Innovations and when do they start hurting…

This might sound very unusual to many, but had anyone ever thought about how innovation may hurt an organization or an industry altogether?

We are processed (yes, processed!) to accept and reject hypothesis laid and proved or rejected by studies, researches and cases in such an orderly and systemic way that we seldom think beyond the obvious.

Hence, it is almost a shock to listen and believe that –”…sometimes innovation hurts”.

Well, I call it self-hurting Innovation.

Before we demystify the title of this post, we put down an easy definition for innovation – Innovation in the simplest terms can be defined as a new and intelligent value addition in an existing product/category or develop a new product/category altogether which satisfies a customer’s need which was either unsatisfied or was never known to have existed before.

Let us take some examples to understand the above definition –

Innovation
Product-based	Touch functionality in mobile phones
Category-based	iPad by Apple
Cost-based	Chinese electronics products

Now, as we see none of these innovations hurt their organizations or categories, so how can an innovation actually turn self-hurting?

To get answer to this question we need to understand three types of innovations which organizations try to achieve.

• Defensive Innovation – This is a type of innovation which the organization seeks in order to defend its market share. These innovations does not lead to higher sales or loyalty neither they offer a path-breaking value additions to the customers. They are some minor tweaking in the existing offering to ensure that the product or service remains in the competitive race.Eg.-  Bringing out a diesel version of an existing petrol version automobile in a market with greater popularity of diesel versions automobiles.
• Aggressive Innovation – As the name suggests, these are the innovations which the company looks forward to in order to gain a substantial market share led by growth in sales volume and overall brand perception. These innovations offer excellent value-offering to the customers which are way ahead what the competitors are offering and hence aims at higher brand loyalty and market share against its competitors. Eg. -   iPod was ruthless with its competitors in developed markets due to its par excellent offerings.
•  Path-breaking Innovation – These are innovations which are not usually intended to be one. It means that they usually are accident! These innovations turn out to be huge success, almost always coming to as a surprise to the organizations and people around. These innovations not just lead but create new ways in the industry they are related to. Eg.-  Google search engine, started by Larry Page and Sergie Brin as a small step towards making search easy in a localized environment before turning into technological goliath and Facebook, kicked off in a dorm by Mark Zuckerberg with no clear headway and plan

Every organization must have a balance of projects aiming for defensive and aggressive innovations in its organization.

Problem starts brewing when the innovation becomes a necessity and more so when they turn into white elephants.When innovations become necessity organizations starts investing too much on them. Investments are made in conceptualization, research, design, production, marketing, sales etc etc and a product or a service which we refer as an innovation is born. Obviously, these investments takes shape of hopes and higher the investments are, higher the hopes weaved. These high hopes in turn further leads to investments into the new brand or product without much thinking on its potential and ROI. Since you want the higher investments to pay off well, you invest further more in an effort to leave no stone un-turned.

The end result is exorbitant amount of resources captivated by this new innovation. Sounds like recipe for disaster? Well, we have only started!

We know less than 5% of new products and brands are actually successful. The rest of them fall flat when the rubber meets the road. So what happens of the high hopes and even higher resources locked in this “innovation” which just bombed?  The company loses the opportunity to invest in other platforms where it might have earned success. Not just this, it also starts losing on strategic and operations fronts because of a failed innovation and its repercussions and in turn starts lagging with respect to its competitors.

In order to ensure that an innovation turns out to be what it is expected, following pointers must be kept in mind –

·         Strong leadership and a common vision for the organizational business units and domains

o    Ensures that everyone is aware of what is south as an organization and there is transparency and objectivity in decision making process across functions

·         Customer is first and foremost

o    No innovation attempt must be made without taking into account what are the customer needs and pain points and what does the innovation seek to address

·         Constructive and continuous feedback mechanism and multi-filtering processes

o    To ensure that no projects are taken forward as “pet projects” which leads to lack in objectivity and  usually tends to go unfiltered till finishing line due to emotional reasons

·         Strategic and realistic allocation of resources for projects undertaken by the organization

o    This allows the projects to have a boundary which they must respect and hence restricts extravagance and subjective approaches to completion

o    Allows right allocation to multiple projects and hence de-risking the overall project portfolio

These pointers are some generic rules which will help an organization to ensure that the innovations sought and aimed for, are not hurting it. Nothing is more dangerous than a self-hurting innovation for an organization, big or small.

So next time when you hear the word innovation, go deeper!

Cheers,