Most business leaders want to adapt to their changing markets, create unique value, and drive revenue growth in a repeatable manner.

That’s exactly what a good innovation process will do. But most organizations are experiencing high new product failure rates – why?

Some thought leaders believe that high new product failure rates are due to the natural tendency of growing firms to optimize operational efficiency, and thereby lose the agility necessary to identify and address new opportunities.

Other experts believe that high failure rates are due to a cultural rift between “creatives” and business leaders where business leaders want to reduce risk and establish a business case for ideas that are inherently risky and difficult to quantify.

Still others believe the problem is due to a lack of senior management involvement and commitment.

I know all of these problems and others are real because I have seen them myself working with dozens of organizations. And yet, in my experience, many of these problems go away when a much bigger problem is solved: the lack of a shared innovation lexicon.

Virtually every profession has its own lexicon. The Project Management Institute (PMI) states that its PMI Lexicon of Project Management Terms “offers clear and precise definitions of nearly 200 of the profession’s frequently used terms.” Can you imagine an attorney trying to prosecute a negligence case without a clear and agreed-upon definition of “negligence?” It would be chaos.

In fact, when juries are convened to consider a negligence case, they must learn about the facts, testimony, and evidence to determine if they satisfy the five elements of negligence: duty, breach of duty, cause in fact, proximate cause, and damages. Notice that, although many of these words are familiar, they had to be given new meaning and clarity for the jury to litigate the case.

Similarly, business leaders are familiar with the word “innovation” and its related terms such as “market, market segment, customer, customer need, unmet need, opportunity, and creativity.” But because these words were defined in another era for different purposes – not innovation – they also need to be given new meaning and clarity in order to innovate.

Because innovation management is a young profession, there is no generally agreed-upon innovation lexicon. So, naturally, people default to the traditional meanings for these words which creates chaos and ensures high failure rates.

For example, 20 years ago, I was hired to facilitate a one-day strategy session for an engineering firm. At that time, energy markets in North American had been recently deregulated which destroyed their primary market overnight. Consequently, they had an urgent need to create new revenue streams.

We spent the morning discussing sales and market data to understand their current situation, gain agreement about their desired situation, and select which markets and opportunities to pursue. After lunch, I led a brain-storming session that generated a few dozen ideas addressing the selected opportunities. Everyone was upbeat. There was hope for the future. Many of us went to dinner together that evening to celebrate.

A few months later, I talked with the CEO of the firm and asked him if they had made any progress developing the ideas. To my dismay, he told me that nothing had been done because they didn’t know which ideas were valuable to customers. Ugh.

What went wrong? For one, we didn’t have a reliable innovation process to follow. That caused us to confuse innovation with creativity. If you want to turn innovation into a repeatable business process, then you must first discover the target customers’ unmet needs and then generate solution ideas (apply creativity) to address them.

We must learn to distinguish between what we know and what we think we know. Simply looking over historical sales and marketing data will not provide the depth of understanding about customer needs that is necessary for effective brainstorming. (These mistakes led me to seek out the Jobs-to-Be-Done¹ (JTBD) innovation approach to ensure this never happened again).

Further, not every firm can iterate its way to success. And even digital firms that 1) can iterate at a low cost and 2) where the negative consequences of misunderstanding the target customers’ needs are few, will find that experiments are most effective after you have identified and validated the customers’ unmet needs. Good science isolates variables and tests them individually. That way, you won’t conflate two different experiments, one that tests customers’ needs and another that tests your solution’s efficacy.

If you don’t identify your target customers’ unmet needs before generating ideas, you will inevitably waste a lot of time and money pursuing bad ideas (i.e., ideas that address unimportant, already well-satisfied, or fictional needs). Why do that when it’s totally unnecessary?

You don’t need a prototype or minimally viable product to understand what people are trying to accomplish in a specific circumstance. But you do need to know what type of customer inputs to obtain, how to get them, and how to use them.

Words are cognitive tools. When “innovation” and its related terms are defined accurately, we can develop new mental models that reflect reality more accurately. In turn, this enables us to accomplish things that were never possible before, such as manage a complex project in a reliable manner, litigate a “negligence” case, or turn innovation into a repeatable business process. Every profession should have its own lexicon, including innovation management.

If you want to make innovation reliable, first discover your target customers’ unmet needs, then generate ideas to address them, and then run experiments to test the efficacy of your solution ideas. If you get the right customer inputs upfront, this sequencing will enable you to accomplish 11 things that turn innovation and growth into a repeatable business process:

1) Avoid and/or kill a lot of bad ideas (any idea that targets an unimportant and/or already-satisfied need is a bad idea)

2) Free up resources by unclogging the front end of the new product pipeline

3) Focus your creativity on what matters most to customers in ideation

4) Generate more winning new ideas

5) Design/develop more winning new offerings

6) Kill projects that are not addressing known customer needs

7) Reduce the number of iterations in development

8) Quicken the time to market

9) Increase the likelihood of success creating unique value

10) Increase the size of success

11) Increase the effectiveness of marketing, messaging, and positioning

Socrates said, “The beginning of wisdom is the definition of terms.” I think he was onto something.

Footnote 1: Tony Ulwick, CEO and Founder of Strategyn (where I worked for seven years), understood the need for an innovation lexicon, so he created it. This enabled him to pioneer the Jobs-to-Be-Done (JTBD) innovation process. See What Customers Want, by Anthony W. Ulwick, McGraw Hill, 2005.