We have all heard that “Money does not grow on trees”. This proverb, cited in 1819 is as old as paper money, meaning that money is not easy to make and not inexhaustibly available. If you extend this thinking to organizations, they need to make sure they have a pipeline of new products and/or services to continue to sustain and grow their business. We are all familiar with the new product adoption curve by Everett Rogers which shows eventually you need to go back to the drawing board to come with the next killer idea.
Today, much better quality products enter the market faster and cheaper but their staying power is very much in question. This means the great big bang disruptors that take the competition by storm can just as quickly fall off the cliff. A shark fin is much more representative of the new product adoption curve. Companies need to constantly nurture a pipeline of innovation to sustain growth.
Big Bang Disruption: Strategy in the Age of Devastating Innovation Author: Larry Downes and Paul Nunes Publication: 2014
I remember a few years ago sitting across the table with the CIO of a highly successful large telecommunications company telling me business is going so well that cost cutting and launching new initiatives to get more visibility was not a concern. Today, as you would expect, this company went through some hard times as they missed important market disruptions and are still paying catch up. Gone are the days that companies can rest on their laurels and count on their cash cows!
I just started a new journey in Innovation Management and I must say I am impressed. For the last 3 months I have been meeting, speaking and reading about the challenges companies face and the opportunities are momentous. I spent the last two decades trying to explain the ROI associated with Project Portfolio Management (PPM), Professional Services Automation (PSA) and IT Financial Management (ITFM) systems. Admittedly, looking for greater efficiency in running the business activities can only take you so far. You can be sure most of your competitors have also made major investments in making their operations as lean as possible.
Innovation Management is about changing the business. I have never seen the kinds of results organizations who have made the investment in building a true innovation engine are reporting. The average ROI from the market and clients I have spoken with is more than 1,000% within 12-24 months and incredibly this number jumps by another 500% annually for the next two years. Depending on your execution a single idea can be transformational. Yet even if companies do not find that breakthrough idea to disrupt an entire market, they do experience significant positive financial impact by uncovering incremental and substantive innovations.
Gartner moved “Idea Management” into “The Slope of Enlightenment” in its 2011 Hype Cycle *, predicting the opportunity for mainstream adoption within 2-5 years and they were right on the mark. There are a number of new offerings in the market and if you look at the depth, breadth, maturity of these solutions including the great best practice content and domain expertise it is mind blowing.
Organizations are looking for innovation in three main categories: product/service innovation, process innovation and business model innovation. These initiatives are undertaken in hopes of achieving projects in the following areas: New Product Development, New Market Opportunities, Work Process Improvements, Customer Success and Customer Experience.
But an Innovation Engine is so much more than a “Suggestion Box” which is what you get from lightweight idea management systems that are sometimes included as part a PPM, Product Lifecycle Management (PLM) or Application lIfecycle Management (ALM) system. To be able to truly create a sustainable innovation engine you need to build processes and systems which are able to facilitate the following:
- Designing focused innovation challenges and campaigns
- Recognizing and rewarding innovation contributors
- Building communities for idea generation and development by employees, customers and partners who are actively engaged in the innovation process
- Training your teams on how to innovate, how to rank, screen, experiment and develop ideas and concepts
If you are looking to create a true differentiator then you should really consider building a sustainable innovation engine to help you stay competitive and grow in this fast changing market place. This also means your other enterprise systems can get a steady stream of strategic projects to choose from.
I would love to get your feedback on what your company is doing with innovation and what are the results you have experienced.
* Source: Hype Cycle for Emerging Technologies, Gartner (July 2011)