Paraphrasing Albert Einstein; we cannot solve our problems with the same thinking we used when we created them. That paradox sits at the core of creating processes for embedding an innovation culture and capability into any corporation. If you go through the same process twice, only a fool would expect a different outcome. And therein lies the friction;
- Businesses want predictable innovation processes that deliver on the clock, at budget.
- Innovation is meant to retain relevance and deliver to a mostly unpredictable outside world.
How to navigate that gap? How come some businesses out there manage to pump out new products successfully year-after-year with process excellence and others fail miserably?
The answer lies in understanding the different degrees of innovation impact. Too often, innovation is regarded merely as making money from new things for customers and consumers. What is overlooked, is the impact those new things have on the business itself. Not all innovations are equal in this light; in particular if you consider all the dimensions you can innovate in: product, packaging, business model, shelf, communication, pricing – the whole marketing mix can offer opportunity for doing new things. With that in mind, you can roughly distinguish three levels.
- Strengthening; incremental innovation which delivers ‘new news’ along only one dimension, e.g. product. All other dimensions remain the same; so you know who you’re selling to, through which channels, at what price. You’re innovating to steal share in well-defined market. You are probably already well equipped to roll-out these new products. Most importantly, you should be doing this all the time, to maintain relevance. From the moment you launch your product, you start lining up regular (small) improvements to keep copycats and competitors behind you.
- Stretching; innovating to redefine multiple marketing mix elements you normally play with. This is more than just new news, this can be about approaching new occasions, new consumer targets in new channels. You’re innovating to grow the category beyond its current boundaries. Roll-out will require more substantial change within your own organisation, alongside the development of the new products. This is the type of innovation you ignite when you find you are losing on price more often. It is a sign the category is evolving into one where stealing share will soon be the only way to grow. You should start looking for new consumers, occasions, formats to grow into new spaces.
- Superseding; game-changing innovating that rewrites almost all the rules, creating a new market from scratch. This is about working from a blank sheet of paper, with not only a completely new product to be created, but probably also requiring a new business to build and sell it as well. It’s not something you should do too often, simply because it isn’t necessary if you are consistently investing in the previous two. But it becomes critical when your product has commodotised. A clear indicator is if all your development budgets is spent on cutting manufacturing costs. A sign your category is dying and only a game changer that rewrites most (if not all) of the rules will be able to resuscitate it.
Great innovators understand the intricacies of the three impact levels above and the difference in mandate and mind-set they require to complete successfully. They also understand when to ignite each type, as well as to what degree you can process-optimise them.
So where do the processes come in, making this all manageable and operational? Looking at the impact levels above, one can easily see how ‘Strengthening’ not only can, but must be caught in well-defined innovation processes as they guarantee long term ROI on innovation. But moving up to ‘Stretching’ and ‘Superseding’, the balance must tilt from operational to entrepreneurial. Simply because radically new products and services require time to settle and their development requires creating new rules and procedures. The old thinking Einstein was referring to, the processes that created the old markets have reached the end of their life-cycle and cannot deliver the breakthrough to create and thrive in new markets of the future. Laying trails instead of following them.
image credit: funtimeshad.com
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Costas Papaikonomou is Founding Partner of Happen, a global innovation agency based in London, Amsterdam, Toronto, New York, and Sydney.