Often, brands and companies innovate
and they set themselves eccentric brand
growth and profit targets… all to be
achieved simultaneously. I get it... it’s
nice to be ambitious and we need to be
ambitious. Why aim for the sky when you
can be among stars right? Push yourself!
I get it. But is that the right attitude
for building lasting (not short-term)
innovative success? I don’t think so.
For established products and services
that are effectively serving a specific need,
it would makes sense to a degree, to set
ambitious targets. At that stage, you want
to be ubiquitous, meaningful, different
and relevant. You want more people to be
impacted by the great job your product
or service is doing and you want to get
something in return for helping them
solve this problem. Unfortunately, we
often see cases where we transfer this
“over-achieving” attitude to innovation,
and frankly I don’t think it works in terms
of building lasting innovative success.
To put this in context, allow me to
share an example of Honda and how
they succeeded in the US market. In
1959, after roaring success with their
motorbikes in Japan, Honda - led by their
founder, Sochiro Honda, embarked on a
bold journey to conquer the US market.
At the time, the US market did not have
a big motorcycle culture like Japan. For
the riders that existed in the US at the
time, they preferred bigger motorcycles
with huge engine capacities and Harley
Davidson owned a big chunk of this space.
Honda believed that American consumers
would appreciate their smaller, light and
easy to handle motorbikes that were
1,500cc. The CEO in charge of Honda
America at the time set out a target to sell
12,000 units (motorbikes) a month. By
the end of the first year, Honda sold only
1,752 units, netting a revenue of $500,000
and a loss of $54,000.
What was the problem? What
happened?
Well, Honda underestimated the driving
conditions in the US, which were vastly
different to that of Japan. To add to this,
the expertise to fix these motorbikes was
in Japan. So every single motorbike that
had issues or needed service, needed to be
shipped back to Japan and then back to
the US (at Honda’s cost), and this whole
process would usually take a month or so.
The inconvenience was too loud for
consumers to handle. Anybody who has
owned or currently owns a motorbike will
tell you that availability of quality service
is as good as availability of the motorbike
brand as well.
Honda, although they did not realise it at
the time, was impatient for growth and
impatient for profits, primarily driven/
blinded by the success it obtained in
Japan. But “luck” was on Honda’s side.
Just as things were bad and Honda were
considering exiting the US market, they
got a saving grace.
The story as it is told, is that the Honda
America CEO owned a Honda Supercab
- the smaller 50cc motorbike that Honda
was famous for in Japan. He often used to
ride it on weekends for errands and other
things. Unlike the bigger motorbike, this
one did not have issues adjusting to the
different weather conditions and it did not
need to be serviced out of Japan. Servicing
could be easily done within the US.
In one of his weekends riding around in
his Supercab, someone took a keen interest
to the bike and asked where they can get
one. Honda had these bikes in store but
they did not actively sell them. They opted
to sell the bigger fish because they felt that
is what had the highest promise of brand
growth and profits simultaneously. Soon
that persons friend(s) wanted a Supercab,
and so did their friends, friends, and their
friends, friends, friends, and so on.
When they realised the Supercab was
gaining popularity, Honda focussed all its
efforts on selling the Supercab and opted