Executing Strategies That Promote Product Innovation
Innovation is not only about product innovation. Companies have always been focused on product innovation that they have ignored in all other areas. To cite an instance, Microsoft launched Kin, a social media phone that was a complete disaster. Within weeks, the entire product went off the market and its manufacturing was completely shut down. Microsoft took at least USD 240 million write off.
So what led such a great product innovator to fail? What market experts understood from many such examples that this could easily happen to even the best. Most organizations are focused on building short-term product innovation engines. These products do not have sustainable advantage and therefore never generate profit; those that do are quickly copied by other players of the same market, negating all long-term benefits. To be able to achieve success in product innovation and sustain growth, companies should learn to integrate product innovation with business models, process and service innovation.
To be able to transform a company, it is important to commercialize and nurture the innovative ideas. This dedication to innovation – the surest way to achieve lasting differentiation – calls for a dualistic mindset; the organization should be able to reap near term results and also prepare for perpetual results year after year.
There are currently five barriers that have been identified to companies that try to achieve the dualistic mindset:
- Absence of the required inclination that would harvest and manage great ideas – Sony had this brilliant idea of building the first iPod equivalent, but it failed in commercializing the idea because of its internal struggle.
- Misalignment of resources available for investment in innovations – Many organizations compete for same funds, which leads to replication of the same process and results in chaos and inefficiencies. The challenge is not about insufficient resources to invest in innovation, but funneling the resources effectively.
- Most of the time the human capital assets are under-utilized and disengaged, leading the pace of action to slow down.
- Broad product and delivery capabilities dilute focus of the product: To cite an instance, the financial services industry since the 1980s had moved from a handful of delivery channels to 15 to 20 channels that includes branches, direct mail, internet, to name a few. This has expanded the product offering by tenfold. Now, “anywhere anytime” banking has become the entry strategy for any providers who desires to address the large customer base.
- There are organizations that create complacency and prevent forward progress. When this happens chances are that it would obstruct innovation and out of the box solution development.
Large organizations have more resources and more talent and need to address a larger market than small players. However, despite this advantages of big players, we often see the smaller players having larger market share and in due time, dominate the industry. If you are wondering why this happens, then it’s because large organization leaders usually do very little to remove barriers and risks above. They lack the “innovation intent.”
Innovation intent gives that nothing else gives – meaning that it clarifies the strategic direction for your focus and efforts. However, it is duty of the top management directional mandate on how the firms should be using innovation to win their market share in that industry.
As per rulebooks, the authentic innovation intent indicators are as follows:
- Innovation is considered as a differentiator between long term growth and success
- Part of strategic vision, and value-defined, there is a strong desire to make innovation part of everyone’s job.
- There should be clear and authentic sponsorship from C-suite for innovation and strategic investments.
- There should be balance between performance engines and innovation
- The senior leaders of the company are committed to role-model innovation behavior – despite the pressure to stay focused on the performance engine
Innovation intent in product innovation must be clear to every resource in the organization, especially the leaders. The intent should be concise, that would drive alignment to business initiatives and help express specific employee behaviors that is necessary at all levels for an innovation ecosystem to take root. Only when designed appropriately, innovation intent is clearly linked to and driven by business strategy.
The following are some of the product innovations that made a difference in 2014:
ClassPass: Operating in more than 20 US cities from USD 79 to 99 per month, the site offers unlimited lessons from a wide range of boutique fitness studio. The stipulation is for three classes from the same studio in that month. The site is a win for consumers because ClassPass enables them to explore a range of exercise options previously impossible. It is also win-win for studios, because it helps in increasing their awareness through a low cost investment. It is great for the fitness class industry because it allows people to enter the market and try new exercise regimes as quickly as possible.
Bluesmart suitcase: This suitcase solves the problem of concerned travelers who are scared that their suitcase will be lost. Bluetooth tracking helps track the location via proximity heat map. GPS also helps if it’s missing over a longer distance. Built-in digital scales weigh bags so that no one goes overboard and a built-in battery lets users charge their electronic devices. A digital lock allows the suitcase to be locked through smartphone and if the tourist is separated from the luggage, it can also be locked remotely. Outside pocket on the carry on version makes it easier to access laptop when going through security. All this value addition makes the suitcase a great buy.
Most product innovations are based on technological advancements. To cite an instance, the Louboutin Nail Polish and LancômeGrandiôse Mascara incorporates technology within their formulae while ClassPass turned a marketing tool into a new innovative business idea. Most of these ideas are warmly welcomed by the audience because they are able to overcome the real problems of the consumer and give their devicesdesired functionality.