Verloop Success in Innovation

Improving the Odds by Understanding the Factors for Unsuccess
1. Auflage 2013
ISBN: 978-0-12-397903-2
Verlag: Elsevier Science & Techn.
Format: EPUB
Kopierschutz: 6 - ePub Watermark

E-Book, Englisch, 140 Seiten

Success in Innovation tackles its subject from a novel perspective: instead of focusing on factors for success, it specifically examines the factors for failure. Similar books often attempt to stimulate more effort on innovation with success stories and methods. But innovation is risky business and most innovative ideas fail. By understanding the typical pitfalls and hurdles in the process, and how to avoid or manage them, readers can significantly improve their chances of success. Success in Innovation is broad in scope and useful to managers, consultants, entrepreneurs, tech start-ups - anyone with a stake in new and powerful ideas, products, businesses, or methods. This book helps readers work smarter, not simply more. - Provides guidelines for assessing innovative ideas - Includes methods for valuing innovation - Discusses the danger points in the innovation process - Explains the planning and development processes - Includes innovation models - Discusses the methods for risk assessment

Jan Verloop is consultant in innovation. Besides innovation he has extensive experience in process and product R&D. He advises both start-up and multinationals in Europe, Asia, and America and has built up first-hand experience with successful and failed innovation projects. He is a non-executive director of Oxford Catalysts, a very successful start-up company which started in the cellars of Oxford University and now has facilities in the UK and the USA. He has lectured and advised on innovation in developing countries at major international conferences and smaller think-tanking sessions with heads of state and leaders in government and business.

Autoren/Hrsg.

Verloop, Jan

Leseproben

1

Insights in Innovation

1.1 What is innovation

Innovation does not mean the same thing to everybody. Many people confuse innovation with invention and think that both words stand for the same thing. Others equate innovation simply with creativity or entrepreneurship or ‘doing things better’. All these concepts are connected to innovation but do not represent the essence of innovation. Innovation is the process that develops an invention or a creative idea into a novel product and brings it to a user or customer, and that process is risky and needs an entrepreneur willing to take that risk. A practical, concise definition of innovation is:

‘Innovation is bringing an insightful idea successfully to the market.’

Besides being short, this definition has several other attractive features. It brings across that:

• Innovation is not a one-off act or a flash of insight, but a process.

• Innovation needs insight. A creative idea by itself is not enough, but the new idea needs to be grounded in understanding its specific merits, such as the value to the customer and the requirements of the market place.

• It is not the technology but the market that determines the fate of the innovation. Market means here a collection of customers that use the innovative product, whether they have paid for it or not. This implies that customer needs and satisfaction must have a central position in an innovation effort.

• The word ‘successfully’ reflects a key insight: if the novel product is not adopted by (a sufficient number of) customers, it is not an innovation!

In its simplest format, a starting innovator has to achieve three things:

1. Develop a new product.1

2. Convince investors to finance the innovation effort.

3. Find customers that are willing to use (and pay for) the novel product.

This may look simple, but each step is a complex process in its own right and furthermore has to be executed at the right time and in the correct sequence. Many starting innovators put all their efforts in the first step because that is where they are good at and it seems to be the most important part of the innovation. As a result, many innovation efforts fail due to lack of money or customers and not because the product did not work. Finding customers that are willing to take the risk of buying and using an unknown product is the deciding factor for the success of an innovation. Considering potential investors as a first customer is not a bad start because also an investor has to believe that the product is worth spending money on.

Besides dealing with the above complex set of processes, the innovator has to also start and built a business that is capable of creating value with the innovative idea and extracting part of that value for the new venture. This means that, besides the three tasks above, the innovator also needs to carry out another task successfully:

4. Developing and organizing the capabilities for making and selling the product profitably.

The learning points are that developing the product is not sufficient, but simultaneously a vehicle, usually a business, for bringing the product to the customer has to be developed as well. Thus, an innovator has to be more than a smart scientist or creative designer but, in the first place, needs to be an entrepreneur, capable of developing and running a business. For a start-up company, the definition for innovation can be adapted to:

‘Innovation is creating a successful business from an insightful idea.’

