“Bad” Innovation Is Just What Your
Company Needs
It’s easy to spot and celebrate the innovations that change
company fortunes: Apple’s iPhone, Warner-Lambert’s (and then Pfizer’s) Lipitor,
Microsoft’s Windows, to name a few. What is harder to appreciate are those
innovations that aren’t the blockbusters and home runs but nonetheless play a
critical role in a company’s innovation strategy. I’m not talking about the
incremental improvements, but rather the value of launching new products and
services that hold tremendous value even though they don’t shoot for the moon.
What follows are four perfectly good reasons, aside from world
domination, to pursue innovations.
1. Innovation as
placeholder.
If you already have a
dominant position in your market, chances are good that when a new niche
product emerges in that space, your company would rather wait to see whether it
matures into a clear threat before responding. But that could be a mistake. By
the time the impact of that product becomes clear, you may have lost your
window to launch a version that will gain traction. Instead, consider
developing and launching a me-too product. Think of it as a placeholder to keep
customers from straying. Once you have made the commitment, you can begin to
refine your vision and build the right capabilities.
Take smartwatches. The
market was created in 2013 with a handful of serious competitors. Pebble
shipped in January 2013; by July, most of the major smartphone makers were
working on their own product, and by September, the Samsung Galaxy Gear, Sony
SmartWatch 2, and Qualcomm Toq were on the market, in addition to wrist-based
fitness trackers. By mid-2014, Android watches by Motorola, LG, and Asus had
joined the fray. But although there was no clear winner and no clear demand,
the smartwatch was threatening to become a distinct market — and one largely
built for Android. Apple shipped its first watch in April 2015 and, by the end
of 2015, it accounted
for more than 50 percent of the market. The
Watch may not (yet) belong among the pantheon of Apple innovations, but it
ensured that nothing else will fill that niche for iPhone users nor shape the
category’s subsequent evolution.
2. Innovation as proving
ground.
Smaller innovation projects
can provide important but affordable ways to test new technologies, market
opportunities, business models, and emerging talent. The interdisciplinary
nature of developing and launching a smaller-scale project, and the reality of
its outcome, can plainly show how a product or service is likely to do on the
Broadway stage of your market, but with a community-theater budget.
For example, before turning
out high-grossing feature films like Toy Story andFinding
Nemo, Pixar made a number of short films that were relatively inexpensive
and weren’t expected to turn a profit. But the shorts provided a low-cost road
map to push new technologies forward and audition young directors. These kinds
of projects test an organization’s ability to innovate: propelling procurement
managers to work with new suppliers, materials, or processes; marketing
managers to engage with new customers, channel partners, or media; manufacturing
to pilot new production; and sales to roll out new offerings.
3. Innovation as trust
building.
Backing an innovation isn’t
a single decision. It’s a web of choices and actions to which everyone in the
company must commit. That commitment is the core of the innovation process and
requires enormous trust among coworkers and departments. No amount of talk can
substitute for the level of trust that can be built through shared experience.
If you wait for the really big innovations to form these bonds, it will be too
late.
Imagine that your company is working on a project that is set to
launch in just a couple of months. You discover that the various business units
haven’t yet committed the necessary personnel, budget, or training time needed
to meet the launch goal. Why? They don’t trust the development team or one
another to deliver. If your company isn’t regularly making commitments to drive
new product or process innovations, you’re losing your ability to do so. People
stop believing in each new project, having learned from the last that if they
just wait, this too shall pass.
4. Innovation as a long
game.
For many innovation
projects, the need to promise a certain and significant return on investment
can doom otherwise viable opportunities. The traditional planning cycle kills
projects not because the outlook for them is bad, but because nothing less than
an overnight blockbuster will be considered a success. It’s called “giving
birth to a 17-year-old” — and the class valedictorian or captain of the
football team, at that. Some things just take time. Instead of thinking about
whether the first product will be a success, consider whether the first product
will enable you to build the right capabilities, understand the market
potential, develop key partners, and guide the market toward where you want to
be in five years.
Consider how Toyota introduced the Prius to the U.S. market.
Hybrid cars represented a new category, one in which customers were skeptical,
horsepower performance was poor, and the marketable price meant Toyota would
lose US$10,000 on every Prius sold. Playing the long game, the company kept
expectations low by limiting initial availability to only a few key markets.
Annual Prius sales peaked in 2010, with just under 510,000 vehicles sold,
but the hybrid technology has had much broader impact. It has appeared in more
than 30 Toyota models, and the company has sold more than 9 million
hybrid vehicles globally since the Prius’s launch, including more
than 1.2 million in 2015 alone.
Blockbusters are nice, but remember that some of the best ideas
have much humbler origins. The Microsoft Surface now holds 53 percent of the
laptop-tablet segment, and is expected to be at 75 percent by 2020. That was
hard to predict from the initial versions of Windows tablets, which launched in
2001 to poor sales. But the company kept learning. The current success of the
Surface Pro 4 and Surface Book reflect valuable lessons learned about
controlling the hardware, rethinking the OS, and designing the entire experience.
Don’t fall into the trap of insisting every idea must look like,
let alone become, the next overnight sensation. An innovation needn’t make
headlines to serve an important purpose in an organization.
Andrew
Hargadon
http://www.strategy-business.com/blog/Bad-Innovation-Is-Just-What-Your-Company-Needs?gko=cc371&utm_source=itw&utm_medium=20160721&utm_campaign=resp
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