Unconventional Innovation: The Symbiotic Link Between Marketing and Innovation Strategy

Written by: Gerard Escaler

In market environments characterized by constant change, innovation remains a primary catalyst for growth and progress. Companies continue to face a wide variety of challenges on their path to growth, including increasing pressure to remain competitive to deliver value to shareholders whilst also remaining relevant to their customer base. To deliver value and enhance differentiation, business and marketing leaders continually seek out novel ways to meet the evolving needs of their target markets.

Traditionally, Marketing and Innovation have been viewed as separate functions within an organization. However, this view is evolving, with forward-thinking companies now discovering an additional source of competitive advantage in the linkage between these two areas. This symbiotic relationship is evidenced by real-world examples of those that have harnessed this constructive collaboration to achieve remarkable success.

A Traditional Separation Between Marketing and Innovation

In a traditional business paradigm, Marketing and Innovation are compartmentalized into separate functions. For example, a multidisciplinary innovation team may be mandated to focus on research and development of products, services, or processes, whilst the marketing team may be tasked with promoting these innovations or creating related campaigns to drive internal and external awareness. This division of labor, while efficient in many respects, can hinder the full realization of the potential synergies between both functions.

A Counterintuitive Perspective

To understand the connection between marketing and innovation, we need to adopt a different lens. This necessarily involves looking beyond the segregation of roles and instead focusing on potential opportunities for innovation where the Marketing function can contribute. Through various consulting projects, I have found that opportunities for innovation reside in the overlap between Marketing and other functions. For example, Marketing and IT can collaborate on dashboard analytics for market intelligence or digital transformation projects to optimize customer experience; Marketing and HR can collaborate on employer branding and professional development; Marketing and Finance can collaborate on pricing strategy and management information systems; and Marketing and Risk can collaborate on customer due diligence and know your client initiatives.

Below is a representative sample of typical areas where the Marketing and Innovation functions not only overlap, but where they can also mutually reinforce their overall impact to the wider organization:

Marketing Technology and Artificial Intelligence

In recent months, businesses have grown increasingly reliant on marketing technology and artificial intelligence (AI) to contribute to innovation programs, despite some concerns about their implementation. In particular, AI offers businesses unprecedented tools to enhance their ability to innovate.

Firstly, marketing technology and AI enable businesses to gain deep insights into customer behaviors and preferences. Through advanced analytics, machine learning algorithms, and predictive modeling, companies can pinpoint emerging trends and unmet customer needs with remarkable precision. This data-driven approach provides valuable inputs for innovation, helping businesses develop products and services that are more likely to resonate with their target audiences, thus reducing the risk associated with innovation efforts. Similarly, effective marketing research and customer feedback mechanisms also provide invaluable insights to drive product and service development. Companies that actively seek and incorporate customer feedback can finesse their innovations to meet specific needs, ensuring higher market acceptance and adoption.

Amazon’s “customer obsession” philosophy lies at the core of its innovation strategy. They not only respond to customer feedback but actively solicit it, encouraging customers to share their ideas for improvements. This two-way dialog between customers and Amazon fuels continuous innovation, leading to breakthrough features such as Amazon Prime and Kindle.

Secondly, marketing technology and AI enhance the efficiency and effectiveness of marketing campaigns, allowing businesses to reach wider and more diverse audiences. The ability to automate repetitive tasks, personalize content, and optimize advertising strategies is a form of innovation in its own right. It enables companies to allocate more time and resources to the ideation and execution of groundbreaking innovations, rather than defaulting to routine marketing processes. This liberation from the mundane fosters an environment where creative thinking flourishes, ultimately leading to more innovative solutions to address both existing and emerging market challenges.

In this digital age, data and analytics have evolved into pillars for innovation, with many companies leveraging big data to identify trends, understand customer behavior, and uncover unmet needs. This begins with marketing initiatives, such as analyzing customer feedback, monitoring social media conversations, and tracking website analytics. Netflix, for example, uses data analytics to inform their content creation decisions, leading to innovation in its streaming model. By analyzing viewers’ preferences and watching habits, they can produce highly tailored content that resonates with their audience, consequently boosting customer satisfaction and retention.

Customer-Centric Innovation

Conventional wisdom suggests that innovation starts with a unique idea, usually generated internally, that has the potential to drive the business in a new direction. However, a growing number of companies are turning this notion on its head by focusing on customer-centric innovation, whereby they actively involve customers in the innovation process, soliciting their feedback and ideas. These, in turn, are factored into internal decision-making and then potentially integrated into strategy.

One example of this approach involves LEGO, the well-known, Danish company, renowned for its innovative toy constructs. The company created an online platform, LEGO Ideas , where customers can submit their own designs. If a particular design receives sufficient support, LEGO reviews it for possible production. This process has not only led to unique product innovations, but also continues to foster customer engagement and loyalty for LEGO.

Collaborative Ecosystems

Innovation need not be purely an internal endeavor. In fact, it can thrive within external or collaborative ecosystems as well. Over the past two decades, companies have partnered with external stakeholders, such as startups, research institutions, and customers, to harness collective intelligence and expertise. These partnerships often emerge from marketing and outreach programs.

Procter & Gamble’s Connect + Develop program is a prime example of this approach. The company actively seeks external innovation partners to co-create products and solutions. By collaborating with a diverse network of collaborators outside of their company, they can tap into a broader pool of ideas and resources, accelerating their innovation efforts.

