Commentary by Jack Hipple

Bad News Is Good!

Using Negatives as Positives for Innovation Strategy ---

Frequently, we get caught up in “reacting” to what we believe is bad news or negative trends. We spend huge sums of money and divert resources from other activities to head off what we consider to be a disaster. When this has to do with business ethics, a steep economic downturn, a surprise piece of legislation, or a surprise merger or acquisition, then these efforts may be appropriate. Sometimes, however, we get caught up in the bad news and don’t use an interesting technique of thinking how we could use a negative as a positive, both in the short term and the long term. Let’s look at a few examples.

Remember the Tylenol® scare of many years ago when contaminated over the counter (OTC) bottles of McNeil Pharmaceutical’s brand of acetaminophen threatened the survival of the business? Millions of dollars was spent on a voluntary recall. There are many similar situations where the “brand” simply disappeared from sight. The makers of Tylenol® decided to stand by their brand and used this incident to validate their corporate responsibility and to enhance their “uniqueness” in a generic brand market. Acetaminophen can be purchased at less than half the price of Tylenol® in most drug stores, but the ads on TV tell you very clearly that they don’t make “store brand” pain relievers.

This decision to use bad news as a basis for strengthening a product brand was not made lightly, I am sure, but it certainly did take a different view of the situation than is taken by most other manufacturers of defective products.When we use various quality tools, we use product and service defects to tell us what customers don’t like and we use this information to improve our products and services. Consumer product and grocery suppliers use purchases of competitors’ products, as determined by checkout bar codes, to automatically generate coupons on the back of sales receipts to change your buying habits.How can we use this kind of thinking in our innovation strategy? What big KNOWN negative things are we aware of that are currently causing migraine headaches and “whoa is me” discussions, which if thought about in this alternative way, could present major opportunities?

Let’s take global warning. I don’t want to start a political or religious debate about this subject, but there is broad agreement that the earth’s climate will be warning steadily through the next 50 years. Politicians and scientists are discussing techniques and funding programs that might alleviate changes beyond then. What if we think about global warming as a business opportunity instead of a paralyzing threat? What trends would we expect? There are projections of which parts of the US and the world will become very much hotter and drier, specifically the Great Plains and southern Canada. Who will supply the increased water demands of these regions? What kind of opportunities exist in improved filtration and water purification/reuse systems that will allow sustainable living? What genetically engineered versions of wheat and corn can survive on one third as much water? How can Canadian farmers take advantage of a warmer climate that they always wished they had for a longer growing season? What kind of technologies could be developed for carbon dioxide sequestration (we see ads about this already).

The world is highly dependent upon precious rare earth elements for many high technology devices. Many of these sources are limited and in unstable regions of the world—an analogy to oil supply. If you are a user of hafnium, for example, instead of hiring 4 more purchasing agents who can speak more languages (maybe a good short term thing), begin to ask yourself how could the function of the rare metal be performed in an alternate way? How could you do without? That would certainly provide a powerful competitive advantage.Inventory your biggest “Excedrin” headaches and approach them as innovation opportunities.

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