Innovating on a Shoestring

Innovation – one of my favorite topics. In his video the president of Innosight talks about his new book. I will briefly summarize his findings, and add my own experiences.

Innovating on a Shoestring

It has never be more important to innovate than in these days of economic crisis. Many managers are curious to learn, how they can establish the required innovation climate in their companies.

Enabling Forces

He suggests you to first look into the enabling forces, and thinks that the following measures create the needed capacity to work on groundbreaking innovation:

  • Make sure that the house is in order. Thus, start by removing the slack in your current processes, and by improving the areas with inefficiencies.
  • Equally crucial is that you verify your current portfolio and identify activities, which you can potentially stop. In particular look for the small, incremental enhancement projects, which add a lot of work, but do not generate too much benefits for customers.

Invest More

Often, it is possible to increase the monetary investment into innovation, or you can simply assign more capacity to these projects. However, the factor time is almost always limited. To address this challenge, take the following measures:

  • Stop doing some things.
  • Understand innovation as a process.
  • Identify possibilities to share risks with customers, or partners, and look for possibilities to co-innovate with others.

Manage Risks

Very crucial is that you start to manage strategic risks, in the same way, as you already manage the technical risk.

You can do so, by allowing you and your organization to incrementally learn about the conditions in a new field. Better than with market research, you answer questions such as “How big is the market”, “How to package the products”, etc, if you allow investment to match with learning from real innovation projects.

Some managers lack the mindset

He thinks that many managers are not prepared and that they lack the mind set, which is needed to master the current challenges. Here is what these managers should do:

  • Look for activities that expose you to ambiguity, and by this learn to think like an entrepreneur.
  • Complicate your life and expose yourself to ideas, which are uncommon in your area, or which give you a new perspective.
  • Grasp into your network, and look for people who think differently than you do, and let yourself be inspired.

My view

He forwards some interesting ideas. In addition to this, I think that it is important to understand the following basics about innovation:

  • Innovation is possible everywhere, and everybody can innovate. To support the innovation process it is very important that you as product manager help your company to truely understand the market. A constant customer focus helps you to gather, what I call, a “real” understanding of customer needs. You have this real understanding, if you are able to think like your own customer, and if you understand the forces that drive him.
  • Innovation is not a value of its own. Also important is that your company benefits commercially from innovation, and that it leads to economic success. Here it is important that you are having a close look on the commercial parameters of an innovation, and that you see technology and economics as two sides of the same coin. To properly evaluate your new products, ask yourself about the quantities, which you need to sell, or the prices, which you can ask for. Also take a closer look to the costs and the cost structure. Ask yourself about the margin, which are possible with your new products, an how much the innovation will contribute to the bottom line of your business.
  • When heading for innovation you need to make sure that you stay grounded. At the end, your company will need to deliver on its promises. Compare the needed core-competencies with the competencies of your company, and define areas of future development and learning. Also identify the most relevant processes, which you need to execute on your innovation. Make sure to develop a plan, of how you extend competencies and processes to the new needs.

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