Innovation is both easy and complicated. The easy part of innovation is focusing on customer needs and the complicated part of innovation is … focusing on customer needs. Customers vary and our ability to serve them depends on three key aspects of a company’s strategy: choice, collaboration, and competency.
Read on or watch the 30-second summary below.
Firms have many choices in innovation. First, a company can choose to serve a broad customer base or a narrow market segment. In choosing a broad market, companies often look to cost competency for a leadership position. However, when products compete on price, customers lack loyalty to the brand. Serving a narrow market segment, on the other hand, allows a firm to create products and services that are differentiated. Typically, these markets allow the firm to charge a premium and generate significant revenues. But, of course, there is no utopia. Choosing a narrow market segment for innovation ties a firm to a specific pattern of development and technology. If an unhealthy marketplace matures, it can be disastrous to revenues.
Next, new product development (NPD) choices also involve the degree of innovativeness. Are products simple line extensions or are they radical departures from existing competition? These business choices reflect investment, risk, and global economic conditions.
Finally, innovation choice includes decisions matching product development with strategy. Some firms are more risk tolerant or cash poor than others. These choices reflect strategic decisions to grow the business or to expand in existing markets. One of the most frequently cited failures of NPD is a lack of strategic alignment; therefore, choices of product and service development efforts must closely align with growth objectives for the company.
Cross-functional teams that work together from idea to launch are proven to be most successful in NPD. Collaboration means more than naming individuals from different functions to be part of the “team”. It means sharing ideas and problem solving with various perspectives, including the customer’s view. True collaboration crosses departmental barriers and external boundaries.
Collaboration also means the team shares trust. Trust requires sharing vulnerability and a social contract among innovation team members. New products will be “ho-hum” if team members do not trust one another enough to share crazy ideas and so-called “outside-the-box” thinking. The more risk involved in an innovation the more trust is necessary for the team.
Quality in design and competency of execution differentiate the best companies from average ones. To always consider the customers viewpoint and what service means is a hallmark of a firm delivering high quality. Such companies hire, train, and nurture innovation competences in all of their employees. And competency feeds back in a continuous loop to customer intimacy – understanding needs and wants.
Training is the starting point to build competency for a quality-driven innovation organization. Sustaining best practices through coaching can take an organization to even higher levels of success. In the Flagship Innovation Leadership program, we recommend both individual coaching and master mind groups for senior leaders. Both opportunities increase accountability and accelerate learning.
The 3Cs of Innovation
Innovation should be simple, yet in practice is often quite challenging. The 3Cs of innovation help teams and leaders to focus on what is most important to create success for new product and service design. First, the company must choose who the customers are. Innovation takes different forms, risk, and investment for broad markets or narrow customer segments. Customer choices align with the organization’s strategic growth goals.
Next, innovation teams must collaborate across functional barriers and with external stakeholders to be successful. Collaboration is built on trust and trust is essential for taking on disruptive innovation. Finally, successful innovation requires competency to deliver high quality results. NPD team members build competency with customer interactions and training in innovation best practices (check out our 1Q2020 innovation training schedule here). Organizational leaders grow their competency through coaching and sharing with others in master mind groups. Join us for an Innovation Master Mind pilot on Friday, 22 November at noon CST (register here).
Your Next Steps
Consider how NPD project choices are effectively implementing strategic goals. Then, ensure your teams are cross-functional and collaborative. Finally, implement training to sustain quality through competency. Read more about innovation best practices in my new book, The Innovation ANSWER Book, available from Amazon here.
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