Francis Wade | The Fifth Rung: Why companies that win at innovation already know where they’re going

As a lead innovator in your company, you are committed to helping your C-suite become inspired by novel offerings. These can help secure a brighter future, but creating them is easier said than done. Fortunately, a new framework has emerged that changes the calculus of category design completely.

To grasp category design, you must first recognise that a category is not just a filing label; it is a space in people’s minds. It’s the mental shorthand that allows a customer to understand what a product is and how it fits into their life. For example, “smartphone”, “microwave oven”, and “minivan” are all categories that were designed by innovators who discovered customers’ unmet needs.

Meet Joe Pine, author of Experience Economy, a 25-year-old book that has already reshaped the way executives think about customers’ experiences of their offerings. He explained that there is a ladder of offerings available to all organisations: commodities, then products, then services, then experiences.

For example, every hotel offers a blend of products (the room itself) and services (the stay, the front desk, and housekeeping). A few also offer carefully curated signature experiences, such as Sandals.

In Pine’s original framework, each rung builds on the one below. His new book, Transformation Economy, builds on his prior observation that distinct experiences can also be transformative. Now, he elevates these transformations to their own rung. At this new level, offerings permanently change the customers themselves, not merely their situation or experience.

This transformation rung is a niche occupied by some churches, gyms, and clubs – and by individual coaches, therapists, trainers, and educators.

Pine further states that this rung can be offered in any industry. However, in most niches, it remains unnamed, unclaimed, and therefore up for grabs.

Unfortunately, most companies have never asked which rung they currently occupy. They lack deep definitions of the status quo, so they can’t see fresh opportunities through Pine’s lens. Call it rung invisibility: you cannot innovate at a level you cannot even see.

The antidote is simple. Work with your colleagues to establish a fixed starting point. Why? Brainstorming only works once you know which rung your next innovation should target.

Take Coursera. The idea of delivering transformational, university-quality education via the Internet existed long before the platform launched in 2012. The easy explanation is that no one had the vision or the will to build it sooner.

However, founder Andrew Ng began uploading Stanford course videos in 2007. But the world wasn’t ready: broadband penetration, streaming infrastructure, mobile adoption, and proven demand were missing. By the time Coursera was launched, the conditions had finally matured.

This kind of ‘waiting’ is not passive. It follows the disciplined definition of a category which does not yet exist, except in the pages of a long-term corporate strategy. Pine himself waited over two decades to write Transformation Economy because, as he puts it, the world wasn’t ready.

His complete ladder offers your organisation the same navigational clarity Andrew Ng had. But you’ll have to be prepared to shift from “What should we invent?” to “What do the other rungs in our industry look like? What lies within our environment?”

Corporate inspiration
as navigation

As a leader of innovation, you have probably tried to inspire others. When results are mixed, you may believe that you lack personal charisma, boundless energy, the right motivational retreat, or an inspiring vision statement.

This kind of inspiration is fragile.

Pine’s ladder offers something different: inspiration that lies in the architecture of the corporate strategy itself. Its qualities: aspirational but credible, fact-based, free of hyperbole, specific enough to span decades without fading.

This is corporate inspiration at its finest: the structure does the work, not a personality.

When a company defines a new rung and the strategy for reaching it once certain external conditions are met, employees understand. The narrative: here is where the company is going and what it is becoming.

When asked about Apple’s strategy in 1998, Steve Jobs stated openly that it was “to wait”. Behind closed doors, his technology firm developed contingency roadmaps for the iPod, iPhone, and iCloud. Imagine how that certainty must have felt to those who were in the know.

Your organisation could do the same. Do the work to develop a corporate strategy for category creation which it keeps in its ‘hip pocket’, ready for launch when the conditions are right.

The only requirement is the willingness to locate your current rung, name the next one, and build the long-term strategy that will make a climb inevitable.

Consider: innovation is not a creativity problem. It’s a navigation problem. Pine’s ladder is the instrument.

Francis Wade is the author of ‘Perfect Time-Based Productivity’, a keynote speaker and a management consultant. To search his prior columns on productivity, strategy, engagement and business processes, send email to columns@fwconsulting.com.