Faster! Faster! Cheaper! Cheaper!
That seems to be our battle cry so much these days that I wonder if the concept of Value Innovation is ready for the dumpster. As a business person passionate about Value Innovation, and believing in my heart that when all is said and done we still want high quality, I certainly hope that Value Innovation is here to stay.
It’s not complicated. Historically if you presented something to your customers that solves a problem in a different way (innovation) and either cuts costs or increases revenue or both (value) and is a reasonable price (value), you likely would have a sale.
According to Webster, innovation was first used in the 15th century. Innovation means “the introduction of something new” or “a new method, idea or device.”
With information travelling at the speed of light, the term innovation is used, misused, misinterpreted and overused. Are there shades of innovation? Is something either innovative or it’s not? Do the experts even agree on what constitutes innovation if it isn’t a patentable invention like the first airplane or cell phone?
Let’s take a business view of innovation. Let’s also add a “shade” to our business view of innovation. For innovation to work in business there must be value to it. It must either reduce cost or increase revenue. Period. While the purist might say that all ideas are valuable, in business there is only one test. Does it past the test of financial viability?
If it reduces your cost, then it increases your profit – boom, financially viable. If it increases your current market size, or brings in a completely new market thus increasing revenues while keeping costs at bay, boom, financially viable.
A recent episode of the TV show “Shark Tank” could have been titled “Value Innovation 101.”
One entrepreneur on the show truly believed his “invention” would revolutionize the way people reduced their vulnerability to voyeurs that hack into computer cams. He created a very simple shutter that slid over the top of the computer and covered the cam lens. He thought it was the greatest thing since sliced bread. The Sharks laughed him out of the studio arguing a Post-it® note would do the same thing. He did not get a deal.
In the same episode, a medical doctor created a way to repair holes in a wall with a simple patch. The Sharks were fighting over who would get this deal. They had all tried to repair walls and saw this as something every DIY homeowner or contractor would benefit from having in their toolbox. This was a commercially valuable innovation, because it would both reduce the cost in time and materials of the DIY and the contractor, and could increase the revenue of the business that sold this product, making it a valuable innovation for all stakeholders.
How do you go about creating innovation that has value?
A popular approach is to have a retreat for your team to see if there are any good ideas lurking in your group of geniuses. The retreat removes the distractions of normal work so ideas flow easily. If you establish a nonjudgmental atmosphere, a group of smart people will start to churn out possible innovations. When I facilitate these sessions, the problem is never a lack of ideas — the real hurdle is to determine what innovations have value. Sometimes, like the wall repair patch, value is easy to determine, but often there is significant uncertainty.
Take the time to test the ideas and get the proper feedback so you don’t leave money on the table or have a commercial disaster. Eventually you will fully vet the promising idea. We find that it is extremely beneficial to “take it to the street” in the form of a very carefully crafted survey. The results are often as predictable as an earthquake: positive results when the innovation has an unexpected resonance in the market, and negative results when a potential land mine is discovered.
So where do you start looking for innovation? There are many ways an organization can value innovate.
Here are some suggestions to help you get started:
- Get competent help. The results will be worth the investment.
- Review your culture to determine if you stifle or encourage creativity, including failure.
- Define your primary or biggest current markets as precisely as possible.
- Define who your markets are not.
- Can you research these markets to determine why they are not buying your product or service?
- What change would need to be made to make it attractive to buy?
- Can you make those changes? Would it be a commercial success if you did?
Getting the right mindset so creativity flows in your organization will greatly help you find the next Value Innovation project that will help your company leap to the next level.