Lateral Marketing: New Techniques for Finding Breakthrough Ideas

"Philip Kotler, the `eminence grise' of modern marketing, teams up with Fernando Trias de Bes for a new look at marketing innovation in these challenging times. Part marketing manual, part brainstorming guide, the book lays out the ingredients in a new recipe for marketing innovation."
-Tom Kelley, General Manager, IDEO, and author of The Art of Innovation

"Lateral Marketing may become the breakthrough marketing concept of the twenty-first century. Managers who apply it will expand their thinking and their profits."
-Thomas D. Kuczmarski, President, Kuczmarski & Associates

"New products and services will be a critical competency for the next decade; this book shows you the way. A compelling and systematic look at the early stage of the innovation process, it is a must-read for any company that values innovation. Lateral Marketing demystifies the fuzzy front- end of the innovation process."
-Gary Lynn, Professor, Stevens Institute of Technology and author of Blockbusters

"Everyone says we need really new products, but Kotler actually gives the reader effective and practical concepts and tools to create them based on thinking across rather than within markets."
-Glen L. Urban, Professor, Sloan School, MIT and author of Design and Marketing of New Products

"Lateral Marketing explains and illustrates the power of marketing creativity and outlines ways of enhancing it. A must-read for anyone concerned with profitable growth."
-Yoram (Jerry) Wind, Academic Director, Wharton Fellows Program

Lateral Marketing looks at the tendency of traditional marketing to segment markets into ever smaller units as a way to create differentiation and help repel new entrants and existing competitors. The authors provide lots of statistics to point out that it's getting harder and harder to launch successful new products, and the prospects are getting worse.

That kind of a finding could leave any serious marketer feeling depressed, but Professors Kotler and Trias de Bes go on the propose a solution: Focus on expanding the scope of what you consider as having new product potential by using Edward de Bono's
concept of lateral thinking (as developed in his book by the same name first published in 1970). Although lateral thinking was designed to expand all types of creativity, the authors show how it can be specifically applied marketing. They provide a convincing case that many of the more innovative new products and services (cereal bars, Kinder Surprise toy-filled chocolate eggs, 7-Eleven in Japan becoming a depot for ordering and packing up e-commerce products, Actimel, food stores in gas stations, cyber cafes, reality TV contests, and Huggies Pull-Ups) in recent years could have been developed using lateral thinking. Traditional marketing thinking and lateral thinking are compared in a helpful table on pages 92 and 93.

On page 97, they define "lateral marketing" as "a work process which when applied to existing products or services, produces innovative new products and services that cover needs, uses, situations, or targets not currently covered and, and therefore, is a process that offers a high chance of creating new categories or markets."

Many people can do lateral thinking intuitively by thinking about what could be different about products or services that customers would like. The book makes this intuition more analytically based by breaking it down into routine steps that anyone can use individually or in a group to come up with innovative perspectives.

You begin by selecting a focus (say, a flower). You make a lateral displacement (an interruption in the middle of a logical thought sequence) for generating a stimulus. You might think about flowers that "never die" instead of flowers that "always die." Then, you make a connection. In this case, artificial flowers are one such connection. The authors then go on to explain how your initial focus can be a market, a product or the rest of the mix of serving customers. To make lateral displacements (let's look at sending roses on Valentine's Day), you should use substitutions (send lemons on Valentine's Day), inversions (send roses on all days except Valentine's Day), combinations (send roses and a pencil on Valentine's Day), exaggerations (send dozens of roses), eliminations (don't send roses) and reorderings (the beloved sends the roses to the admirer). Substitution turns out to be the easiest method to use at the market level. They provide many examples of how to do each one, and how to create products and services from these perspectives. You also get lots of tips on how to make connections. You are encouraged to "solve the gap" by applying a valuation technique by imagining the purchase process, extracting the positive elements, and finding the right setting for the new offering. All of these points are nicely summarized on pages 201-202. They go on to show how to create new business concepts beginning on page 149.

How do you implement lateral marketing in your company? They draw on three suggestions made by Gary Hamel from his article "Bringing Silicon Valley Inside" (Harvard Business Review, September 1999). The three suggestions involve creating internal markets for ideas, capital and innovative talent.

If this summary makes Lateral Marketing seem like a thought experiment derived from the work of others, you have understood my summary well. In putting these new combinations together, the authors have been innovative . . . but they have also missed important lessons that could have been gained by doing field work in the subject.

I began to see how the authors were going wrong when I read their description of appropriate situations for vertical versus lateral marketing. Rather than seeing lateral marketing as potentially the lead process in all situations, they chose to keep vertical marketing as important in newly developing markets. If you look instead at where new business models come, you find they are much more likely to be present in newly developing markets.

The second element that is missed is that lateral marketing is seen as something that marketing people do, separate from the rest of the organization for the most part. Category innovations and new business models, by contrast, often come from combined efforts of those with many functional perspectives. They are often focusing as hard on creating competitive advantages as they are on customer advantages. You won't hear much about strategy, competitive advantage or outperforming competitors in this book.

Those observations made me realize that the majority of the examples were for low-price point consumer products. If the authors had considered more services and nonconsumer products, they would have seen the need to draw on more disciplines collectively in developing new products, categories and business models. Although they see a glint of the possibility of new business models, they miss the point that a valuable new business model is worth a great many successful new products and actually makes the new product development success rate easier to improve.

I recommend the book as a way to help marketing executives who find themselves in a canoe without a paddle when it comes to considering new markets. The process here will help them extend their vision in new directions . . . and that's a good thing.