole paradigm of marketing in terms of value-chain needs to be
redefined. Even the function of marketing is no more so simple as to identify
and satisfy customer needs. No business today can survive by delivering
customer perceived value alone in the competitive markets. Many a serious
authors including Sheth and Sisodia have stated that the present day marketing
may be violating its own definition. W.F.Van Raaij et al have suggested a new view
definition of the future marketing as “the process of creating the experience
of surplus value for all parties involved.” The operative word here is
“experience of surplus value”, not just value but experience of “surplus
value.” As per them and also as per Sheth and others while contemporary
marketing is focused on the production of surplus value, it is no longer
experienced by the consumer. These authors have gone to the extent of suggesting
that marketing efforts of today are being aimed at wrong type of customer and
his behavior rather than the one actually existing in the market.
4.2 The claims
of this nature may be challenged yet, that there is very less creativity and
imagination in the process of creating and more important making the customer
experience the surplus value is quite evident. Real challenge hence is how to
make this process of value creation and also experience more creative and
innovative. Though the market may be flooded with a variety of goods and
products most belong to the same genre and to a narrow band of quality range.
4.3 An
integrated Innovation Value Chain—Authors M.T. Hansen and J.Birkshaw (HBR,June
2007 issue) have suggested an integrated model of generating ,developing and
disseminating new ideas as a part of a strategy aimed at making innovations
more effective. As per them, managers need to take an end to end view of their
innovative efforts, pinpoint their particular weaknesses, and tailor innovation
best practices as appropriate to address the deficiencies rather than copy
other companies’ best practices blindly. The model suggested by them of the
‘innovative value chain’ offers a comprehensive framework for doing this. It
breaks innovation down into three phases: idea generation, conversion and
diffusion and six critical activities viz. internal, cross-unit, external
sourcing, idea selection and development and spread of the idea. This model
helps the company to identify its own weaknesses in the chain and then select
the tools and approaches to implement. The overall strength of the innovation
chain being the weakest link of the chain, it is imperative to strengthen this
link.
5.0 Marketing of
Services and Social services
5.1 Concept of
Social Services--- For the purpose of this paper a slightly more innovative and
different approach as well as definition of what constitutes a social service
is followed as a context. A suggested definition is,
“Social Service
is any service which from the point of view of value creation has a lot to
contribute to the societal good and welfare in addition to the individual
benefits and satisfaction.” As an example let us consider healthcare segment,
in particular hospital services. Hospital services play an important role in
creating social well being and are key elements in the cumulative health
management of the society. Thus their role in creating surplus values and
experience of the same from the point of a patient is an individual as well as
social need thus adding to the responsibility of the hospitals to deliver this
surplus value. The present scenario in India leaves much to be desired and
there is hardly any serious effort by the hospital authorities to address this
issue. In terms of innovative and creative practices the situation is even grimmer.
Even in
developed countries opinions of customers about marketing in general is very
poor with 83% agreeing with statement that company sees them only as someone
with money to spend, 78% saying that almost all brands are same, and 70% having
no trust in advertisements,(ref. survey by UK based Marketing Forum,
Mitchell,2001, as quoted by Sheth and Sisodia,2003). If this is the condition
in developed countries one can imagine the less developed, developing countries
and the plight of the customers there. In case of services as hospitals,
railways, public transport etc. the customer is completely at the whims and
fancies of the service provider.
5.2 What is
necessary is, as suggested by Sheth and Sisodia, not incremental policy change
but a drastic paradigm shift from markets to customers and from transactions to
interactions. In their case for a customer centered marketing approach, they
propose a strategy based on the following:-
a) Focus on creating end-user value- in case of
a hospital it would mean the patient- and is outcome of high performance
standards and constant innovation. It is also outcome of-
-- Performance
value,
--Price value,
--Personalization
value
b) Use cross functional teams- in case of a
hospital it would mean induction of some managerial talent along with medical
and technical.
c) Implement
automation and integration—In health services it will require a cautious
approach.
d) Use fixed cost marketing--
e) View marketing as supply management
f) Create P&L accountability for marketing
g) Create a subscription model of marketing
h) Bring marketing and business development
together
It is not
possible to elaborate each of the above points but the one of end user value
and its experience is of paramount importance in all services especially social
services.
