There are a lot of articles on this site and some of them are rather heavy. At times it can be hard to see exactly how to even apply all this knowledge. Let’s dedicate some time to a couple of case studies to show how successful firms have innovated.
Saturn was created by GM as a subsidiary in 1985 and while the company failed in the Great Recession its initial founding and then success was because of the way it innovated.
The Saturn was to be an entry level brand that addressed the fact that people hate buying cars from car dealers. The principle was simple: Turn the sales process into one that is positive and make the service more service-like.
GM’s thought was that they could build a win-win situation instead of a win-lose one. They thought this would have a huge impact on the market.
They fixed the price of a Saturn so there was no haggling and nobody ever got a deal – or a bad deal. Saturn refused to hire anyone who had sold cars before, however a large portion of their labor force ended up being people who had purchased Saturns and were enthusiastic about their cars. This worked out massively in their benefit.
People who bought Saturns felt like they were joining some kind of club. Each summer owners were invited to a "reunion" at the manufacturing plant in Tennessee and when they purchased their car were asked if they wanted their picture up on the showroom board. Saturn viewed their customers as family and treated them as such – they’d even wash their cars when they brought them in for service.
This was backed up by homey advertising that was all about people and relationships and the brand identity soared.
On the business side of things Saturn was created so GM could better compete with the Japanese and Korean companies that produced high quality and low cost models consistently. The Saturn was not fancy and really was just average but it did meet this positioning.
The service was what was innovated and it worked incredibly well. Saturn did fantastic business for many years and multiple car companies have taken pieces from Saturn’s service offering and incorporated them into their businesses.
So why did the company fail in the end? GM hit financial difficulties and scaled back new car production. New models didn’t come fast enough which meant that car dealers often had nothing competitive to sell and in had to start selling used cars as in addition to new. Each passing year GM made the company less independent until it finally had none and its initial message and features were essentially removed.
Ultimately Saturn failed because GM scaled it back, ignoring the brand and what made it great. It’s a great example of listening to your market and then completely failing to.
Starbucks was originally inspired by a man named Alfred Peet in Seattle where premium coffee beans were sold. It didn’t start with this kind of coffeehouse plan though, originally the company sold whole beans.
Howard Schultz was hired as the marketing lead and on a trip to Italy became fascinated with the coffee culture of the country. His plan was to bring that kind of business to America but on a giant scale.
In America the Starbucks model was at first considered laughable by investors and venture capitalists but Schultz saw the opportunity and pounced on it. This is the key to innovation and the key to building sustainable businesses. He found a void and did something about it.
The original owners of Starbucks discarded the idea as bogus and Schultz left the company to start his idea up. It was massively successful and he was able to buy both Peet’s business and Starbucks, rebranding the whole thing into the Starbucks we know today.
When the company went public in 1992 it experienced stunning growth. Only five years later the company had grown tenfold. This is how the most successful businesses have done it: they’ve seen an opportunity and then acted on it. At the end of the day they shipped their product to the delight of their target market.
Despite resistance Schultz realized his vision. Yes he transformed coffee and how it’s sold in America but you’ll note that he had to push to make that very thing happen. Is there anything worth pushing for at your firm?