7 Reasons to Jump Start Innovation

Many companies have been “sitting on the sidelines” during the recent recession and subsequent slow recovery.  It’s time to “get back in the game” by jump starting your innovation efforts.  In this post we will  outline seven reasons to get your innovation juices flowing again or start to get serious about innovation.  So let’s dive in.

The 7 reasons to jump start innovation:

1. If you are standing still, you are falling behind
2. New products add incremental new revenue boosting your top line
3. Well designed and innovative new products have higher margins and can improve profitability
4. New Products replace revenue when existing products become obsolete or price pressure decreases margins
5. Cost cutting can only improve profits in the short term.  A steady stream of new products will improve both the top and bottom lines over time.
6. A steady stream of new products enhances your reputation as an innovator or leader in the markets you serve
7. Growing, innovative companies are fun to work for and as such can win the talent war for the best people.  If you like working with smart, creative types, then look for innovators.

Let’s start with the first one.  When companies go into cost cutting mode (either in tough times, after an acquisition, or just to boost profits) one of the first places that gets scrutiny is Research & Development (or product development).  Viewed by most executives as an expense rather than an investment, the cost cutters wield the ax and chop away.  Bad move.  This results in reason #1. 

When R&D budgets get cut, companies typically don’t stop development, but shift emphasis to small incremental product improvements or line extensions which are less expensive to complete.  The focus diminishes on new products that can really impact the bottom line.  True new product developments are either more resource intensive or the timeline for new revenues is longer than the incremental improvement projects and thus don’t get much focus.  This results in standing still, since competitors are likely moving ahead. 

Product development also requires momentum or a pace.  You know it when you experience it.  Everything is moving along with the right pace and the team gains momentum and things just click.  Starting and stopping projects due to short term budget swings breaks that momentum making it harder to get back on track when the project resumes. 

In the next few blog posts we will expand on the remaining reasons to jump start innovation.