I recently came across an interesting article about Georgia Power’s prepay payment product. The article reminded me of the importance of a couple of variables on the success of innovation initiatives.
The first variable is the importance of timing on opportunities. I worked with a US-based utility in the mid-1990s on a prepaid electricity pilot, and while the pilot was successful from a technology perspective, concerns from regulators and local politicians that it could be used to discriminate against specific customer segments kept it from progressing beyond the pilot stage. Fast forward to today, and there is much more receptivity to prepaid services (i.e., prepaid cellular phones), and prepaid payment options have gained broader acceptance with electric cooperatives and municipalities. As many innovators have noted, timing is undoubtedly an essential variable in innovation success.
My experience in a medical diagnostic startup company earlier in my career triggered my familiarity with a second variable that is important when addressing innovation opportunities. In the article on Georgia Power’s use of the prepaid payment options, the CIO of Georgia Power wrote that the product is targeted to meet the needs of “customers who have issues paying their bill.” Given the high costs (i.e., customer calls, disconnection/reconnection of services, deposits, payment agreements, bad debt collections) associated with customers who have issues paying their utility bills, Georgia Power’s focus on this segment makes much sense. The question is, are there other customer segments that might benefit from the use of the prepaid service, and how would you identify them?
The medical diagnostic startup that I worked at was the first company to launch monoclonal antibody diagnostic tests for the Physician and Clinical markets. These tests were a significant improvement over the existing diagnostic tests, as they were much more accurate (very high sensitivity and specificity) and provided results much faster (in approximately one minute). The first diagnostic test we launched was for testing if a patient was pregnant and given its demonstrated advantages over the existing pregnancy tests at that time, we felt pretty confident that we would have a winner on our hands.
Our initial thoughts on which medical specialties we would target led us to OB-GYN’s, General Practitioners, and Family Practice physicians. We based this on the question, “what doctors do women go to find out if they were pregnant?”. When we launched the product, sales of the pregnancy test exceeded all of our estimates. A couple of medical specialties and specialty clinics that we hadn’t initially targeted were purchasing large volumes of the pregnancy test. These other specialties were Surgeons and Radiologists, and they were buying our product to ensure that their patients “were not pregnant.” Their use of the test was for patient safety and to address malpractice concerns. As every woman knows when they are going in for surgical or radiology procedures, the doctor asks if they are pregnant. Our product provided surgeons and radiologists with an accurate, quick, and inexpensive way to verify that their female patients were in fact, not pregnant. Had we framed our initial question to something like, “what physicians would want to know if their female patients are pregnant,” we would have had a different perspective. This approach might have led to additional questions and discussions on our marketing and sales strategy. In the end, we were lucky that these other physicians saw the value in our product.
Looking at Georgia Power’s focus on “customers who have issues paying their bill,” what questions and framing might have led to their consideration of other customer segments that might be interested in the prepaid product. Studies have shown that customers utilizing the prepaid payment option tend to reduce energy consumption, which might appeal to a broader segment of the utility’s customer base. Customers on a fixed income, students, energy conservationists, and others might find the prepaid product a good fit. Additionally, millennials tend to be more accepting of prepaid products and services (i.e., cellular, subscription services). Framing discussions might have used something like “what customers might be interested and benefit from the prepaid energy product?” to identify multiple personas (or customer segments) for the service. Indeed, there is nothing wrong with focusing on the customers who have trouble paying their bills, as the costs associated with these customers can impact the costs and services of a utility’s overall customer base. The questions are, “is there a bigger opportunity for the company for the prepaid product?”, and “what other customers would benefit from using the prepaid service.”
I’ll close with a few of my thoughts on innovation, and the first is that timing has a lot to do with the success of innovation. Sometimes success is outside of our control due to cultural norms, regulatory or political constraints, and customer acceptance of “a new way of doing things.” My client’s prepaid energy pilot in the 1990s was not doomed due to technology constraints; it couldn’t survive the politicians’ and regulators’ concerns. In addition to timing, it seems that quite often companies don’t understand the value of framing in innovation. The importance of using human-centered design concepts from design thinking and service design (i.e., empathy, divergent and convergent thinking, beginner’s mindset, interviews, observations, personas, etc.) can help to identify and understand customers’ needs and desires. Additionally, it is critical to invest significant time and effort in research to help frame the problem or opportunity. Finally, the importance of questioning versus solutioning can’t be overstressed. I will close with a statement made by a professor at an innovation workshop I attended at the Stanford d.school. He said, “it is better to have the wrong answer to the right question than the right answer to the wrong question.”
