Why Brands Are Crucial To Innovation

Why Brands Are Crucial To Innovation

Here’s a thought experiment. Imagine the engineers working in
the product development labs at Volkswagen A.G. develop three
innovations: a suspension for a smoother ride, a more fuel
efficient ignition system, and a better safety restraint system.
The strategic question for the company then is: which of its brands
will carry each innovation? It wouldn’t make sense to introduce
all of the innovations in all of its brands — not just because
that would be too costly, but because the meaning of the innovation
would differ depending on the brand that carries it.

So if you had to choose, you would probably suggest that the
better suspension naturally belongs in the Bentley and Audi brands
while the better fuel efficiency may be best introduced by the
Volkswagen, Seat, and Skoda brands. The optimal strategy for the
safety system may well be to do something unconventional: to
license the innovation to a competitor, in this case, Volvo, to get
that brand to first introduce it in its cars. Pioneered by Volvo,
the safety innovation would then gain traction and market

Features or innovations introduced by the wrong brand can fall
. An example from the news business provides a case in
point. Henry Farrell, a professor of political science
writing in the Washington Post
, describes how Wikileaks
grew frustrated that the general public wasn’t paying attention
to its highly newsworthy stories. Eventually the organization
realized that, in order for its revelations to have any impact, it
needed brands such as the New York Times and The
to make the news “impossible to ignore.”

every product and feature innovation is a potential story
impact on the marketplace is a function of the brand that carries
it. Innovation is not just about R&D efforts or new product and
feature development. Without brands that consumers trust, the story
of any innovation is incomplete. In other words, brands are just as
critical to innovation success as are new products. Trustworthy
brands do three things:

1. They reduce the customers’ risk of trying new products
and features.
 American consumers are willing to try a
finger-print sensor on the iPhone from Apple, but might not be so
eager to try one from Huawei.

2. They position the innovation and give it meaning.
Suspension systems developed by Volkswagen engineers make more
sense in an Audi, a brand known for its comfort, than in a Skoda,
an economy brand. Similarly, a quick lace-up system on Rockports
would be interpreted as adding to convenience and comfort, while
the same system would connote performance and speed to action on a
pair of Nike shoes.

3. And finally, brands normalize the new product or feature;
they give it credibility.
MP3 players were invented as the
MPMAN by Saehan
Information Systems of Korea
, but it wasn’t until the iPod
was launched that the market truly took off.

Downstream, marketplace assets such as brands aren’t just
nice-to-have complements to upstream assets such as R&D labs.
They are
a necessary condition for innovation success
. Brands facilitate
consumer acceptance and pave the market path for innovations.

Contributed to Branding Strategy Insider by: Niraj Dawar, Author
of TILT: Shifting Your Strategy
From Products To Customers

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Source: FS – HT – Brands
Why Brands Are Crucial To Innovation