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Creating sustained growth is hard under the best of circumstances. From 1990 to 2000, just 7 percent of publicly traded companies in the US enjoyed eight or more years of double-digit growth in revenues and operating profits. As the growth crisis worsens in the coming decade, you can expect this percentage to shrink significantly - unless companies rethink their approach to growth.
Demand innovation
The good news is that we have recently begun to observe a new form of business design innovation - a new response to the challenge of growth that is being pioneered by a handful of farsighted companies. These companies are focused on creating new growth and new value by addressing the hassles and issues that surround the product rather than by improving the product itself. They have shifted their approach from product innovation to demand innovation.
Demand innovation expands the market's boundaries. It focuses on using one's product position as a starting point from which to do new things for customers that solve their biggest problems and improve their overall performance. Thus, companies skilled in demand innovation do more than simply take value and market share away from traditional businesses. They also create new value and new growth in revenues and profits, even in mature industries that appear to have reached a plateau.
Several of today's most innovative growth companies, including Cardinal Health, Johnson Controls, Air Liquide, GM OnStar, John Deere Landscapes, and Clarke American have become skilled a demand innovation. They compete in widely divergent industries, and the specific business strategies they practice vary greatly. But all have one thing in common: they have managed to create impressive new revenue and profit growth in industries or industry niches that most observers and business leaders consider inhospitable to growth.
The more we studied the approach to business practiced by Cardinal, Johnson, and the rest, the more convinced we became that it represented a genuinely new phenomenon. The new-growth innovators are great business model innovators as well as imaginative and insightful analysts of the business environment, skilled at recognizing opportunities where others do not and developing profitable ways to respond. Such new-growth businesses focus on growing new value by discovering new forms of demand.
A case studv in demand innovation; GM OnStar