5.3 Creativity
and innovation in services—a lot needs to be done in this respect where the
mind set is completely service provider’s prerogative and absolutely no effort
is visible to enhance the end-user value. There is a no. of new services
emerging which need redefinition and redesign from customer centric strategies.
Here are examples of some new services which can be termed as social services—
a) A great many ‘spiritual’ and ‘religious’
services not falling under any specific traditional categories. Some time ago
the present author’s paper titled, ‘Managing of Spiritual Services Marketing’
was not accepted by one of the leading business institutions since it did not
fall under any old categories of services. And yet everyday at least five media
channels on the T.V. belt out various types of programs under various titles as
‘Yoga’, ‘health’, bhakti etc. It is time to recognize this altogether new segment
and apply scientific managerial concepts including those of marketing to these.
b) Health and Spiritual tourism--- Again a new
emerging sector of social services which is lacking a value orientation and
innovation.
c) Health care segment—Based mainly on
traditional Ayurvedic treatments is a flourishing business in many
metropolises.
d) Education and allied services—though doing
crores worth of financial transactions is completely lacking in innovation and
creativity in terms of end user values.
e) Low cost air travel and budget hotels and
tours—a sunrise industry needing valuable inputs in terms of customer
orientation.
f) Many other services that are flourishing in
all major cities but lack any innovative problem solving inputs.
5.4 Future of
social services marketing—Advance of technology will bring about drastic
lifestyle changes and subsequently altogether new segments of services hitherto
non-existent. An integrated approach based on innovative and creative solutions
and concepts will go a long way in making these really “customer focused” with
“interaction” as the main strategy rather than the present “transaction” one.
5.5 Concept of
Social services—The present concept of social services as those which are
essentially charity oriented and thus NGO governed, needs to be replaced by a
concept similar to what Kotler et al called ‘Social Marketing’ in which the
interest of the society are at enhanced stake such as mentioned above. A model
than can be developed where empirical concepts in marketing and the latest
philosophies in marketing are used with the end user value in mind.
6.0 Innovative
Marketing of Social Services
6.1 Change in
mindset—As mentioned by Michael Thomas (Thomas,2003) all professional marketers
of today suffer from what he calls ‘epistemopathology’ , that is diseased, sick
and bad knowledge which is mechanistically applied to global market systems. N.Ascherson
as quoted by him called it ‘the sightless psychopath of market forces’,
Lindbloom(1990) called it ‘impairment’ and Senge(1994) refers to it as
‘organizational learning disability’. In plain simple words, no matter what the
companies may say about their customer focus and other big worded philosophies,
what drives them is a spirit of pure
greed in terms of wealth for the few and society be damned! Thomas has given a
clarion call to make the profession of marketing a ‘social trustee, civic
profession’ rather than what it is today sick, diseased, mechanical market
driven professionalism. This I feel defines what I want to call as ‘social
services marketing’ practices. This mindset change in itself will be a great
innovative input to present day marketing practices.
6.2 Social
responsibility as the touchstone of all marketing and business activity-- It
would be worth while to revisit our great Mahatma Gandhi who is all but
forgotten in today’s blind rush of the stock market and filthy rich culture of
the few, and remind ourselves of the few things that will surely destroy us, as
given below-
--Politics
without principles,
--Pleasure without
conscience,
--Wealth without work,
--Knowledge without character,
--Business without
morality,
--Science without humanity,
--Worship without
sacrifice.
What is important is to
believe that ‘morality’ is not an option but a ‘must’ for business
to survive and the same
holds true for marketing. No factor is bigger than the one of
social responsibility if we
have to destroy the sightless psychopath of market driven
forces.
6.3
Some conceptual tips for making marketing more innovative and creative are as
below,-
-- Dare to think different and be ready for change but change does not
mean letting go of our moral
principles.
-- Change must begin from within that is in the mind and mindset. No
outward change can ever be successful strategy.
