I was wrong when I was innovating

How to communicate something different effectively

We all agree—or at least, most of us do: when a company sells something identical to what the competition offers, that product or service becomes a commodity, something common or banal. In such cases, its price depends solely on supply and demand.

This scenario causes a lot of stress for gross margin (if there is one at all), and worse still, the company is no longer in control of its destiny, unless it's large enough to be an oligopoly or monopoly.

Product or service differentiation is something learned in the early stages of marketing. Everyone knows that if what you're selling is different—positively different—it's easier to sell and may even allow you to charge a higher price.

The level of differentiation

What makes something stand out, what gives it that "extra something" compared to what the competition offers, can be viewed as a scale of improvement over what already exists:

1. A bit of a makeover: The same product, but with a more attractive touch. For example, prettier packaging.
2. Functionally improved: Something that makes it easier to use or purchase, or reduces friction for customers. For instance, a refillable kitchen cleaner spray that cuts down on plastic waste—a minor but meaningful improvement. Technically, this is an incremental improvement: "more of the good" or "less of the annoying."
3. Transformed or innovative: This can go as far as disruptive innovation. For example, a supermarket designed specifically for young couples with small children who find shopping overwhelming.

The higher the level of differentiation, the stronger the appeal to key customers, which translates into greater loyalty (for the finance department, this means sustained cash flow) and the ability to charge more for the product (i.e., higher gross margins).

A case where I was wrong

In 2003, in Lleida, a mid-sized Spanish city, the leader in grocery shopping was Supsa Supermercats Pujol , headed by its founder, Rafel Pujol, a fan of innovation —even disruptive innovation. I was fortunate to gain his trust, first as a consultant and later as the part-time commercial and marketing director.

I was also lucky with my team. They weren’t so much excited about innovating how we should sell things, but more about improving customers' quality of life when shopping.

At that time, many young couples were both working and had several small children at home. For them, grocery shopping was just one more task in an already complicated life.

We decided to create a new retail concept specifically for them. It wasn't a specialty store but rather a clearly segmented one.

We decided to do R&D in retail, and for that, the laboratory was a "pilot store." We called it Sunka, a place to relax and take a breather. Customers entered through a poetry tunnel.

We introduced a "Butler" service, a place to drop off items for repair, clothes for cleaning, and to solve small household problems. There was also a daycare where kids could be watched while parents shopped. There were many other ideas, products, and services aimed at this "no-time-for-anything" segment.

An innovative store had to be expressed in an innovative way. I asked two excellent designers, Pep Valls and Joan Carles Colàs , to create a little book which contains life reflections that resonate with people in this segment to hand-deliver to neighbors.

They also designed a storefront aligned with the spirit of the interior. It was a contemporary art piece:

We selected staff with great empathy to form a true "A-team." Everyone felt intense emotion and adrenaline on the key moment: the first day of opening to the public.

However, the data from the first five weeks couldn’t have been worse.

Sunka's sales per square meter, compared to our chain's standard stores with the same prices, were 25% lower.

My management colleagues told me, "At least put up a sign that says 'Supermarket!'"

I knew three things that reassured me a little: a store serving frequent, local shopping would be seen many times if it was well-located, the products and services we prepared were well-suited for these families, and the staff was truly a "dream team." I told the CEO we just needed to wait for word-of-mouth in the neighborhood. He smiled and agreed.

From the fifth week onward, sales per square meter steadily grew. The Sunka store eventually stabilized at 30% more than other stores in the chain.

Additionally, the loyalty of its key customers reached 85.48% of their family food spending (based on customer card data). Rafel Pujol, the CEO, and all the store staff were thrilled with the quantitative and media results.

What went wrong?

What I didn’t know at the time was how the brain processes external stimuli. For example, a storefront that doesn’t look like a supermarket.

Assuming an innovative product works well, the challenge lies in how to make it understood and brain-pleasing. Launching a highly differentiated and innovative product can bring great commercial and economic joy, but first, it must pass through a filter.

