In the last two posts we discussed the beginning of a process to determine what new products to develop. Let’s take a step back and ask why is innovation important? Good question. Innovation takes many forms but it is safe to say that rapidly growing companies are most likely good innovators. When you think of innovative companies, who comes to your mind? Most people think of product innovators like Apple, or software/internet innovators like Google, Twitter and Instagram. But what about business model innovators like Dell, where you can go online and custom build a PC? Think about service innovators like Amazon where you can buy just about anything. Uber and Lyft have used smartphone apps to disrupt the taxi business. No more hanging out on the corner with your hand raised (although that still works!). Interesting sidebar: I was recently in downtown Chicago and after dinner we needed a cab. My millennial kids whipped out their cell phones for the Uber app. I just stood near the curb with my hand raised using the “old fashioned” method. Hand raised won!
Why is innovation important in every organization:
- It is big business (just look at Apple, Samsung, Cisco, IBM, Facebook, Google, and many others)
- Critical for future growth; organizations can’t stand still, even small, emerging companies
- Every product no matter how good eventually “dies”
- Competitors will always be trying to out-innovate you!
- Successful innovation creates barriers to entry, patents, trade secrets, etc.
- Involves the whole organization, driven by strategy, execution is key
The issue is innovation is risky business. Product development is hard work and risky:
- Failure rates around 40-50% (after launch)
- On average for 7 new product ideas, 4 enter development, 1.5 are launched, and one succeeds
- Need a robust pipeline of new product ideas
- Have a portfolio of new product ideas
- Have some easy, some hard projects
- Mix in some big potential hits and several incremental product enhancements
- Use an ongoing screening and evaluation methods
- Use an appropriate process to select the potential projects that fit the strategy and provide a solid return on investment.
I can’t remember where I got the following image, but if you’ve ever done a major product development project can you identify with this?
In our next few posts we will describe some portfolio tools that will be helpful in your polymer innovation efforts.