Yesterday we listed ten characteristics of innovative companies. These were:
- Innovative Business Model
- Continuous Investment in Innovation
- Skillful Blend of Design and Technology
- Steady launch of “paradigm shifting” products
- Lengthy track record of successful innovation
- Institutionalized Capabilities
- Ongoing and successful expansion into new areas
- Products that allow “lock-in”
- Staying Power
Now we are going to discuss each of these in turn.
Innovative Business Model
Not everyone can be a Google. And even if you could, would you want to? Yes, Google looks very good now – but do you remember Netscape? They were the most innovative company around in the internet space with a new business model, and look at where they are now. It’s hard to succeed on the foundations of an entirely new business model and maintain that success – and at any given time, there can only be a few successful companies operating on an entirely new model.
That being said, without innovation, you’re not going to survive. So we’ll look at Toyota and 3M – more traditional companies in more traditional markets – and see that the innovation in the business model is the focus on the continual development and launch of innovative products for an innovation hungry marketplace – you don’t need a completely new business model, but your business model needs to be based on innovation.
Continuous Investment in Innovation
All of these companies invest significantly in R&D. Without a significant R&D investment, your potential for reward is limited. The reality is that innovation takes smart people – and in today’s economy – it takes lots of them as few products can be designed without a broad interdisciplinary team where each individual member has deep (PhD) knowledge in a relevant area and each area is covered by more than one person. (It’s hard to make progress in a vacuum, which is why the best research is usually produced by research groups, be they academic, industrial, or joint, with multiple experts in the common research area.) In other words, you’ll need a good team that is educated, experienced, and capable, and they’ll need tools and resources to support their research. It’s not cheap in the short term, but when you look at the payoffs the top five companies have achieved on their innovation investments, it’s a pittance in the long run.
Skillful Blend of Design and Technology
Good products are user friendly and appealing. Why else would someone shell out $400 for an iPod when other manufacturers offered high-end MP3 players with the same storage and sound quality for half the price? Make sure you include usability experts in your interdisciplinary team and that hardware, software, and marketing all work on, and off of, the same specifications.
Steady launch of “paradigm shifting” products
Innovative companies are always innovating – and always launching new products. This includes better versions of existing products as well as new products. It doesn’t even have to be a totally new product, just a product that is new-to-you and enhanced to add value that wasn’t there before to the market-place. If you need help managing your innovation, look to invention-on-demand, a modification of the TRIZ problem solving methodology.
Lengthy track record of successful innovation
Innovative companies have a good track record. Launch the right product at the right time with the right features and interface, and the market will come to you if it is bundled with the right message at the appropriate cost point, provided it is a quality product. The last factor is key. To build a track record, your products must be high quality. They must be easy to use and do what they are advertised.
Innovation is institutionalized in market-leaders, as well as knowledge and processes. You should use technology to help you manage the process. In particular, you should employ PLM (Product Lifecycle Management) and Innovation Management technologies. (Some examples of innovation management technology can be found in my post Innovation Matters.)
Ongoing and successful expansion into new areas
Innovators are never complacent about their position in the market. They are constantly looking to not only improve it, but to expand into other related markets, and, occasionally, to create a new market (based on a new breakthrough). Always be on the look-out for new opportunities and enhance your marketing capabilities to break into new markets when the time is right.
Innovators are fast. Their cycle time is usually half that of the industry average. They work in unison to take a product from conception to completion as efficiently as possible. There is no political infighting or unnecessary roadblocks. There is one team with one goal. When a milestone is reached, the product simply moves on to the next one. Schedules are accelerated when time permits and, more importantly, they are lengthened if required to achieve the desired level of quality. After all, the sooner an issue is addressed, the less impact it has to the overall cycle time.
Products that allow “lock-in”
Innovators develop easy-to-use products suitable for the mass-market at a price point that allows majority adoption and usage around common standards. This gives them the ability to effectively lock-up a significant portion of the marketplace, which they can continue to support and sell to with newer, better products in the future.
Innovators are in it for the long haul. That’s what gives them their staying power. They realize that innovation is not a quick-fix or a one-shot endeavor. It is a continual process.