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Common Misconceptions in Strategic Innovation Initiatives

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Initiatives to
cultivate innovation are rapidly proliferating. From my regular dialogue with
Marketing and R & D executives of science/technology-based organizations, I
notice many initiatives are built on at least one of these underlying
assumptions.
1. Innovation can be Outsourced
2. Ideation = Innovation
3. Technological Novelty = Innovation
Per se, these assumptions are perfectly good starting points ' the mistake is
to believe that's all you have to focus on. A lot of thought and care needs to
be put into the application and follow through of these assumptions to achieve
sustainable results.

(1) Innovation Can Be Outsourced
Many corporations have been funding collaborations
with academia and startups in the hope of giving birth to their next killer
product. Typically, the corporate sponsor funds certain research activities,
the outputs of which are then imported back for development into a commercial
product. There are numerous success stories.

But there are at least as many deals that do not
deliver. A typical pitfall is the adoption of an arms-length relationship ' the
sponsor provides funding and the partner conducts research, with little
day-to-day interaction and a high risk of both sides getting mis-aligned over
time. In other cases, the sponsor does the opposite, imposing its
processes/SOPs on how the partner operates. Neither approach is conducive to
the cross-stimulation and integration of complementary skills and perspectives
which generates the best innovations.

Experienced sponsors (i) use their in-house
capabilities to regularly provide what their partner lacks or to enhance what
they do, and (ii) assign (as their primary partner interfaces) individuals with
collaborative behaviors and openness to different ways of thinking.

(2) Ideation = Innovation
Many initiatives include a 'suggestions box', where
anyone can suggest ideas, often with a reward if the idea eventually becomes a
project. But good ideas alone are not enough. A typical pitfall is a screening
process which is too much driven by NPVs and revenue forecasts, filtering out
many ideas for new markets whose upsides cannot be easily quantified.

More importantly, rarely does a single idea translate
directly into a product. Typically, several related (or even contrasting) ideas
are considered, refined and synthesized by a cross-functional team before a
viable concept is articulated. And this concept needs further exploration in
successive iterations of test-fail-adapt until the product specification is
finalized.

In fact, most organizations have more than enough good
ideas, whereas many could get better at shaping them into viable concepts and
eventually products. There are many different approaches that can be used for
this product shaping process, ranging from (i) systematic identification,
analysis and testing of assumptions, to (ii) exploratory co-development
projects with marquee customers, to (iii) open architecture approaches such as
crowdsourcing.

(3) Technological Novelty = Innovation
Technological inventions do not always translate into
commercial successes. Yet in many corporate R&D organizations, the culture
of publications and patents is deeply embedded. Of course, technological
breakthroughs are necessary enablers for many successful products, but there
are just as many successful products assembled from existing technologies. What
matters is addressing customer pain points and improving the customer
experience in a significantly better way.

Organizations that have become smarter at innovation
stimulate and prioritize the use of technology (novel or existing) to drive a
dramatic improvement in (i) the level of customer benefit delivered, or (ii)
the cost of delivering the existing level of customer benefit. They also
innovate on usage, exploiting their existing technology platforms in new
customer segments, applications and industry sectors.

And platform exploitation can be combined with a
clever product shaping process to generate innovations with high market value
quickly. For example, Verdande Technology, a software company originally in the Energy sector,
has in just 18 months, extended its technology platform into financial services
and healthcare through
exploratory co-development projects with marquee customers
.

Want to learn more about strategic innovation?
Register for BEI 2013! BEI: Back End of
Innovation is a conference focused on the execution of innovation strategy. It's
where the entire innovation process comes to life-from leadership &
organizational structure, to optimizing the idea portfolio, to process and
strategy, to commercializing new ideas ' ultimately driving bottom line
profitability.  

About the Author: Robert Thong co-founded and chairs Unleash, a consultancy that helps organizations address their
business challenges through their own collaborative, entrepreneurial
problem-solving. He is a veteran of dozens of strategic initiatives in
biomedical, healthcare, IT and professional services organizations. In addition
to partnering with senior executives on Unleash's client engagements, Robert is
a highly regarded speaker, workshop leader and facilitator of leadership team
offsites.

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