Innovation without a market is like cooking a meal for one – you can still feel satisfied, even if no one else would eat it. But what happens when you start serving your cuisine du jour to others?
The decision to innovate can be a difficult one, as innovation typically involves a longer term commitment of people, resources and effort. When it is successful, there is no doubt about its benefits, both for your business and your customers.
However, innovation will only be successful when there is a marketplace willing to buy the output. If you don’t agree, you will after watching a couple of episodes of Shark Tank.
So, before you commit to innovation, you better ask yourself a couple of critical questions.
Invest for today or invest for tomorrow?
All businesses come to a point in their growth when it is time to consider either consolidating their existing strengths or innovating. So what are some of the drivers that can influence such a decision?
- shifting demand for existing products or services;
- emerging trends or disruptions to the existing marketplace;
- challenging campaigns by direct competitors;
- changing consumption trends of customers; or
- reducing sales margins or internal cost pressures.
Understanding your drivers for innovation is important because innovation is neither a risk-free nor cost-free process. Sure, you can take a piece of paper and sketch out some ideas. However, conducting market research and then prototyping, piloting, funding and protecting your innovation will require a big investment, usually with great personal risk.
Know thy marketplace and one will know thy self
If you want to know whether it is time to innovate then simply ask your marketplace. And I know that you know that deep down this is the truth. And any denial of this is simply a mechanism to avoid the discomfort that the revelations of the marketplace can cause you.
How would you respond if your marketplace told you: we no longer love your product?
Well, history has shown that businesses have responded in different ways with varying degrees of success. Some companies have chosen to ignore their marketplace and perished (IBM, Kodak, Nokia). Others have listened to their marketplace and, interestingly, the marketplace of other industries, and flourished (AirBnB, Zappos, Apple).
The case for knowing your marketplace is simple: if you want your business to profit in the long-term, then innovation is your biggest asset to respond to a changing marketplace. Today, we are experiencing a shift in the way businesses is conducted on a scale not seen since the Industrial Revolution. So, what should you be asking yourself and your people to really understand the need for innovation?
When should we innovate?
That depends on your marketplace. Here’s some questions to consider that may help you identify whether you need to undertake some external innovation – to satisfy your customers, or internal innovation – to satisfy your business model.
- External innovation: does tomorrow’s marketplace need us to innovate?
- Who is tomorrow’s marketplace?
- Do we already serve or supply them?
- Why are their needs or desires changing?
- How do they want our service or product?
- What are they prepared to pay for innovation?
- Internal innovation: does our business model need us to innovate?
- Are our business operations sustainable?
- Are our revenue share and profit margins secure?
- Is there waste in our operations we can remove?
- Are our competitors gaining advantage?
- What external forces could disrupt our model?
If you know your marketplace is loving what you do and will continue to do so, you can afford to continue strengthening your business. But don’t take the speed of change for granted.
Ultimately, innovation is a means to an end – satisfying your marketplace and strengthening your business model – not an end in itself.
Like your meal for one, innovation without purpose may keep you busy and provide you with sustenance, but you may be forever dining alone.
About the author
Craig Stephens is an energetic performance expert who has transformed the personal and working lives of managers and professionals for over 20 years. His experience includes senior roles in banking and finance, quality assurance, project leadership, executive management and chartered accounting. He is a qualified Organisational Coach, Neuro-Linguistic Programming Practitioner, and Six Sigma Black Belt. He is also a Chartered Accountant; holds a Diploma of Project Management; and holds a Bachelor of Commerce and Bachelor of Arts from the University of Melbourne.”