-- Creativity occurs by destroying the past first and builds on it, but
do not destroy the foundation.
-- Servitude is the best aptitude for any work and management including
marketing. Those who serve the best survive others get destroyed.
--
Social and civic responsibility are two pillars on which all marketing
practices must be built.
6.4 “I
shall be telling this with a sigh somewhere ages and ages hence; Two roads
diverged in a wood, and I took the one less traveled by, and that has made all
the difference”, this statement of Robert Frost best sums the attitude
necessary for those who want to innovate. When you take the road less traveled
there is danger of getting lost too but than there is also the possibility of
reaching the rainbow at the end which lies the pot of gold as they say. In
service industry mediocrity and ordinariness do not pay if you want to
differentiate and get advantage out of it. “Within management research,
there is no project equivalent in scope and
ambition
to reducing carbon emissions, curing AIDS, imbuing machines with intelligence,
developing hydrogen-powered
vehicles, or commercializing space travel. Where is management’s Human Genome
Project? Where is its $100 laptop? Where is its manned mission to Mars?
--------------- So, give it
some thought. As managers, and management scholars, what’s our moon shot for
the 21st century?” this is the question asked by Gary Hamel in his
book “the future of management”. What fuels long-term business success? Not operational
excellence, technology breakthroughs, or new business models, but management
innovation--new ways of mobilizing talent, allocating resources, and formulating
strategies. Through history, management innovation has enabled companies to
cross new performance thresholds and build enduring advantages. In "The
Future of Management," Gary Hamel argues that organizations need
management innovation now more than ever. Why? The management paradigm of the
last century--centered on control and efficiency--no longer suffices in a world
where adaptability and creativity drive business success. To thrive in the
future, companies must reinvent management. Hamel explains how to turn your
company into a serial management innovator, revealing: the make-or-break
challenges that will determine competitive success in an age of relentless,
head-snapping change; the toxic effects of traditional management beliefs; the
unconventional management practices generating breakthrough
results in "modern management pioneers;" the radical principles that
will need to become part of every company's "management DNA;" and the
steps your company can
take now to build your "management advantage."
This is the final truth about marketing and also for services marketing. “Innovate or
perish” is the new age mantra.
7.0 Conclusion
7.1 In conclusion it can be said
that innovation and creativity are two sides of the same coin and companies of
tomorrow do not have any option in regards to these two skills if one may call them
so. Future organizations whether business or any other type, will be too
complex and the environments they operate in, even more complex and fast
changing. In such fluid and volatile situation only way to survive would be to
constantly innovate and create ideas faster than the changes occurring in the
environments. It would not be out of context here to quote the parable of the “quick
and the dead” as the appropriate description of the next generation marketing
ventures as well as the business ones.
------------------------------------------------------------------------------------------------
References
Books-
1.
Apte Govind,(2004), ‘Services Marketing’, New Delhi , Oxford
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2.
Bono Edward De,(1992), ‘Serious Creativity’, New
Delhi , Harper Collins Publishers
3.
Doyle Peter & Bridgewater
Susan, (1998), ‘Innovation in Marketing’, New
Delhi , Butterworth Heinemann.
4.
Kitchen Philip J.Ed.,(2003)’The Future Of Marketing’, New York , Palgrave
Macmillan
-‘A Meeting of
Minds’, Ibid
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Koestler Arthur, (1964),’The Act of Creation’, London,
Penguin Books Ltd.
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Lubart T.I. & Sternberg R.J.,(1995), ‘Defying the
Crowd’, New York ,
Free Press
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11. Sheth
Jagdish & Sisodia Rajendra,(2003), ‘The Future of Marketing’, Ibid
Articles in Journals-
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Rakesh, ‘Intellectual Property and Innovation’, Vikalpa,Oct-Dec 2004,pp69
13. Hansen
M.T.& Birkinshaw J., ‘The Innovation Value Chain’, Harvard Business Review,
June 2007,pp.99
14. Nambisan
Satish & Sawhney M., ‘A Buyer’s Guide to Innovation Bazar’, Harvard
Business Review, June 2007,pp89
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