InnovAAAAAtion

InnovAAAAAtion is what you hear every CEO yelling at the top of his lungs to his Senior VPs.

"We MUST innovATE!  We have to be innovATIVE to stay competitive!"

What he doesn't realize is that these VPs already know this!

Who are these VPs and what is the innovation that Mr. CEO is looking for?  Well, titles usually range from VP of R&D, Chief Innovation Office (this is newer), VP of New Product Development and of course you have some VPs of Engineering and Marketing.  Innovation in its simplest definition is any product or service that meets an unmet need in the marketplace.  A new way of doing something (Ford's Line Manufacturing) or a new feature to an existing product (the windshield wiper) or a completely new product (although these are rare).

In Scott Berkun's book "The Myths of Innovation" he explains that even the popular belief of innovation relating to a completely new product is a myth.  The iPod was not a completely new product, but an innovative way of using 1,000 existing products in a new way.  The shape was the only thing new.  Innovation has to be grounded in existing products or materials, or they take forever to develop and there usually is not a market for them (aka: no knows how the heck to use them).

So how does Mr. CEO go about getting his team of VPs to innovate.  There are a million strategies on answering this question but, most companies (and I have dealt with many) usually start with a common exercise (which actually relates well with Jason's last post on a personal level as well).

1. What are our core competencies?  What do we do well?  
2. What products or services can we reposition into adjacent markets?
3. What products or services in our markets are we not making now, that we could make better than our competitor?
4. What products or services do not currently existing in our existing markets? What cool new features do our customers want in a new product?  
5. What markets can we combine into one product offering?  (Blue Ocean Strategy)

After answering these questions, I guarantee you will have more questions to figure out:

• Do we have the right people with the right skills to makes these products?
• What type of Return on Investment (ROI) will we see?  What is the potential Commercial Value (ECV) of this product?
• What are our competitors doing?
• And on, and on, and on it goes.....

Companies are able to manage this madness with a simple formula:  The Right People, The Right Culture, The Right Process and The Right Technology.  Without all four of these aspects Innovation is not sustainable.  The right people are entrepreneurial at heart and love figuring out new things; otherwise they get bored.  The culture is founded in executives that are not afraid to fail (often and fast), and are not afraid of letting their employees experiment.  The right process has to take you from Ideation, through development and post-launch of new products.  There are many processes out there, I recommend Stage-Gate, although it is not the end-all, by-all process.  The right technology has to do with software - MS XL and MS Project will kill you trying to find and manage data....TRUST ME!  Do yourself a favor, get a PPM software solution if you are managing lots of projects.

How important is this topic and sub-topics?  The Aberdeen Group found that companies that have a robust portfolio management process (all four parts of the formula) realize 25% more revenue from their innovation projects.  A study from Kalypso found that 52% of medical device companies were unhappy with their return on investment.  Remember, what is not growing is dying!  Don't let your business be one of them!  In order to grow your business, you need new products and services that meet unmet needs.  Otherwise you are competing in price alone and that is a recipe for disaster.  No one can always be the low cost provider and be profitable!

So, Mr. CEO is right - you must innoVATE!