The FT this week highlighted the plight of some organisations innovation efforts, delivering more gimmicks and novelties than real world ideas that transform the bottom line and offer customers a new way of doing things. Read more here; https://www.ft.com/content/a3357dfe-cbb4-11e7-8536-d321d0d897a3.
The article goes on to explain how collaboration is the driver behind real world innovation, but what else do organisations need to focus on to ensure their innovation efforts are delivering value?
Here are five areas that you should be focusing on to drive value through innovation:
Focus on your core business, or at least your core principles
Innovation efforts become gimmicky when all sorts of ideas are being considered in the pipeline that have little or nothing to do with your core business. While it is sometimes necessary to break the mould and deliver innovations that are radically different from what has been tried before, it is also necessary to have the skills and credibility to do those ideas justice. IBM, for example, created a business IT services company from their core competence as a supplier of business machines. They didn’t completely reinvent themselves, they refocused themselves, while maintaining their credibility and integrity.
Make sure that the scope of your innovation efforts have boundaries, albeit flexible boundaries. Don’t allow the latest gadget, technology or market trend distract you. With emerging Blockchain applications, for example, the question should not be “How can we use the Blockchain?” but rather, “What are the implications of the Blockchain on our business?”
Create a robust business case
Just because you are innovating does not mean that you should throw away procedures that are in place to prevent bad decision making. A business case, at the very least, should provide research and answers to questions in the following areas:
- Market landscape, including competitors, alternative products, customer analysis etc.
- Approximate cost / benefit analysis with justifiable assumptions and fact based costings.
- Investment appraisal and approximate time to deliver value.
- Unique selling proposition and how the idea is innovative.
- Flexible scope and boundaries of what is being delivered.
- Risks or doing and risks of not doing.
If an innovation is of a scale or size that makes it worthy of significant investment then the business case will be the cornerstone of value derivation. Don’t skimp on it to save time.
Adopt Lean-start up principles
Start-up businesses and entrepreneurs usually work differently to large businesses and organisations. They don’t have the luxury of time or money to spend developing and redeveloping ideas.
Eric Ries, author of Lean Startup (find it here on Amazon) recommends that projects should work smarter not harder by engaging with customers at an early stage, eliminating uncertainty and developing an MVP (minimal viable product) that can be used to test the market.
While the business case is an essential cornerstone document, it should be produced quickly and scope should be iterative. The author therefore recommends applying Lean startup principles but supplementing them with robust but flexible processes that prevent initiation of ill conceived projects.
Fail fast when you aren’t succeeding
Fail-fast is a term that has become common in innovation circles, but how do you actually know when to fail a project. With a robust business case it should be clear when a project is not achieving its desired results. If something changes in the marketplace or a better product becomes available the business case should be revisited and if necessary invalidated and the project stopped. Revisiting the business case periodically, through a regular review process, should allow scope to be managed flexibly while analysing the reasons and benefits for delivering the project in the first place. It’s always better to fail a project before it starts than fail it half way through. Likewise, it’s better to fail a project that is 90% complete than to continue investing in it when it is doomed to fail. A fail-fast approach should avoid projects getting this far, but occasionally it might still be necessary to cut your losses.
Measure results after delivery
Projects are frequently measured on the success of delivery, but the operational product or service is then not measured against it’s business case. An innovation capability needs to demonstrate success so measuring the revenue, cost savings, customer satisfaction and positive press relating to an innovation will provide credibility and additional resources to plough back into further innovation. Individuals therefore should be accountable for delivering sales and customer satisfaction results against whatever the innovation pipeline has delivered.
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