The thalamus, the brain’s gatekeeper, has to open the door to attention. And that's not easy because most visual, auditory, or other stimuli we receive don’t even get consciously processed by the brain.

For an innovative product to pass this perceptual barrier, it must meet two conditions:

1. It must be surprising: Something bold that grabs attention in a fraction of a second. If it causes a "flatline" reaction—like too much descriptive text—there's little hope the thalamus will deem it worthy of attention. Moreover, surprise can activate the hippocampus, contributing to making the experience unforgettable. At Sunka, the storefront was bold, especially when you looked inside and saw the poetry tunnel and the Butler service.
2. It must be quickly understandable: It's not enough to be surprising. People need to understand what it’s about and how it benefits them. I overlooked this in Sunka. If the stimulus doesn’t fit with what's already stored in deep memory, it can trigger fear of the unknown.

This happens because the thalamus, when surprised by an external stimulus, sends the signal to the brain areas responsible for deep memory. If the new stimulus doesn’t align with what's already stored, it evokes fear of the unfamiliar or what's outside our cultural norms.

UNESCO envisions culture as "the way we live together." Christine Nagel, creative director of Hermès Perfumes, says "there is no creation without memory." Similarly, Pep Valls speaks about the importance of considering "form memory" when designing something innovative.

Deep memory doesn’t just store knowledge but also experiences lived with intensity. It also holds personal, familial, and social attitudes and values. A good example is the outrage many Spaniards feel towards the chorizo version of paella that’s popular in the UK.

The brain doesn’t quickly embrace the radically new, even though it might later find it interesting and useful. It’s more geared towards avoiding potential harm than seeking pleasure.

In the 1970s, psychologist Daniel E. Berlyne noted that when a stimulus is too familiar, it’s boring, and when something new is excessively complex, it causes discomfort. Therefore, the most pleasant experience is when a message—or a store’s façade—is either something new but simple or something familiar with a bit of complexity.

This is a proper example. This version of the world map is surprising to Europeans. Partly new, partly familiar.

Fear-reduction ‘airbags’

Fortunately, there are four ‘airbags’ that help reduce the feeling of risk when faced with an innovative proposal.

1. Company-provided stimuli: Such as return guarantees or trial periods.
2. Social stimuli: Opinions from other customers, bestseller lists, or word-of-mouth from friends and neighbors. These are much more effective because we have a strong sense of belonging to the "we." In Sunka’s case, it was word-of-mouth that ultimately saved us.
3. Direct human contact: The stimuli generated by personal interactions, like smiles and conversations with store employees, activate the brain more than a 3D ad. Sunka had strong allies in this regard.
4. Context management: Presenting something innovative in an environment that makes it more acceptable or less risky. A daring dress is perceived differently on a fashion runway than in a bakery line.

Some Practical Considerations

Here’s a checklist:

1. Are you looking to offer a differentiated or innovative product or service? If you think pioneers got eaten by cannibals, it’s probably best not to bother.
2. Does the innovative product actually improve something concrete in customers' lives? If not, none of the following will help, no matter how well you explain it.
3. Is the innovative product explained with technical jargon? This likely won’t pass the thalamus filter. And if it does, it will bore the cortex.
4. Does the message seek to make recipients feel surprised at how interesting the product is? You’re on the right track! The thalamus will activate and pay attention.
5. Is there a semantic or semiotic connection to something already in the deep memory of the recipients? Great! The brain will feel like you’re part of its environment, its “tribe.”
6. Did you answer "yes" to questions 2, 4, and 5? Congratulations! You’re on the way to making a good business.

References

1. Sunka now has a recent version, created with the participation of teams of coworkers working on innovative modules.
2. Berlyne, D. E. (1971). Aesthetics and Psychobiology. Appleton-Century-Crofts. This book outlines his theories on arousal, aesthetic preference, and the impact of complexity on pleasure.

This article is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International cc Lluis Martinez-Ribes, October 2024, BCN