Feedback Loops and Iterative Innovation

Marketing initiatives can also provide ongoing feedback loops for product and service refinement. Through A/B testing, social media engagement, and customer reviews, companies retain the ability to gather real-time data on how their innovations are performing and adapt accordingly. This iterative process of innovation can result in continuous improvements that better meet customer needs and market demands.

Airbnb’s early success could be attributed to its iterative approach to innovation driven by its marketing strategy. The company rigorously assessed and refined its platform based on user feedback, and its marketing tactics built upon those improvements. Over time, they created a marketplace that more closely matched travelers with unique accommodations based on their specific needs, a concept that revolutionized the travel industry.

Branding and Emotional Connection

Powerful branding can transform an innovation initiative into an emotional experience for customers. The brand becomes a promise of quality and innovation, instilling trust and loyalty among consumers. This emotional connection not only drives repeat purchases but can also influence customer advocacy.

One of the most iconic examples is Apple, whose marketing and branding strategies have transformed its products into objects of desire. The brand’s association with innovation, sleek design, and cutting-edge technology extends beyond its product portfolio. Apple’s marketing reinforces the perception that owning an Apple product equates to being part of an exclusive club of innovators.

Case Studies in Unconventional Innovation

Innovation can be strategic (as a result of planned decision-making), incremental (evolving organically from pragmatic experience), or serendipitous (emerging opportunistically). Throughout my career, the organizations I have worked with have benefitted from one or more of these approaches. Irrespective of how a company arrives at the decision to implement an innovation pilot, the Marketing function could be a good starting point for idea generation.

Following are three companies who have mastered the link between marketing and innovation and capitalized upon it to achieve success:

InnoCentive — Open Innovation Ecosystem

InnoCentive is an open innovation company that enables organizations to crowdsource solutions to their unsolved problems (framed as “Challenges”). Through its network of over 380,000 problem solvers, who are external to their organization, the company arranges competitions to provide ideas and solutions to pressing business, social, policy, scientific, and technical challenges and provides sizable awards to contest winners. In 2020, according to its own website, Wazoku Crowd completed its acquisition of InnoCentive, expanding its platform with “a leading crowdsourcing and open talent community” to enhance idea management and innovation. InnoCentive’s approach to open innovation has been taught as a case study at various universities, including Harvard Business School, Columbia University, and Massachusetts Institute of Technology, among others. It demonstrates the value of developing a collaborative ecosystem and seeking solutions outside of an organization’s internal talent pool.

Starbucks — Product Innovation through Customer Feedback

Starbucks, the ubiquitous global coffee giant, exemplifies the integration of marketing and innovation through its “My Starbucks Idea” platform. This initiative invites customers to submit their ideas for new products, services, or store experiences. Starbucks not only listens to its customers but also implements many of their suggestions. This approach has led to innovations such as the introduction of new beverages, alternative milk options, and the creation of a mobile ordering and payment system. The “My Starbucks Idea” platform has not only generated customer engagement but has also served as fertile ground for innovation that aligns with customer preferences.

IKEA — Collaborative Ecosystem for Sustainable Innovation

IKEA, the Swedish furniture company, has adopted a forward-thinking approach to innovation by collaborating with external partners and organizations. One notable example is their partnership with social enterprises and startups to drive sustainable innovation. Through initiatives like the “Better Shelter ” project, IKEA has leveraged the Marketing function to promote socially responsible and sustainable solutions. By engaging in projects that address pressing global issues, IKEA has not only driven positive change but also enhanced its brand image. This sustainable innovation aligns with the values of their environmentally-conscious customer base, reinforcing their position as a responsible and innovative brand.

Key Challenges and Considerations

While the linkage between marketing and innovation is undeniably potent, it is not without its challenges. Below are a few related aspects for further consideration:

• Over-reliance on Customer Feedback: While involving customers in the innovation process is valuable, companies should strike a balance. Over-reliance on customer feedback can lead to incremental changes and prevent groundbreaking innovation. In addition, there are innovations that customers are not well-suited to predicting — consider the first Sony Walkman or the first portable CD player — so this should be only one tool in a repertoire of many for innovation.
• Data Privacy and Ethical Concerns: The collection and use of customer data for innovation should be conducted ethically and transparently. Mishandling data can lead to privacy breaches and erode trust.
• Maintaining Brand Authenticity: Companies should be cautious not to compromise their brand’s authenticity or dilute their innovative image when collaborating with external partners or pursuing unconventional marketing strategies.
• Risks and Experimentation: Unconventional approaches to innovation often involve risk-taking and experimentation. Companies should be prepared for the possibility of failure and have mechanisms in place to learn from such experiences.

The symbiotic relationship between marketing and innovation is more critical than ever in the current business environment. By adopting atypical approaches to developing innovation strategy, companies can harness the power of marketing to drive and amplify their innovation tactics. Marketing not only creates awareness and demand for innovations but also provides a valuable feedback loop for refinement and ongoing improvement. As we move forward, it is essential for businesses to embrace the interconnectedness of marketing and innovation, breaking down the traditional silos that separate them. By doing so, companies can position themselves at the forefront of their industries, responding nimbly to change, and delivering greater value to their customers. Unconventional innovation is not just a path to success, it is now the new normal.

About the Author:

Gerard Escaler is an Advisor for Loyal VC and the Chief Marketing Officer of Lyrium Venture Partners Limited. He also serves as the Co-Director of the Founder Institute’s Philippines chapter, the world’s largest pre-seed technology accelerator. Gerard holds a Chartered Marketer certification and received his Executive MBA from Kellogg School of Management at Northwestern University. He also holds a Postgraduate Diploma in Digital Business from Columbia Business School and MIT Sloan, where he was a Global Ivy Scholar.