I read an interesting article on innovation today that looked at the ideas of David Midgely, marketing professor at INSEAD, who has written a book called the Innovation Manual.
Although many companies are looking towards innovation to help them gain market share or increase sales coming out of the downturn, Midgely says that many of them are wasting resources by not managing the innovation process properly. He is quoted as saying, "It's not the effort that companies put into innovation that decides success. Instead it is how firms go about doing innovation that separates leaders from the rest."
So how can companies be sure that their innovation dollars are being spent in the right place? What's important, says Midgely, is to look at innovation across all functions. Companies looking to develop an innovative product and service need to consider where they are trying to innovate. This could be in any of the following: customer, technology or business model. The article outlines examples of each of these:
- Customer: Nintendo developed the Wii to appeal to a new customer base that didn't traditionally buy games consoles;
- Technology: For its PS3 console, Sony focused on developing a new chip that would give its games the edge amongst gamers;
- Business model: Apple's iPod was successful, not because it was a great device, but because it created a new business model around iTunes that would allow users to easily buy only the tracks they wanted.
What's interesting about these examples is that the company focused on innovating in a single area. The Wii, for example, doesn't have any real innovation in its business models and even its motion sensor remote can be considered as helping establish the product amongst a new segment of gamers.
Once a decision has been made about where to target the organizations' innovation efforts, Midgely suggests a number of steps to make it a success. These include:
- Set up a cross functional team responsible for developing the innovation;
- Work directly with customers in the development phase;
- Make the right organizational changes to deliver the innovation (this is particularly important for service or business model innovations);
- Build momentum for the innovation through proper marketing.
FastCompany.com has two very interesting articles on innovative products. One is very cutting edge, the Kindle and Amazon, while the other is much less high tech and even includes a service delivery workforce in the business model, the Red Box video rental.
http://www.fastcompany.com/magazine/137/tech-edge-box-tops.html
Both of these innovate in very different ways and may have adhered to some steps outlined in the Innovation Manual but I think the biggest thing in many of these cases is leadership commitment. I once had a professor tell my class that ideas and innovation is not the problem in Corporate America but what was lacking was execution and commitment. I think any Innovation Manual would be unfinished if it did not address the leadership (commitment) aspect.
Innovation or disruptive innovations can exist inside large organizations or can come from smaller more nimble start-ups but perhaps the source of the innovation is not as important as the process of developing that innovation. Without the entrepreneurial side of development then where will an idea go? Where will the application of that idea take root and prosper? If that innovation is disruptive to a core competency, will leadership still believe in the idea or will they push it aside (Xerox PARC)?
The idea that proper marketing will build momentum for an innovation is a core step seems a bit suspect to me. Not to say that marketing is not important because I believe it is, but on a scale of importance from one to eleven (just because 11 is better than 10) I would put marketing around a 5 while leadership should get an 11.