I am sure that if you take part in the decision making that defines the course of your business, at some time you will have been discouraged by a headline like this one.
I completely disagree with it. I feel lucky; I work in an electronics company where innovation is part of our day-to-day experience, part of our DNA.
At IKOR we are very clear that we cannot allow ourselves to fall behind by simply relying on the old adage of “doing things well”,“doing them in the same way as always” does not protect us from the unstoppable progress of technology, of innovation.
I encourage you to read about Clayton Christensen’s theory and you will see that while large companies put their efforts into the search for innovations that keep them at the top, as one of the most select suppliers, other smaller businesses are able to successfully combine innovation and investment, and in this way they are gradually capturing those niche markets that large companies discard.
However, that search for disruptive innovation (the kind that causes a sudden change in the market) is overvalued, and is not at all easy.
How, then, do we innovate?
First, with strategy.
A good tool for this is the “Gartner Magic Quadrant” or competitive advantage matrix, which allows you to understand the place your business occupies in relation to its competitors and thus define the line to follow for its development.
The classification is made according to two fundamental parameters:
- The X axis, or “completeness of vision”
This consists of the ability to anticipate and adapt to the needs of the market based on several factors:
- The knowledge of the current market, from the supplier’s position.
- Whether or not your products are aligned with the functionality requested by the current market.
- If your product offer meeds the needs of the customer.
- The Y axis, or “ability to execute”
This measures the ability to develop and commercialise solutions in the market based on:
- Your ability to interpret market movements and execute your strategies successfully.
- The qualitative and functional character of the product itself.
- Effective strategies to achieve the sustainability of the company.
- Your agility in providing responses to new market trends and, consequently, in updating your products.
This tool allows us to evaluate our level of competitiveness.
Second, with cunning.
Here I am reminded again of Gartner’s hype cycle, which helps us to predict the progress of new technologies.
We talked about this in a previous post, and we know that all new technology suffers from unjustified over-excitement at the beginning of that cycle, as a result of this being the first appearance of the novelty and because of human imagination itself.
After a certain period of time, the realities become apparent and expectations fall in line with what is actually possible in terms of the advance of each technology.
Here the old advice of buying cheap and selling expensive does apply. You must not be fooled by technologies that are too promising to be true.
Your technological background and perhaps the experience of past mistakes must provide sufficient criteria to define the limits of the technologies, to judge for yourself and realistically evaluate the potential of each of them. Here I would challenge you to identify realistic applications.
It is in the depression of disappointment that the opportunities lie. Take advantage of your business knowledge, the knowledge of your market and your own capabilities, and anticipate the impact of each of these technologies, investing in those that have proven their worth in the previous stage.
Innovate with intelligence.
Innovation is not without risks. All management teams must balance the financing of promising ideas for new products with the taking of risks.
This is calculated risk management, which in my view should focus on committing to those transformation challenges that provide long-term strategic value instead of focusing on the uncertainties or on the identification of risks.
And of course you must define the exit factors, which allow you to objectively decide when to abandon the venture or how far to go with your big investments.
If it still seems too difficult,
I would recommend “Integrating Problem Solvers from Analogous Markets in New Product Ideation” by Franke, Poetz, and Schreier and suggest you reflect on the question:
Who provides better inputs when it comes to devising new products, experts with a lot of experience in a specific business area or the “problem solvers” in distant “analogous” markets but who share similar problems and needs?
At IKOR we work for sectors as diverse as the automotive industry and medicine, providing solutions throughout the life cycle of the products.