How to Get Actual Results From Your Innovation Process

How to Get Actual Results From Your Innovation Process

Kevin Fallon / Friday, May 5, 2017 / Strategy Management

Everyone talks about innovation, but few know how to define it or drive it in their business. According to Curt Carlson, CEO of the Stanford Research Institute and inventor of HDTV and Siri, “Less than 30% of new initiatives add any value to the enterprise, and of those innovations, less than 10% had any thoughtful innovation process whatsoever.”

Today, Chief Innovation Officers are just as important as Chief Marketing Officers or Chief Financial Officers. Everyone thinks innovation is about great ideas but that couldn’t be further from the truth. To produce tangible results, the act of innovating should be executed similarly to how you run sales, operations or finance, using a disciplined process with measurable results.

There are four things great innovators do to drive systematic innovation in their organizations to get tangible results:

1.  Develop Value Propositions Based on Keen Customer Insight.  When thinking about your customer, you must understand the customer environment from the customer’s perspective. Most companies say that they do this but they actually view the customer from their own product or service centric viewpoint.  Two successful examples of innovating using keen customer insights are Uber and Airbnb. Both disrupted their respective industries by discovering untapped customer needs.

How do you change your perceived value to the customer? Take time to re-segment your customer base and work on things like creative product bundling, channel integration or improving your brand identity to change customer perceptions. For example, Perdue built a whole brand around the beautiful coloring their chickens had. Begin to think about the customer’s environment and how to solve their real challenges.

2. Build a Customer-Centered Innovation Strategy.  This is critically important. A good example of this is Netflix which was founded by Reid Hastings in the mid-90’s. DVD’s came into the market in 1998. Hastings saw the value of shipping through the US postal service, disrupted Blockbuster’s model and put them out of business. Netflix continued to innovate on strategy – rather than fall by the wayside like Blockbuster. In 2007 Netflix created streaming and cannibalized their back-end. In 2013, they got into TV production. Last year Netflix released an estimated 126 original series for film and now they have 86 million subscribers. Netflix brilliantly innovated with a focus on the customer.

To build a customer-centered strategy, you need to create a set of 3-5 strategic thrusts. Strategic thrusts set the direction as to where you will spend your energy and resources for your transformation.  They are innovative and customer-centered with enough power to be driven throughout your organization. Your executive team has be on board because they must drive the transformation.

Here is an example of a strategic thrust: Increase new product revenue from 8% to 30% of total revenue in 5 years.

How do you know if your strategic thrusts are heading in the right direction? An acid test for quantifying value is if a customer is willing to pay for it.  Measures of strategic thrusts are usually financial.

3. Engage Employees to Deliver Strategically Aligned Objectives.  One of the best companies doing this is 3M. They have thousands of innovations and over 30 new product platforms in design right now and are driving employees to continually innovate. There is a Gallup poll that says that “69% of employees are disengaged at work.” The number one constraint relative to innovation in every company is the time and energy of its employees.

So how do you engage your employees? You set higher level goals and assign a specific set of initiatives to them. Relatively speaking, ideas are not that important to innovation. Everyone thinks that you need great ideas, but that’s not true. Successful innovation starts with goals, 3-5 strategic thrusts, objectives for the thrusts and then initiatives to carry the thrusts to completion. Having high value initiatives assigned to the right people eliminates constraints.

4. Manage Innovation with a Disciplined Methodology. This enables your company to manage strategy and innovation together in a systematic way. Samsung is one of the greatest innovation companies in the world. They use tools like TRIZ to systematically drive innovation. We did research to find out what companies like Samsung do better than anyone else and discovered 10 levers that help drive innovation success. Strategy and performance, the bookends of innovation, are the two most important levers to CEO’s. To increase the success of your strategy and performance you need to manage the act of innovation just as you would manage sales or operations with structure and quantifiable goals.

Innovation doesn’t need to be a painful process or require amazing ideas. What it does need is a commitment from senior management, a customer-centered, structured approach and your employees motivated to execute the strategy. The current state of your business is the net value of the sum of all the innovation that occurred since the inception of the company. Are you innovating for tomorrow? 

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