This is the second blog of our 5 part "Ignite Innovation" series from the Head of Ignite Exponential, Alan Cucknell. Missed out on part 1? You can catch up here.
According to the latest CBInsight report, State of Innovation, “85% of companies say innovation is important. And 40% of companies felt they were at risk of disruption.” Interesting, the more senior the respondent, the more importance they place on innovation. Yet despite this focus, strategic innovation remains a considerable challenge for most organizations.
In this blog, I’ve explored a few of the reasons for this from my experience, and in later posts, I’ll share some thoughts about what we can do about it:
1. The fallacy of repeat
As investors say: “past performance is no indication of future returns”. Let us consider the simplest of cases. We’ve succeeded in a previous market. We want to reintroduce a successful product or service into some new market. Easy right? Of course not. Just because a solution succeeded in one market, doesn’t necessarily mean it will succeed again in a new market. Even in the same market, the action of competitors and trends, and perhaps even our own past success means what worked yesterday, won’t necessarily work today and we can’t assume that yesterday’s market need will even be relevant tomorrow. Most of the time, innovation isn’t as simple as a “repeat”.
2. Innovation is inherently uncertain
In our work, strategic innovation and design is about creating something new and valuable for a customer in the future. In our experience, it is this last word that makes innovation particularly challenging – the future. We might be identifying new markets, developing new technologies, exploring new business models or designing new products and experiences. Not only are we attempting to identify some new type of value others have missed and to bring a tangible and effective solution to market to address this need, but the need itself is often moving or unclear.
3. Let’s just ask our customers
Of course, we can ask customers “what they want”, and there are many well-established methodologies for this, but at the best of times customer research is an art, not a science. It is not the fault of the researcher, or the customer – most customers simply don’t (and perhaps can’t?) know what they will want in the future. That word again - the future.
4. The innovation department
There has been a trend to the creation of innovation departments, innovation champions and even chief innovation officers. While we’re supportive of the trends, it’s a challenging gig. Innovation succeeds (and fails) for a complex set of reasons. Understanding the customer through great marketing is not enough. Neither is delivering new technology through strong R&D, or creating compelling designs or finding new business models. The strategic ‘innovation activity’ needs to have many functional perspectives from these domains and more which makes it complex to address and to manage.
5. Future uncertainty increasing
The world is constantly and unpredictably changing. There are rising societal expectations, a changing political landscape, new business model trends (e.g. the decrease in ownership, freemium, the rise of services) and a torrent of disruptive technologies, (most notably, the ‘internet of things’, AI, Machine Learning and Robotics) and all in the context of ever limited environmental and economic resources. We face these “known unknowns” but we’re also faced with “unknown and unknowable unknowns”. We inherently “don’t know what we don’t know”!
The impact on innovation
Given increasing uncertainty and the pace of change today, it is understandably more challenging than ever to confidently focus innovation investments and therefore to lock down new concepts or product specifications for detailed design, technical development and manufacture.
And if this specification does change later during development, there can be a considerable cost of redesign and lost opportunity (for example, sub-optimal performance or the missed revenue of a delayed launch). While this presents risks, it also presents an opportunity – an opportunity to those companies that can find a way to move quickly and confidently despite the apparent uncertainty.
Our team is proud of its considerable track record in tackling some of the toughest innovation challenges across many industries and growing many leading businesses and brands.
And yet, despite these achievements, we don’t see a single innovation, design, marketing or strategy process that is confidently and effectively able to help our clients to navigate this uncertain future.
Are you spiralling into 'The Fallacy of Repeat' in your business? Do your customers know exactly what they want so you can provide? We want to know so let's continue the conversation by following IEX on LinkedIn and Twitter.