Monday, January 11, 2021

Conditions for innovation to succeed

 I was asked recently to write a short post about the conditions necessary for innovation to succeed.  It's actually not possible to write a short post about innovation, much less the conditions necessary for innovation to succeed, but I've tried to simplify this into nine critical factors for success.

They are:

  • Scope and opportunity framing
  • Executive commitment
  • Clear definition of the outcome (incremental/disruptive, product/service/business model)
  • Adequate resources and funding
  • Recruiting the right people
  • Understanding customer needs
  • Cultural realities - risk taking, openness to new ideas
  • Agile idea development and testing (MVP)
  • The ability to accelerate ideas into product or service development

The first question I often get when I create a list like this is - are all these criteria important?  Can we rank them and decide which ones need more development?

The answer is, yes, you can rank them - I think good scope, executive commitment and the right people are the most important criteria for success - but really good ideas can be killed by other factors.  For example, one of the biggest idea killers is the inability for many companies to take really good ideas and get them prioritized in the existing product development process.

 If I had to choose, I'd prioritize the right people with the right support and give them the right problem.  With those basics in mind, you can do a lot of good innovation.

If you are interested, here's a brief definition of each of the factors that contribute to success.

Brief explanations

I'd like to provide a brief explanation of these criteria and explain why I think they are important for innovation success.

Scope - too often executives ask for innovations, but can't describe or won't identify the scope of the work, what they hope the innovation activity will produce (see clear definition of the outcome) and what investment or risks they are willing to endure.  Without this clarity, or in absence of a defined scope, the teams adopt the business as usual thinking and infer a narrow, limited scope even if the executive team wanted more disruptive innovation.  This is why so many "innovation projects" result in incremental or "me too" ideas.

Executive commitment - It's hard enough to get the existing products or services to market, let alone try to create new solutions in an uncertain innovation process. Plus, some good ideas will require that businesses rethink their existing offerings or channels.  And, the work isn't free and requires air cover. Executive involvement and commitment in an innovation activity is critical for success. As the old saying goes, at breakfast the hen is involved and the pig is committed.  Innovation needs really deeply involved executive involvement and commitment.

Adequate resources and funding - I'll deal with the funding here and the resources in the next bullet.  Discovering needs, testing ideas, conducting research and getting new ideas through the development process and then launching a new product costs money. Starving the teams to get more creative solutions isn't necessarily wrong, but failing to invest small budgets when the potential payoffs are huge is simply misguided.

Right people - I've written extensively that the right people for innovation are typically NOT the "best" people in the current processes.  That's because they are wedded to the existing products and processes.  You need to find the creative thinkers, the outliers, the people plugged into customers and markets.  I think this is so important that I wrote an entire white paper and personality analysis called the Unusual Suspects.  Getting the best innovators involved, rather than the "best" people, will definitely accelerate your innovation work.

Needs - most innovations solve current but unfilled or unmet needs, or anticipate and create solutions for needs that customers don't yet know they have.  Your current market research is mostly focused on your existing customers and existing products.  Discovering new opportunities and needs requires a refocusing of your research and a new way to interact with customers and prospects.

Culture - The old saying is that culture eats strategy for breakfast.  Guess what's for lunch?  A highly optimized, cost conscious culture that is moderately risk adverse and focused on the short run will not conduct expansive innovation projects, and will not carefully consider risky, unproven ideas.  Want more innovation?  Make your culture more welcoming to innovation.

Idea Development and validation - you need a really good, agile and rapid MVP development process to bring an MVP to customers and prospects for testing.  This is NOT a complete product but provides a tremendous amount of insight into what the product or service should be and...

Solution Development - You've got to figure out how good ideas are going to get converted into new products or solutions.  Most companies have products and product development pipelines that are overtaxed and not prepared to accelerate new ideas.  So good ideas often languish in the decision making process just trying to enter product or service development

Other conditions

There are other conditions of course.  Two that should be relatively obvious but not covered here are:

  • The ability to launch a new idea - new ideas may reach new customers through new channels.  This can require rethinking marketing strategies and channels
  • Legal and regulatory issues - there are ideas that require the development of industry standards or regulatory programs.  If the standards aren't complete or regulatory frameworks don't exist, some new products, no matter how promising, can't be realized

Why would anyone try

In light of all of these criteria, why would any reasonable executive try to innovate?  The answer is that many don't.  Instead, they wait for smaller firms and entrepreneurs to create new ideas and simply acquire the company or technology.

In fairness, other companies have skunkworks or separate organizations that seek to become the innovation engine of the organization, so innovation is isolated from a lot of cultural and decision making overhead.

Some organizations, like 3M, Apple and Google, rely on a deeply embedded corporate culture which encourages innovation and risk taking.  I wrote about this approach in Relentless Innovation.

However, as we can see from examples like AirBnb or Uber, 3M or Apple, different organizations with different philosophies can successfully innovate and relentless innovation does drive a market premium over companies that do not innovate.

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posted by Jeffrey Phillips at 10:38 AM


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