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Joyce Wycoff opened the 2005 Innovation Convergence conference this morning with a "state of innovation" presentation. In it, she shared a list of interesting insights, which I will summarize for you here:
- Innovation must be customer-centric: How do we create value for our customers? Many organizations, Joyce pointed out, are still very product-centric.
- Look beyond product and service innovation: Business model innovation is a big source of potential innovation for many firms.
- More connections = more innovation: Diversity leads to a greater number of perspectives. Joyce encouraged attendees to seek out connections both within and outside of their organizations. Proctor & Gamble's "Connect & Develop" initiative is a prime example: it mandates that 50% of its innovations must come from outside the company (through trusted business partners, for example).
- Innovation is a process that can be learned: However, it requires different approaches to training, tools and experimentation.
- Emerging markets = innovation labs: When you're selling products to emerging markets (such as 3rd world countries), your products must be low-priced, of course. But the process of getting to that low price point forces organizations to rethink the core value of their products, an exercise that can be quite revealing for its primary markets, too.
- Creative recombination trumps the "new": Joyce pointed out that there are very few totally new, never-before-seen innovations today. Most successful innovations are the result of combining existing products and attributes in new ways. This approach carries a lower level of risk and investment than "blue sky" innovation initiatives.
Joyce also explored the implications of one recent study, which showed that a staggering 96% of respondents believed their innovation initiatives were unsuccessful. That's a 4% success rate for corporate innovators. In contrast, however, venture capitalists (VCs) reported that they had a 31% success rate. Why? Joyce outlined a number of possible reasons, which may provide some lessons for the rest of us:
- It's a numbers game: VCs see many business concepts, and become adept at separating the wheat from the chaff.
- VCs typically see business plans from many industries and markets, and thus naturally develop a broader perspective on what works.
- Successful VCs typically have a well-defined and rigorously-applied set of criteria that they use to measure the viability of business plans. Most companies don't do this, or don't do it well, Joyce explained.
- VCs usually have excellent networks of people they can call to bounce ideas off of, before they make an investment in a new business concept.
- VCs place a bigger emphasis on the people behind the plan than they do on the idea itself. They appear to realize that ideas can always be tweaked or improved. However, if the right people aren't in place to manage their development, then the firm is probably doomed to failure.
- After they invest, VCs usually maintain a hands-on approach, effectively becoming a partner in the venture. They work side-by-side with the firm's management to solve problems and do whatever needs to be done to grow the company. In contrast, many organizations that internally fund innovation initiatives take a hands-off approach, and expect the innovation group to run itself.
Great insights, indeed! |
