The greatest obstacle organizations face with their innovation program is budget. Full stop. Every company wants to innovate and generate success, but many find it hard to justify project costs with new products facing such a high failure rate. As such, organization leaders may not engage their innovation team to the fullest degree, instead playing it ultra-safe or not setting sufficient time aside for research. And with day-to-day operational costs outweighing both incremental and disruptive projects, innovation teams have even less to work with.
Of course, the lack of greater innovation budget doesn’t always mean leaders don’t want to go all in; the amount an organization spends on innovation doesn’t measure true commitment to innovation. The issue lies in innovation being considered a cost rather than an investment.
Be open to the innovation process—while staying within budget—by following these tips.
Start off small, but recognize potential early on
Betting small is a reliable tactic. It can, however, stunt future innovation if not supplemented with slightly riskier action down the road. According to Innovation Leader, 49% of surveyed companies in 2018 focused on incremental innovation over adjacent (28%) and transformational (23%). In other words, companies are more focused on improving existing products or services rather than expanding to other markets or creating entirely new ones.
This is a logical strategy, but organization leaders should recognize and act on promising projects, investing the earnings from smaller projects into larger ones.
Time and time again, companies (and their competitors) have found success in later, grander innovations thanks to earlier, smaller ones. Nokia invented the smartphone—a grand innovation—but lost traction when they didn’t upgrade its faulty operating system. Customers noticed the OS’s faults and sought the product elsewhere, most popularly Apple, whose technology wasn’t groundbreaking but was incrementally tweaked based on customer demand.
Every company has the capacity for innovation, but only those that act on market signals will only see success if they act—even if it’s slightly risky.
Let go of unworkable solutions
If you find that a project isn’t going anywhere in its current iteration, it may be either time to approach it differently or abandon it entirely.
It’s a tough scenario: Management teams don’t want to abandon projects after spending a great deal on them, but they can save more if they get out early. If even small bets don’t pan out, why even bet at all?
As mentioned, 95% of the 30,000 new products introduced every year fail. Just as you should recognize a product’s potential, you should recognize when a product is failing to make traction. Putting effort in innovation in general rather than in specific products will only make room for more successful products in the future.
Communicate with and inspire your innovation team
Maureen Metcalf, CEO of the Innovative Leadership Institute, says it well: Leaders set the tone for their employees. A leader’s mission determines not just their own day-to-day tasks, but also their employees’. If, then, a leader is personally invested in innovation, that organization’s innovation team will follow suit.
We’ve touched on this in our blog before. More than once. Communication is the heart of all operations, and it’s especially important when your company’s fiscal future is involved. If one of the product’s features isn’t landing, let them know; if one feature is going over exceptionally, let them know. You’ll save time and money in the process.
Avoid overcomplicating your product
Let’s assume you’ve followed all of the previous steps, probably some of your own. Your productive innovation team currently has a great product on the assembly line, but after testing realize this one feature could make it better. That one feature becomes two, then three. Before you know it, you have an entirely new product.
Elongating a product’s timeline will hurt your budget, as well as your product. It’s not necessarily negative to recommend changes. If you’re getting lost in the product or service you’re designing, you’re doing so for the best of your company and your customers.
However, you should let the product stand on its own legs first. See how V1 performs, review it at the end of the term, and then determine what could be added or tweaked.
Benchmark your innovation program against others
Here’s a hard sell to management: How do you measure success without focusing on revenue while staying within budget?
Most companies are within the early stages of innovation maturity. Innovation Leader’s 2018 survey found that approximately 43% of companies are in the emerging stage, meaning that their innovation programs are well-structured but aren’t entirely optimized. In other words, it’s too early to tell how well innovative ideas are panning out.
Benchmarking your organization against others with more sophisticated innovation programs will show you what they’re accomplishing and how. You could even review their annual report and match it against your own. However you decide to compare yourself with your competitors, you will to get a better idea of what’s possible with what resources.
Let your new product provide future innovation
Innovation begets innovation. When your new product does well, it opens the market up for other products and services, which can then inspire even more innovative products and services. It’s a positive cycle.
Innovative companies report higher sales from new products than less innovative companies. Seeing your innovation budget as an investment rather than your cost will set the tone for your company. It may even inspire other departments to put forth new ideas.
Ideawake can assist you in capturing the innovative spirit of your employees. It provides the space for your employees to share their ideas, and it also measures those ideas’ ROI. Read more about our product here.