Innovation is NOT Inherently Risky and Messy (at least not as much as you think)
Are You Generating Ideas “Blindfolded?”
It saddens me to see how many firms fail when trying to create new and improved offerings to drive revenue growth. This is all too common because most firms have bought into popular misbeliefs about innovation. Most of us have been snowed!
For example, many of us were taught that “innovation is inherently risky and messy.” That may seem obvious given the fact that 70-90% of new products fail. And yet study after study has shown that the biggest risk of innovation is misunderstanding the market1, not generating solutions. You see, at a high level, there are two risks associated with innovation:
- Market risk, i.e., the risk that people will not buy want you make
- Solution risk, i.e., the risk that you cannot make what people want
Innovation is not inherently risky and messy; the way most organizations are going about understanding their target customers’ needs is risky and messy!
But the good news is that you can dramatically reduce your market risk when you:
- Obtain a comprehensive set of your target customers’ needs
- Identify and rank those needs according to how “unmet” they are (needs that are both important and unsatisfied are unmet and are opportunities for innovation and growth)
- Select which opportunities are attractive to pursue given your relative strengths
Great new offerings and growth strategies are formulated by addressing unmet market needs with the firm’s relative strengths. That’s exactly what this process enables firms to do in a systematic manner.
This turns the mess of innovation into a disciplined business process that consistently delivers results. It enables firms to generate solution ideas with great clarity and confidence because they now know where to focus and what to do to create unique value.
As a matter of fact, this process enables firms to know in advance that their ideas will create unique value – even before any ideas have been generated. How is that possible?
It’s possible because you will have already identified and ranked the biggest opportunities in the market and selected those opportunities that are attractive to pursue based on your ability to address them and win in the market. This will enable you to avoid wasting time and resources pursuing bad ideas. A “bad” idea is any idea that addresses:
- An unimportant need
- An already-well-satisfied need
- A need that you cannot address well and win
Bottom line: if you can help your target customers get their important unsatisfied jobs done better than the competition (and you almost always can when you know what they are trying to accomplish and how they measure success), then you can be confident that your new offering will be valuable and unique.
This is how leading firms are turning innovation and growth into a repeatable business process that consistently delivers results. Is that something you want?
Footnotes:
1: Robert G. Cooper, Co-founder of the Stage-Gate Idea-to-Launch Process, has conducted some of the most rigorous studies on the causes for new product failure and has repeated found the front end of innovation to be poorly executed.
“A thorough understanding of customers’ needs and wants, the competitive situation, and the nature of the market, is an essential component of new product success. This tenet is supported by virtually every study of product success factors…Sadly, a strong market orientation is missing in the majority of firms’ new product projects. Successful firms spend about twice as much time and money as unsuccessful firms on these vital front-end activities…Research shows that homework pays for itself in improved success rates and actually reduces development times.”
The Drivers of Success in New-Product Development, Industrial Marketing Management, 76, (2019), p 36-47.
Get game-changing customer insights to drive innovation and growth. Reveal needs. Create value. Drive growth.
