Books: Cost-Conscious InnovationBy
With memberships starting at $10 per month, Planet Fitness frequently has been cited as a disruptor in the traditional fitness market. Geared to appeal to first-time gym members and those who are looking for a more casual workout, Planet Fitness saw a portion of the fitness market whose needs weren’t being met by the more traditional gyms with higher overhead. This different perspective is the basis of the book Costovation by Stephen Wunker and Jennifer Luo Law. Costovation is defined as “a type of innovation that significantly compresses cost while still exceeding customer expectations.”
Often when discussing innovation, cost is seen as a limiting factor, but Wunker and Luo Law encourage companies to look at cost cutting through the removal of operations or features as an important component to strategy. Costovation as a strategy can be successful not only for product innovations, the authors argue, but also for the production process, selling strategies, and other behind-the-scenes activities.
In addition to Planet Fitness, examples of companies that have pursued costovation strategies include Primark (inexpensive clothing) and Warby Parker (online-only prescription glasses). Costovation provides a framework of questions to ask and perspectives to consider when exploring the potential of the strategy.
The book is divided into two main parts: an examination of the three traits of costovation and the playbook, where 20 different potential strategies and tactics are laid out. The authors have determined that you need three major traits to costovate successfully: breakthrough perspective, relentless focus, and a willingness to blur boundaries. These traits are analyzed through brief case studies. In the playbook, the potential strategies and tactics are discussed, and thought-provoking questions are included in each section to help determine whether cutting costs to create an innovative solution would be a good fit.
Wunker and Luo Law give useful examples of both wildly successful costovation strategies and complete failures. One of the key takeaways to engaging in costovation is that the process requires that a company not just pursue the high-profile, very visible portions of the strategy but must be willing to look deep below the surface and pursue innovations that will support the visible products or services, whether it be through operations, material sourcing, or other support divisions.
Ultimately, each company must determine which strategies to pursue, but the authors of Costovation bring a new perspective on how to steer innovation and address the unmet needs present in many markets through lower-cost solutions.