Or how you can drive growth with User-centered innovation
In November 2018, Tendayi Viki was asking again in Forbes “Why large companies continue to struggle with innovation?” – a recurring question for too many years.
We do not pretend to have the magical recipe for Innovation. However, our daily work with both large companies and startups gives us a unique perspective on closing the Gap for putting “Innovation” in practice.
Companies “hear about the advantage of disruptive innovation or step-out innovation and decide that their organization should do “some of that.” But their organizations are designed to do something else very well. Namely, what they are already doing.”
– Why Big Companies Can’t Innovate, Harvard Business Review
From large companies, we hear how difficult it is to “Innovate” in specific industries; worst, many Managers believe they are laggards while other companies are faster, more flexible and prone to innovate! There is so much noise around “Innovation” that many Manager are in constant “catch-up” mode or FOMO (Fear Of Missing Out)
At the same time, from B2B Tech startups, and the frustration of “Innovation Labs” disconnected from the priorities of the Company’s core business. Several months into meetings, negotiating proposals and running Proof-of-concepts, the initial excitement for the “innovative” solution is often buried under business lack of focus, day-to-day priorities, one-off pilots and red tape.
On a rush to “Innovate”, many Managers and Entrepreneurs alike forget the 3 levels of maturity for adoption of Innovation:
- Technology maturity or what everyone is talking about today
- Market maturity or the ability for a viable roll-out at scale
- User maturity, rarely talked through but often most critical
In this paper, we will uncover together 3 challenges on a path to true Innovation-for-Growth. We will also articulate 5 specific actions companies can execute to achieve sustainable Business Growth.
Challenge #1 – it’s Innovation Magic!
Remember how you watched the latest Magic show? Like a kid, you probably experienced a mix of Delight, Wonder and Superiority!
- Delight – we are wired to be in awe of things that cannot be logically explained.
- Wonder – we know these things are fantasy, but if magic is real, then maybe all kinds of other cool things that we want to believe are real, too.
- Superiority – while there are some people who watch magic with wonder, there are plenty of others who get off on their perceived superiority to the magician. They can figure it out. .
Today, Innovation is like watching a magic show!
Delighted by the Technical novelty, we join the crowds of Innovation Summits & Tourism, Startup festivals and Pitching competitions. We know many of these things are fantasy but also wonder how it could work for our company. The first thing we burn to ask the Magician is “how did you do this”?
Challenge #2 – The “Innovation-as-a-service” Trap
Under pressure from shareholders, customers and competition, each business needs to “Innovate”. As so often, Managers focus on the easiest part of the equation – the How. We send people to training to acquire and learn the method and tools.
We establish Innovation Labs, “Silicon Valley Outpost”, Accelerator, Incubators and often even hire a Chief Innovation Officer! And then we outsource the essence of Innovation to external providers or “innovation-as-a-service” consulting firms, with the promise that you too can innovate … efficiently!
From this, the “Innovation Manager” feels free to share deep insights travelling the world, giving keynotes about Innovation at the ever growing audience of Innovation Forums.
Challenge #3 – The “Halo Effect”
Our business world is full of research and analysis that are comforting to managers: that success can be yours by following a „Innovation“ formula, that specific actions will lead to predictable outcomes.Innovation is one good example of “The Halo Effect” where the perception of one quality is contaminated by a more readily available quality. In this case, Innovative companies being rated as more performing when promoting Technology innovation.
What the authors claim to be the causes of long-term performance are more accurately understood as attributions made about companies that had been selected precisely for their long-term performance… In fact, lasting success is largely a delusion, a statistical anomaly… – The Halo effect, Phil Rosenzweig
So what we should do instead?
Build on your business and management strength.
Stop focusing on Technology Push “Innovation” and instead address the key hurdles on the way to sell a new product or solution into the market – User Adoption. And be ready to transform your company in a challenging but rewarding process!
Focus on customer (re) discovery
Established companies have a deep market experience, established channels and long standing customer relationships. From there, Managers are best positioned to identify user’s problems, both internal and external.
B2B Tech startups engage in Proof-of-Concept with prospective customers to offset their lack of “track record”. For larger companies, this PoC can also be a fantastic opportunity to (re)discover their customers, adjust features, increase value capture – and secure user adoption along the way.
Be ready to Test-and-Learn
Most companies have established a functional, geography or product-driven organization or a mix of all. Many also have or thinking of establishing a Chief Digital / Innovation Officer.
One particularly useful organization is along the Customer Journey including a Customer Success team or some people committed to a great product value experience. These customer-centered teams are key in ensuring customer maximize value from new products. More importantly, embedded in the New Product development teams, they can provide invaluable insights to for new user-driven product innovation while increasing value capture!
Organize to Execute
Once the customer insights are flowing into your organization, the true business growth will come from implementing the new product or solution features. This phase will rely on a higher tolerance for Risk and the proper frugal mindset or Jugaad.
Methods such as Agile process to execute and iterate evolving product features over time can be helpful. This is done sometimes under a separate organization with required “Air Cover” to protect from interferences while also giving marketing freedom with eventually a distinct Brand.
New products require also new sales processes, capabilities and metrics. First you will need to invest more qualified sales people time for Inbound vs. outbound sales and Solution vs. Product selling. The focus is on establishing a long-term relationship and on ensuring your customer is deriving sustained value from the solution. e.g. Partnerships and network effects.
When we work with a Startup, we define what are Key Performance Indicators and identify Solution-selling talent. While the solution might be new, the KPIs are generally well established in the given market but might be quite different from the established Company core business!
Business and Talent acquisitions
For many large companies, hiring the required talent, particularly round “hot new tech” such as AI, Cloud computing, Software Development is a real challenge.
We rave at the GAFA & Co. and their incredible ability to innovate and grow. We should not forget that most AI solutions the GAFA are now deploying to the market are arising from many Product & Talent-driven acquisitions over the past 5 years.
Used properly, Innovation marketing and “Acquihire” can be powerful tools to evolve the way your company culture, customers, employees and new hires image.
To bring it together, some takeaways:
And of course Mind the Gap between Innovation and Adoption!
- Focus on user-driven innovation to deliver true business performance & Growth
- Listen and partner with your customers to increase your value capture
- Review your organization design to ensure customer success and feedback
- Implement Reverse Mentoring to upskill your organisation and evolve Culture
- Set clear goals for your innovation initiative… you get what you measure
- Challenge “Innovation-as-a-Service” solutions against your Business goals
- Validate first startup Commercial value-add, not equity transaction
- Foster experimentation Mindset to address new customer unmet needs
- Consider creating a separate Brand & organization for execution
Looking forward to your comments, questions and feedback !