Every professional magazine and journal and the national press is talking about innovation and few these days talk about invention other than in very technical terms and yet we are inventing things every day.
I quite like Wikipedia’s definition ‘Innovation is the application of better solutions that meet new requirements, inarticulated needs, or existing market needs. Accomplished through more effective products, processes, services, technologies, or ideas that are readily available. It can be defined as something original and, as consequence, new that “breaks in to” the market or into society.’
Whereas ‘an invention is a unique or novel device, method, composition or process. It may be an improvement upon a machine or product, or a new process for creating an object or a result. An invention that achieves a completely unique function or result may be a radical breakthrough. Such works are novel and not obvious to others skilled in the same field.’
And why do I suggest that innovation is the mother of invention well quite simply that for the majority of us we invent things during the process of innovation?
Interestingly even Goffin and Mitchell, from Cranfield University, in their article ‘Learning to Avoid the Net Preset Value Trap’ talk about ‘the value of an innovation project such as delivering a new product or service, which others might call invention’. What the article neatly points the reader to however, is that the way in which businesses calculate the value of an innovation often makes them unduly risk averse. And that ‘leading companies use an iterative process to calculate the value since there are so many variables and like weather forecasts long term forecasting is not practical’.
And where the forecasting is based solely on financial models it is unreliable due to the lack of knowledge about the target market or potential sales. And its key that businesses to thrive must manage a portfolio of innovations and nominate a champion for them. The more useful method would be to use a balance diagram, which displays on the grid the balance between the key aspects including risk and reward. And early stage projects evaluated using a scoring method where each factor is given a score of say between 1 and 10 and may include competitor activity and fit with overall company strategy.
Challenges will often arise between those developing the products or services and finance teams and in early stages using financials alone is quite literally a ‘limiting belief’.
Goffin and Mitchell also suggest that the way in which new ideas are pitched to a business is key and give a great example of how McPherson’s the kitchen manufacturers have a transparent decision making process where each team pitches as if were at an industrial fair with stands showing prototypes suggested advertising and market data. This might not be possible in every case but it’s a good model to consider.
Goffin’s article ‘Creating Breakthrough Products from Hidden Needs’ clearly points to the number of failures that businesses will experience, even more so in certain sectors. And reminds us that even Apple, the perceived kings of innovation, have had some very significant and costly failures. He notes that products which stand out from the crowd, offering unique features providing real customer benefits have an 80% chance of success. And that traditional market research methods asking people what features they would like in future product will fail as people struggle to articulate their needs.
At Cranfield they have found that using the ‘repertory grid’ developed by psychologists as a way of showing how people think and to uncover cognitive maps in parallel with ‘ethnographic market research’, which will show latent customer needs and the cultural drivers of product usage can be very effective. However there are organisational barriers to be overcome especially when using new types of market research, specifically from the marketing departments when it comes to hidden needs who perceive their status to be threatened.
All of which is really important for every business to consider but what about the smaller organisations, many of whom are the true innovators and often don’t have the immediate budgets for the extensive market research. Ripping up the rule books and starting again may actually not be such a bad idea given the above. In some SMEs the business owner may also be the innovator who feels under pressure to get everything by the finance person. And with smaller budgets to work with may spend far too much time head thinking about cash and not enough heart and gut feeling about the possibilities and potential. It is of course very important that there’s some grounding and accountability but there has to be a balance.
Being open with everyone in the business about any innovations is really important, someone may have an idea that would massively improve the idea, have an understanding more of the wants and needs of existing clients, be part of the target market themselves, have knowledge of factors that will be a challenge but can then help with a solution.
Larger businesses will also have processes in place to protect their intellectual property (IP) but smaller businesses less so and are often unaware of what can be protected and how. Most commercial law firms will have a department that specialises in intellectual property and protecting this is part of the innovation budget. Undertaking an IP audit where key products and services are identified, all IP assets and their associated legal rights and the market advantage these give you is a task every business would be wise to undertake and then maintain.
Not to do so can be a costly omission if someone else were to exploit what is your intellectual property. Costly not only in loss of market share and potential legal action but also the time and energy needed to pursue any such action. Like insurance, it’s a cost until the time that we need it…
A new product or service is a personal creative process even when working as a team, we often hear of people discovering or inventing things in a very similar time frame. Be the person or the business the world remembers not the also rans!