Bad” Innovation Is Just What Your Company Needs

http://www.strategy-business.com/blog/Bad-Innovation-Is-Just-What-Your-Company-Needs?gko=cc371&utm_source=itw&utm_medium=20160721&utm_campaign=resp

Interesting article. See the original for great examples of each innovation type.

It’s easy to spot and celebrate the innovations that change company fortunes: Apple’s iPhone, Warner-Lambert’s (and then Pfizer’s) Lipitor, Microsoft’s Windows, to name a few. What is harder to appreciate are those innovations that aren’t the blockbusters and home runs but nonetheless play a critical role in a company’s innovation strategy. I’m not talking about the incremental improvements, but rather the value of launching new products and services that hold tremendous value even though they don’t shoot for the moon.
What follows are four perfectly good reasons, aside from world domination, to pursue innovations.

1. Innovation as placeholder. If you already have a dominant position in your market, chances are good that when a new niche product emerges in that space, your company would rather wait to see whether it matures into a clear threat before responding. But that could be a mistake. By the time the impact of that product becomes clear, you may have lost your window to launch a version that will gain traction. Instead, consider developing and launching a me-too product. Think of it as a placeholder to keep customers from straying. 

1. Innovation as proving ground. Smaller innovation projects can provide important but affordable ways to test new technologies, market opportunities, business models, and emerging talent. The interdisciplinary nature of developing and launching a smaller-scale project, and the reality of its outcome, can plainly show how a product or service is likely to do on the Broadway stage of your market, but with a community-theater budget.

1. Innovation as trust building. Backing an innovation isn’t a single decision. It’s a web of choices and actions to which everyone in the company must commit. That commitment is the core of the innovation process and requires enormous trust among coworkers and departments. No amount of talk can substitute for the level of trust that can be built through shared experience. If you wait for the really big innovations to form these bonds, it will be too late.

1. Innovation as a long game. For many innovation projects, the need to promise a certain and significant return on investment can doom otherwise viable opportunities. The traditional planning cycle kills projects not because the outlook for them is bad, but because nothing less than an overnight blockbuster will be considered a success. It’s called “giving birth to a 17-year-old” — and the class valedictorian or captain of the football team, at that. Some things just take time. Instead of thinking about whether the first product will be a success, consider whether the first product will enable you to build the right capabilities, understand the market potential, develop key partners, and guide the market toward where you want to be in five years.

http://us7.campaign-archive1.com/?u=c085f68552cb36b8f48e68bd7&id=03ae049069&e=1eb3a55cc4

We discussed topics like this extensively in our Driving Organic Growth and Innovation class. Rita McGrath is one of the leaders in this area of driving growth in uncertain business environments.

Innovation is on a roll these days as a hot topic of conversation. Unfortunately, despite all the talk about it (search on “Innovation” and it returns approximately 500,000,000 results) the doing, to many, is still a black box. Indeed, a recent McKinsey survey reported that 86% of the executives that responded thought that innovation would be highly important to their future growth strategies, while 80% reported that they were concerned about their business models being challenged. Only 6% reported being pleased with their company’s innovation performance, and the most telling response to me is that the 94% who were not pleased with how their innovation process was going had no idea what the problem was.... 

....My CEO won’t invest in innovation unless I can give him an ROI projection

 This is an all-time classic problem – see Clayton Christensen and colleague’s excellent article “Innovation Killers” for why. The first thing senior executives need to understand is that as uncertainty in your operations increases (as it does when you are doing something new to you), the value that is being created can in no way be captured in a present value calculation. Instead, you need to think of it in terms of option value. Consider the graphic above – as uncertainty increases, the present value component of value decreases, to the point at which when you are waaay out there the value you are creating is almost entirely option value.

....So what I would tell my ROI-hungry CEO is that… “unless you are investing in those hard-to-value but opportunity creating options (high uncertainty), you are implicitly voting that today’s business more or less as it is, is going to drive your growth needs in the future.” 

These Five Behaviors Can Create an Innovation Culture
http://www.strategy-business.com/blog/These-Five-Behaviors-Can-Create-an-Innovation-Culture?gko=85549&utm_source=itw&utm_medium=20160721&utm_campaign=resp

Some real interesting thoughts:

Many companies want to establish a culture of innovation, one that will encourage employees to take risks that lead to breakthrough products. But how exactly to build this type of culture often eludes senior leaders — threatening the success of their innovation initiatives.,,,Culture is the net effect of shared behaviors, and therefore adopting innovative behaviors must come first. You change the culture by becoming more innovative — not the other way around....companies should focus on changing a few critical behaviors — “a small number of important behaviors that would have great impact if put into practice by a significant number of people.” When it comes to innovation, adopting the following five behaviors can help your organization to make the leap.

1.  Build collaboration across your ecosystem. Innovation is a team sport. It requires excellent collaboration among siloed business and functional units and across geographies, as well as with external partners. 

1. Measure and motivate your intrapreneurs. Intrapreneurs are the folks in larger organizations who couple an entrepreneurial mind-set with the ability to leverage company assets such as channels, brand, and market savvy.To enable intrapreneurs to succeed, you’ll need to measure and recognize their innovative efforts. Three metrics play special roles.

1. Emphasize speed and agility. Innovation happens best when people move quickly. (Innovation and growth is all about momentum)

1. Think like a venture capitalist (VC). VCs tend to focus on big ideas that make the risk worth taking. You should do the same. When you hear a new idea, ask if it can make a significant difference. 

1. Balance operational excellence with innovation. Some experts think big companies can’t prevail in the face of disruptive innovation, even if they excel in operations. The truth is they not only can, but must. The tension that comes from balancing operations with innovation drives true success in today’s world.