“Welcome to the Proven, Practical, Profitable Innovation podcast! I am Richard and I thank you very much for taking time out of your busy day to listen to this podcast.
Today I’m going to be sharing with you some of the most helpful thinking I’ve ever experienced regarding innovation strategy that can really make a difference in your business.
Please be sure to listen to the end of this podcast where I give you an exciting preview of future podcasts.
If after listening to this podcast you feel a need for more help, please contact me directly—my email is email@example.com. You can also go to my website—i2ge.com– where you can explore many innovation topics, especially check out the DIY Innovation Training on the menu bar. We customize all the training programs to our clients’ unique needs and circumstances.
OK, let’s get into today’s very important topic—innovation strategy.
While I have subscribed to the Harvard Business Review for many years, I have not frequently found information that is both proven and practical. Having spent six years in academia as a professor at Arizona State University—after spending 26 years at Procter & gamble and Gallo–, I developed a view that people in academia do not have a clear understanding of the real world. Most of their perspective, in my opinion, comes from being an observer of business rather than as an operator of a business. When you are a business operator, you have a very high appreciation for information that is both practical and proven. Having said that, in the June 2015 issue of the Harvard Business Review I found the best ever thinking and advice on how to develop a powerful innovation strategy. Since there is so much help in this extensive article by Gary Pisano, a Harvard professor, it will take more than one podcast to share all of the high quality insights that can help your business.
So let’s dive in.
In the opening headline of the article, the author makes the point that over the last several decades businesses have invested heavily in innovation – time and money – only to be frustrated with the results in many if not most cases. You recall from an earlier podcast where I shared that 75% of all new products and services fail within five years, with most failing within two years. For companies who think they’re pretty good at business, this can be pretty frustrating.
For good or bad, companies often have an overall business strategy. I say for good or bad because business strategy efforts often produce a written document that frequently just gathers dust or is not kept current in a rapidly changing world or was not well developed and thought out in the first place.
Putting aside for a moment how well developed an overall business strategy is, companies frequently fail to develop a companion innovation strategy even though innovation is probably critical to the success of the overall business strategy. To be clear, companies do think about how innovation can help, but it is often thinking about tactics and processes. For example, companies can get caught up in how to best reorganize R&D, utilizing open innovation/crowdsourcing innovation, and setting up alliances with other companies. This is not strategy.
Successful innovation requires a system. How is a company going to go from identifying the most promising innovation paths to developing big ideas consistent with those paths to developing business concepts and designs to selecting the best projects to fund and bring to market. How are you going to do this? This question needs a well-thought-out answer or your risk of innovation failure becomes very and unacceptably high. Maybe most importantly, the right answer for your company is probably unique, which makes it very difficult to just copy what some other well respected innovation company is doing.
A business strategy and innovation strategy need to go hand-in-hand. These strategies cannot be developed at lower, functional levels of the organization since functional interests may be at odds with total company interests and this can torpedo innovation success. As a result, business and innovation strategies require the deep involvement of a company’s most senior leaders.
The development of an innovation strategy requires the perspectives of 1) competitors’ strengths and weaknesses along with a view about how to develop competitive advantages in your type of business and 2) the company’s strengths and capabilities that can be deployed to create those competitive advantages.
In thinking about these two points, the crucial question becomes how can innovation create better value for customers? Value is the critical part of the equation. Value includes functional efficacy and efficiency. Value includes the price someone pays for the benefits delivered by the product.
Value can be created in many ways. You can deliver the same performance at a better price – net, there is a value advantage. You can deliver much better performance at a relatively better price – net, this is another way to create a value advantage. You can make it more convenient that can save time, which has an economic value creating a value advantage. You can make it more reliable, which is another way of saving money relative to competition so that you create a value advantage. While all of these may sound attractive, smart business people know you need to choose which avenue to go down. Capabilities required to develop each of these potential value advantages can be very different. You need to know your strengths and the marketplace environment to guide which choices are best and right for your business.
Another critical question is “how is your company going to ensure the company’s value goes up as a result of your innovation efforts?” So many companies grasp at the fool’s gold of having a technology patent or a patent of any kind. They think this creates a barrier to competition. The truth is, companies have so many ways of delivering a specific set of benefits and value and your patented technological solution is only one of those ways.
So if a company cannot rely on a patented technological solution alone to create its value delivering advantages, what can it do to ensure that it financially benefits from innovation? Often a patented technological solution is a starting point, not an end point. This solution needs to be bundled together with additional capabilities delivering relevant and compatible customer benefits.
A great example of this is Apple. They were not the first ones with a smart phone or a tablet that we know as the iPhone and iPad. Yes, the hardware is very good. Bundled with the hardware are a highly functional and intuitive operating system and more apps than we ever thought possible. Both Apple and external apps formed an operating environment with the hardware to create significant competitive advantages against major, highly capable competitors like Microsoft, Google with their android operating system, and Samsung.
The other associated learning from innovation successes is that the first innovation is important but a program of continuous innovation is necessary to maintain and build whatever initial success a company achieves. Just think about the annual updates to the iPad and iPhone operating systems and a continuous flow of new and often amazing apps.
What you can do today with this information. The major point from today’s podcast and part two that follows is that if you count on innovation to grow your business, you must have – not nice to have – an innovation strategy.
First, this article suggests an innovation strategy should be developed for every company that relies on innovation for growth. Least you think that this suggestion applies to a minority of companies, in my experience the vast majority of companies do not have and innovation strategy.
Second, the Innovate2Grow Experts or i2Ge experts have led well over 100 innovation projects with medium to very large companies. Almost universally, we have seen the lack of a comprehensive innovation strategy. Our experts get hired because of their proven track record in inventing many high potential ideas. As I mentioned in a previous podcast, Doug Hall – the founder of Eureka Ranch – and I have both remarked how clients go off-site, invent products with very high potential for success, and then as little as a month later those ideas have been virtually neutered. I’m not saying that 100% of this could be avoided with an innovation strategy, but I truly believe many, many more big ideas would survive and thrive.
Third, with 75% of new products failing, the lack open innovation strategy or a very weak one is a significant contributor to this unnecessarily high failure rate.
Fourth, given these two points, I believe it is very important for everyone listening to this podcast depends on innovation for success to create a well thought out innovation strategy utilizing the excellent guidance in the article on reporting on here.
If you would like to see the key written points from this podcast, you can find them in my blog – i2ge.com/blog.
If you would like to contact me, please email me at firstname.lastname@example.org.
If you would like to create far more robust innovation capabilities within your business, I have a complete portfolio of training programs that we tailor to your unique needs. If you would like to learn more, go to the Innovate2Grow Experts website – i2Ge.com and click on DIY Innovation Training.
One of my six books is Proven Practical Innovation That Delivers Results. This very low-cost book is available at Amazon in paperback and has a Kindle book. Is truly packed with lots of practical help.
Importantly, if you found this podcast helpful, please consider helping us with a five-star rating for these podcast. Thank you in advance for your support.
A preview of the next podcast I.
The next podcast present part two of how to develop a powerful, practical, and proven innovation strategy. You will learn about the various kinds of innovation and in what business situations each is most appropriate. Following this podcast you will, in combination with part one, have the ability to start defining the unique innovation strategy that is right for your business.
Thank you very much for your time and I look forward to reconnecting with you soon. Please have a great day.