Posted by Sarah Brown on 17 Jun '20
Innovation -its challenges and how to choose what to progress
Innovation is no longer a choice, it is a necessity
Innovative growth is challenging. For example, if the innovative growth is about new business models or services how long will you bear losses? Amazon, Google & Facebook all lost money for many years, though some argue this is partly to reduce taxes, but how far are you willing to go?
Most business models can be adapted & potentially be moved from loss to profit making, so it can be counterproductive to accept or expect a long period to profit. In the 80s in Advance, a commercial services company, as new product development manager I was only looking for break-even within three years for new products & services that we were bringing to market. In a fairly stable market this might still be OK but in many markets, technology is having such an impact that in three years the market may have moved on & you never get to profit.
Innovation is not always easy. James Dyson, the inventor of the Dyson Vacuum cleaner, “failed” at more than 5,100 prototypes before getting it just right. You need to decide as a business what & why you pursue ideas. Dyson’s innovation was prompted by the failure of the current technology; the problem he had personally identified of the vacuum cleaner that clogged up & didn’t effectively work.
“It is not [price & output] competition which counts, but the competition from the new commodity, the new technology, the new source of supply, the new type of organisation-competition which commands a decisive cost or quality advantage & which strikes not at the margins of the profits & the outputs of the existing firms but at their foundations & their very lives.” Joseph Schumpeter
Some ideas will pay off; some will fail. The key is to fail as quickly as possible. The speed of doing business has increased dramatically & every minute counts. The best businesses try many different ideas & let the losers go quickly & with no remorse. But no one would say Dyson was wrong to take over 5000 attempts, so the critical issue is to undertake your innovation within the wider context of your vision & how you want to change the world, so that you can use these parameters to decide what you continue to pursue. Dyson was driven by a clear problem that needed solving, not his ego.
Criteria for innovative success
What criteria will you use to choose between new product opportunities? Here are some but there are many others:
- Potential size of market
- High barriers to entry
- Fit with vision & niche – how much it changes the world as you want
- Fit with your customer needs
- Speed to market
- Investment needed
If it is about innovating with new processes & systems that will save money. How will you judge which to proceed with; short term gain, long term savings, impact on overheads etc.?
Having been involved in new product development for forty years, a key reason for failure I have seen is when the criteria for success are unclear before you start.
The reason the criteria need to be in place at the start is that once you have ideas there is a temptation to make the criteria fit either to support the idea or destroy it.
We can help you develop the criteria and the ideas – give me a ring for a free chat 01709 810080
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