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Innovate or Die

Marketing guru Phil Kotler gets creative.

February 1, 2013

Interview by Susan Burns

Philip kotler zlp4m4
Phil Kotler, S.C. Johnson & Son Distinguished Professor of International Marketing at Northwestern University’s Kellogg School of Management, is a winter resident of Sarasota. A pioneer in the field of global marketing who consults for major international corporations, he is the author of dozens of textbooks; one of them, Marketing Management, is still the most-used marketing textbook in the world. Kotler will speak about his latest book, Winning At Innovation, at New College of Florida on Feb. 20.

 

How has innovation changed in the last 20 years?

In the past, many of our great innovations came from major research centers such as Bell Labs, Xerox, Intel, DuPont, IBM Research Lab and others. Research centers are expensive to operate and, at times, hit a dry spell.  Today, companies such as General Electric have moved to a different model.  GE’s model, called Open Innovation, augments its own research staff by connecting with approximately 75,000 other researchers around the world and works with others to get their ideas and participation.

 

You’ve co-authored Winning at Innovation, a handbook for businesses about how to make sure their companies are innovating.  What do companies need?

I have always been impressed with economist Joseph Schumpeter’s dictum that a dynamic economy needs innovation. Innovation is the drive to make products, services, business processes and experiences better.

There are many good books on the innovation process, but my co-author, Fernando Trias de Bes, and I took a different tack, that if a company is to be successful at innovation, it must have people with the skills to play six different roles.

A company needs an Activator who keeps coming up with ideas, a Browser who can deeply research the potential of any specific idea, a Creative who can turn the idea into a testable concept, a Developer who can turn the concept into a marketable product, an Executor who can launch the new product successfully, and a Finance person who can manage the cash flow.  We call this the A-F model of innovation, and have used it at Nestle and other companies to help them develop new businesses.  Our book says a lot about what it takes for a company to develop an innovative culture and tools.

 

What would most company owners be surprised to learn about being creative?

Creativity is a mindset, not a specific act.  The Whirlpool Company chose 400 of its people to be trained in creativity methods. It paid off. Whirlpool has since created a number of new businesses, including Gladiators, which is in the business of designing garage interiors to make them function better for storage and workshop.

 

What’s the biggest mistake companies make in their quest to be innovative?

Getting so excited about an innovative idea that the innovator goes ahead to build and launch it without having collected any evidence of the market’s interest and willingness to pay the asking price. Poor skill in marketing can be a major handicap, where the innovator has misidentified the best market segment, overprices the product or insufficiently invests in traditional and online media to get the message out.

 

Is there a way for companies to evaluate their innovation in advance?

A company has to undertake a financial analysis to estimate the expected rate of return on the proposed innovation.  This involves estimating the revenue coming from the estimated number of buyers minus the costs incurred in innovating and marketing.  For-profit companies usually should not proceed unless the rate of return is more than 20 percent, given all the uncertainties in estimating the required numbers.

 

What’s the best way to incentivize employees to be innovative?

Management should make it clear that the company values innovative, out-of-the-box thinking.  Management should give bonuses to individuals and teams that create successful innovations, and there should be an annual ceremony to honor the innovators where they describe how their innovations came into being.

 

What role does marketing play in innovation?

Peter Drucker, the father of management, stated: “Business has two—and only two—basic functions: marketing and innovation.  Marketing and innovation produce results: all the rest are costs.” Marketing often is confused with messaging about the new product through buying advertising or hiring sales people.  A more important marketing skill is to identity the market segment that would have the highest interest in the product and learn how to efficiently contact them with both off and online media.  Marketers have to make major decisions on product, price, place, promotion and positioning to reach the intended target market.

 

What has been the most important innovation in your lifetime?

The Internet for delivering to us the opportunity to search for knowledge, to communicate with others on platforms such as Facebook, Twitter and LinkedIn, and to enjoy YouTube where others have the opportunity to express their creativity.

 

What are your favorite ad campaigns?

1. The Absolut Vodka campaign, because it took an essentially undifferentiated product, vodka, and made the brand famous by showing different ads incorporating the famous bottle somewhere in the ad, making it a collector’s item.

2. The Got Milk campaign, showing different people with milk on their upper lip, reminding us that we forget to drink milk, and

3. Wendy’s Where’s the Beef campaign, where the little woman keeps reminding us that Wendy’s delivers a larger hamburger by slighting the competition. These and other campaigns are shown in the auditorium of the Museum of Marketing that we built in Bali, Indonesia, which celebrates great marketers, products and commercials.

 

Save the Date

“Winning at Innovation,” Feb. 20, 2013, 8 a.m., Harry Sudakoff Conference Center, for a conversation with global marketing strategist Phil Kotler and a panel discussion with local innovators Rob Brady of ROBRADY, Catherine Strayhorn of Ivir, Inc. and Norm Worthington of Star2Star. Biz(941) is a sponsor. $35, includes continental breakfast. Visit donate.ncf.edu/events or call (941) 487-4888.

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