"Innovation" has become the buzzword of the decade, often encountered by eye rolls and yawns. Yet, companies are reliant on innovation for continued growth and competitive advancement. The issue is that the concept of innovation has been sorely misrepresented and overhyped to be this go-big-or-go-home idea that requires massive amounts of time, money, and resources. In this post, we hope to dispel those myths.
Myth 1: Innovation happens overnight
On one end of the spectrum we hear about the “overnight” successes—Airbnb, Uber, and so forth. However, if you read the history of Airbnb, the company’s success was preceded by a completely different vision and mission at the onset. It actually took the company three years to get its seed funding of $7.2 million[1]—a dollar figure that is not that substantial when compared to strategic enterprise initiatives. During this time and to date, the company has gone through multiple iterations, failures and shifts in its business. A business 10 years in the making hardly equates to overnight success.
However, what the Airbnb story does tell us is that innovation is a process. I argue that innovation should be methodical, incremental and focused on maximizing customer value.
Take for example, the Nest thermostat. The building blocks were already in place and relatively simple. Nest incrementally evolved the technology and placed its bet on the customer experience aspect of a common household device to design and build a simple, more human, user-friendly product that aims to save energy while keeping households comfortable. The company’s bet paid off: Since being acquired by Google in 2014 for $3.2 billion[2], Nest has released a number of new products, including a smart video camera that can act as a baby monitor, a theft deterrent, or a pet cam.
We see the same examples across industries, including heavy industrial. Take GE for example. In a Fast Company article written by John Gertner, he writes,
"In trying to build smarter machines, the company is also vying to create a new industrial age that produces broad, rippling gains for the entire global economy. What's curious, though, is that GE's grand endeavor isn't about disruptive innovation, at least by Silicon Valley's standards. Rather, it is about the vast potential of incrementalism—that is, a predicted 1% improvement in the productivity of GE's big iron. At first glance, such a number seems terribly modest. But by merging the stolid industrial world with the fleet digital world, Immelt believes GE can achieve something revolutionary. The scale of the company's products is so large that small gains in their productivity could, Immelt proclaims, "drive massive economic benefit." He is talking about hundreds of billions of dollars.[3]"
Through the adoption of cross-functional teams and agile methodologies, many of our clients are able to develop better products in a shorter span of time. One of our clients in the financial services industry was able to take a product to market in under six months across three platforms (iOS, Android mobile apps and a responsive website).
Myth 2: Innovation is expensive
It’s no surprise that we are in one of the most disruptive periods in business history. Back in 2014, venture capitalists invested more than $50 billion, funding aggressive newcomers across myriad industries that threaten to disrupt a number of B2B companies.[4] Established companies took notice and are aggressively trying to adapt—by spending lots of money. However, we argue that it doesn’t have to be this way.
At one FORTUNE 1000 financial services company we recently met with, they had an entire massive conference room reserved as its “innovation room” where nine members of the company’s innovation committee assembled regularly. The walls were covered with Post-It notes, Gantt charts and the like. The committee was charged with coming up with a strategy to pivot one of its lines of business. It only had one shot to get it right, according to one of the executives.
Detailed plans were drawn up of what the pivot would require in resources, collateral, communication, hardware investment, etc. However, what started as a good intent, turned into a very significant cost burden to the organization. Nearly eight months in, the company was no further along with zero product built. We proposed a more cost-effective solution that would get product to market faster.
What we’ve found to be true is that innovation does not have to be this burdensome on an organization. Through a persona exercise, lean requirements workshop, and prototyping, a business can quickly validate business ideas and deliver a minimum viable product to market at a fraction of the cost that can generate value in months, if not weeks.
We recently worked on a mobile application for a leading manufacturer of backup power generation products for residential, light commercial and industrial markets. The company’s service dealer network (SDN) needed better tools, but the organization was hesitant to develop a full-blown product without better understanding its network’s needs. We built a working prototype in approximately eight weeks. Upon testing the prototype with its SDN, 90% of the dealer network subscribed before it even was a product.
Once the product vision is solidified, a more significant, but still iterative, investment could be made to propel the venture through multiple stages of maturity. Assembling a cross-functional team and the various processes enable teams to deliver a lot of value at a lower cost, thereby making the cost of innovation much lower.
Myth 3: The innovation team can operate in isolation
Forbes’ contributor George Bradt wrote an article titled, “Why You Should Eliminate Your Chief Innovation Officer.”[5] That title may appear extreme, but what Bradt was trying to convey is that not one person and/or team within any organization should be solely responsible for innovation; and we couldn’t agree more. What we continue to see are real ideas and opportunities being brought to the table where the company’s service/product intersects with the customer. We believe that innovation is really the artful execution of ideas that already exist within a company. A culture that tolerates failure, embraces change, and empowers employees (for more on this, watch the following video).
Enterprises need to dispel the myth that the Chief Innovation Officer needs to drive innovation. Rather, the Chief Innovation Officer should serve as the catalyst to ensure that innovation comes from anywhere within the organization. If anything, this person is in a unique role to foster a culture of listening and then establishing a process whereby the organization can quickly react with small prototypes that individuals on the front lines can test.
Conclusion
As companies begin to view innovation as an organization-wide, iterative process, many of the widely held beliefs associated with such a broad word become folklore. Among our clients, we’ve seen drastically reduced time to market and increased efficiency through the adoption of cross-functional teams and agile methodologies. This approach has allowed these companies to become more innovative by breaking down product development barriers.
Related Posts
Building a culture of innovation
How Product Thinking can spur innovation and accelerate products to market
Demystifying innovation [VIDEO]
[1] (2016). Airbnb. Retrieved from https://www.crunchbase.com/organization/airbnb#/entity
[2] Winkler, Rolfe and Wakabayashi, Daisuke (2014). Google to Buy Nest Labs for $3.2 Billion. Retrieved from http://www.wsj.com/articles/SB10001424052702303595404579318952802236612
[3] Gertner, Jon (2014). Behind GE's Vision For The Industrial Internet of Things. Retrieved from https://www.fastcompany.com/3031272/can-jeff-immelt-really-make-the-world-1-better
[4] Kerner, Lou (2014). Running Scared? Big Companies Increase Innovation Spending. Retrieved from http://techonomy.com/2014/11/running-scared-big-companies-spending-innovation/
[5] Bradt, George (2016). Why You Should Eliminate Your Chief Innovation Officer. Retrieved from http://www.forbes.com/sites/georgebradt/2016/03/16/why-you-should-eliminate-your-chief-innovation-officer/#534a17f92270
