Innovation
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Innovation: When? What? How?

Burgess COMMENTARY

Peter Burgess

Innovation: When? What? How?

The life cycle of products decreased by factor 4 the last fifty years. Innovation is essential, but ideating new products, services or business models is difficult. Research shows that nearly 60 percent of companies have difficulty generating sufficient innovative ideas.[1] If you want to start innovation effectively, you have to ask yourself a series of questions. There are at least five questions to answer:

• When: now or later?
• Who: external experts or internal team?
• What: revolutionary or evolutionary ideas?
• Which criteria to use?
• How: the creative or structured way?

It’s a myth that companies are continuously innovating. Of course companies all have a R&D or innovation department working on new concepts. And big corporations have a stage-gate innovation funnel full of new initiatives, which they monitor on a permanent basis. But if you define innovation strictly as “something really different” a lot of so-called innovations are in reality additions to or variations on existing product lines and brands. Often the innovation board of the organization will only approve genuine innovation once far less risky concepts have stopped generating growth.

The completion of the innovation process, from conception to introduction, spans an average of 18 to 36 months. So, it is extremely important to anticipate and react in time to be a market leader. Leaks in the roof are easy to spot when it’s raining, but it is better to have the repairs done beforehand. The ideation process can only succeed if the company is financially and mentally sound enough to do this. If the board of directors and co-workers are under a lot of pressure you should think twice before starting an ideation project. It is best to wait until the dust has settled and the forecast is clear.

2. Who: external specialists or internal team?

Would a small group of external specialists create better ideas than a group of internal managers and co-workers? They might. However, what’s the use of brilliant ideas if there’s no support within the organization? Every idea might be rejected because of the ‘not invented here’ sentiment. You promote positive energy and cooperation within your organization by letting those colleagues, who will play a role in the development and introduction process, participate in the ideation of their own innovations. This is very helpful in the innovation delivery phase. It helps a lot if several people share in fostering an idea. For this reason I support a team approach. What’s more motivating than watching your ideas take seed and flourish?

3. What: revolutionary or evolutionary ideas?

Which innovation type should be your goal for a new product, service or business model: revolutionary or evolutionary? Evolutionary ideas are typically the “superior” concepts: the better supermarket, the better car hire service or the better street sweeping machine. They are often upscale innovations, which offer more at a higher price. Revolutionary concepts are truly different.

The type of innovation you should focus on depends on the characteristics of your market, your company and your ambitions. If you are a market leader in an existing market, with low potential for growth, you should dare to go for new-to-the-market revolutionary innovations in other market segments. However, if you’re a relatively small newcomer in an enormous growth market, then I can imagine you would first want to conquer the existing market with new evolutionary concepts. Make a clear choice though.

4. Which criteria to use?

Often an ideation project gets started when a senior director says: “We have to come up with something new.” And then he or she leaves the rest up to you. And how many times has it happened that when you presented your innovative business ideas they were all rejected? It’s very hard to meet fuzzy expectations. Success starts first by clearly establishing the criteria that new concepts must meet. Discuss with your Board questions like:

• How much turnover must the new concept realize in year three after introduction?
• What’s the minimum profit margin?
• Should the new concept be new to the market, new to the country or new to the world?
• Should our aim be a specific target group or market?
• To what extent should the new product concept be the talk of the town?
• To what extent should the new product concept fit the current brand values?
• Are we obliged to make the new product concept ourselves (with our own manufacturing facilities) or can we look for partners?
• Making expectations explicit before you start will provide you focus.

Creativity plays a major role ideating new innovative concepts. A lot of people think you can only be creative if you don’t have any constraints to consider; enabling you to really think outside the box. I agree you can’t discover new oceans unless you lose sight of the existing shore. However, it’s not just crazy ideas that your organization is looking for. It’s looking for ideas that meet the criteria we just discussed. Therefore you need to follow a process that will lead you to concrete business cases that are attractive and viable within your organization. Creativity alone will not get you there. You will also need customer understanding, business sense and technical expertise. That’s why a structured ideation approach can be a helpful tool in determining: What to do? In which order? When? With whom? And how? That’s why I developed the FORTH innovation methodology. Check out 20 free checklists and formats.