With this definition of innovation in mind, it is important for a techno-starter to appreciate how a true opportunity from the many ideas that present themselves can be recognized. Key characteristics of a sound innovation opportunity are2:

1. Creating value for customers by solving a problem or meeting a latent need.

2. Offering attractive profit potential.

3. Fitting with the capabilities of founders.

4. Being amenable to financing.

These characteristics may look obvious, but they provide a simple and effective screening tool for looking at innovation opportunities. In a way, the fourth characteristic is somewhat superfluous. Typically when the first three characteristics are satisfied, financing will not create an insurmountable hurdle. As the saying goes, ‘there is always money for a good idea’. But it provides a good check whether the assessments of the first three characteristics were fair and realistic and not based on optimism and idealism. When this assessment is positive, the innovation project can start.

For understanding the intricacies of the innovation process, it may be useful to compare innovation to a journey of discovery or a quest. A quest shares many aspects with innovation and they can serve as learning points:

1. A quest has magical appeal, not recognized by most, but irresistible for some.

2. A quest leads through unknown and uncharted territory.

3. Most quests fail and never reach their destiny.

4. The ‘treasure’, if found, is usually different than expected.

All these features can be found in the innovation process, including the often seemingly irrational drive that an innovator has, based on the conviction that the innovation is valuable and will be successful.

1.2 The Bridge Model

In abstract terms, the overall effect of an innovation quest can be described as transforming intellectual capital, embedded in formalized know-how and patents, and human capital, skills, and capabilities embedded in people, into a product that can create financial capital. Innovation is a process for creating and transforming value.

The bridge model reflects that innovation builds a bridge between the ‘intellectual world of ideas, technology, inventions, knowledge, patents’ and the ‘commercial world of customers, markets, utility, value’. Figure 1.1 illustrates the concept of innovation as crossing a bridge between two different spheres: the intellectual world of science and arts, and the commercial world where innovation is measured in terms of ‘utility’ or ‘value’. Most of the time that value will be expressed in money, but that may not always be applicable. In a commercial environment, creating value means generating attractive revenues. Not all innovations will generate revenue. Innovations that are only used internally, such as novel business processes or computer programs, may only be used for reducing costs. Innovations in or by nonprofit organizations may also not measure success in terms of revenues. The key requirement for success in innovation is that it is used by satisfied customers.

Figure 1.1 The innovation bridge.

Planning and leading an innovation effort can be compared to planning and leading an expedition into unknown territory. The actual actions to be taken will vary starkly for different destinations, but they all have to go through the same process. An expedition to the South Pole, the top of a mountain, or the depth of a jungle may seem to have little in common, but in generic terms, they all go through the same phases: planning, preparing, the quest itself, and the way back. The fourth phase is an essential part of the expedition and should not be overlooked because reaching the top of the mountain but not returning home safely does not constitute a success. Similarly, an innovation quest has four phases:

1. Creating the concepts for the product and the business.

2. Developing and demonstrating the product.

3. Developing the supply chain to the market.

4. Building a business with a robust cash flow.

Staging of the innovation process is important because in each stage the activities are different in nature and requires different capabilities. As a consequence, the people involved, including the leadership, may need to be changed when the innovation moves into a new stage. Understanding what has to be done in each stage as well as the how and the why, and doing them in the right sequence are key to success. The required changes with the shifts to the next stage have to be managed properly. The fourth stage is the ‘proof of the pudding’ and determines whether the innovation is successful or not. But not finding ‘the pot of gold at the end of the rainbow’ does not necessarily imply failure. If the quest is stopped in time and for the right reasons, the venture should not be considered a failure, but an heroic attempt that was worth doing.

Stage I: Creating the product and business concepts

In this stage, the innovative idea has to be developed into a business concept that includes a product development and a business plan. The product development plan describes the perceived advantages of the product in terms of benefits for the target customers, together with an analysis of the required capabilities, the timeline, and a cost estimate for the development. The product development plan is preceded by a conceptual design of the product. The design can be limited to the exterior shape of the product, but that is usually not sufficient. For radical innovation, the design is in the first place the interaction of the various elements and technologies, and the way the desired features...