I recently did my EMBA about fast strategic innovations during which I created a set of practical tools and a process that should help anyone involved in innovating and validating new business. The process is simple and helps you to produce a report that answers to "Should we proceed with the innovation and invest in it or not?" within a week. The process will help you bring value in the shortest time meaning also that you won’t be wasting anyone's key resources, typically time and money. I’ll be presenting the process in three different blog posts. In this first post I open up the concept of strategic innovation, the critical importance of the beginning of the innovation process, and how to avoid risks.
Don't limit your perspective too much
Before digging into the main topic I’d like to note that when doing strategic innovation or, in other words, "designing and validating initiatives that have real business potential," one should not limit the perspective to any specific angle. Traditionally questions are related to the product idea and how it fits into the portfolio, how and when to proceed developing, how about market and competition, does this support the strategy and most importantly does the idea deserve investment.
These perspectives are also needed, but when you want to make a fast decisions, you need to perform the first steps of strategic innovation quickly while providing the essential information from all relevant perspectives, including:
- the customer and en-user needs
- the company strategy and vision
- product development and possible portfolio
- technical implementation
- the markets and competition
- macro-economic forces and future.
You don't need to be an expert in all of these topics. The Internet is full of information and resourceful people to ask from. The key is to have the right combination of tools and methods to help you to find the relevant answers and a process that supports you to do this fast. It's also essential that the tools are easily reusable and generic enough to fit different contexts.
Risks and challenges in business innovation
Did you know that approximately 90 percent of all innovations fail. Many research has shown that the beginning of the innovation process has the most significant impact on the end result. Many times there is a considerable amount of uncertainty and uncertainty and lack of information which makes progress difficult.
Approximately 90 % of innovations fail.
Typical stumbling blocks at the beginning of business innovation are:
- Wasting time for scrubby ideas and focusing too little on good ideas
- Insufficient reduction of unclarity
- Insufficient attention on customer needs
- Using only in-house competence
- Failing to link the product development to company strategy
- Insufficient understanding of competition and technological advancement.
Quite often, companies also fail in segmenting by forgetting to find out what the customers really want and in which context. This leads to unsuccessful and unprofitable value propositions. Businesses are not lacking in good ideas, but they do need directions for getting through the innovation process's fuzzy front-end.
How to avoid risks by using a fast and agile approach
As failure is possible, you want to fail before significant investments. To eliminate the risks, working in short iterations is recommended. Because the risks are highest at the beginning of the innovation process, it is essential that the initial studies and trials are fast while still providing sufficient information that helps to make agile decisions. Three applicable methodical approaches are Design Thinking, Lean Startup and Value Proposition Design.
Design thinking
Design thinking is a process for creative problem solving that focuses on three key aspects that are also important for strategic innovation: the desirability, feasibility, and viability of the solution. It aims to provide a deep understanding of:
- Competing solutions and how the customers relate to those
- What customers value the most and what are their genuine needs
- How to build a solution that tackles 1. and 2. with existing or attainable capabilities.
Lean Startup
In the Lean Startup the business plan is considered as a hypothesis that is modeled and validated fast and cheap to estimate viability as soon as possible.
Value Proposition Design
Value Proposition Design follows the same philosophy combining design thinking and a business-oriented approach around its core idea: designing and implementing sustainable value for the customer and the company. Value Proposition Design is a methodical process by which companies can create services that customers really value.
Like Lean Startup, Value Proposition Design also vouches for speed and small, iterative learning cycles. Both approaches advise testing the hypothesis continuously. By validating the ideas, only the one with real potential will come through.
Combined, these three approaches (Design Thinking, Lean Startup and Value Proposition Design) provide sufficient process, methods, and tools that can help
- Tackling the typical risk in the innovation process
- Seeking and finding answers to all the relevant questions
- Understanding and connecting aspects like customers and segmenting, competition and markets, technology, and macroeconomic forces in a meaningful way.
In the next parts of this blog series, I'll
- Introduce my 5-day strategic innovation process and methods that are developed based on design thinking, Lean Startup, and Value Proposition Design
- Reflect the utility, effectiveness, and generalizability of the solution
