Playing Moneyball for the Win

Playing for Star Power, not Wins

Take a moment to think about your organization – Are you investing in star power or wins? Do you know what your organization’s “win” is or how your job contributes to it? You would be surprised how many people don’t. Common wins include boosting revenue, improving gross margin, increasing operational efficiency, outperforming competitors, decreasing debt, achieving return on investment, increasing employee or customer engagement, innovation ROI, and many others.

If your organization is playing for star power, you may notice many inefficiencies. Here are some common ones:

  • Proliferation of “vanity metrics” such as # features, # reports, # users, and # awards yet lackluster financials.
  • Many, small product development activities that never make it to market, siloed departments, proliferation of capabilities or tools that are underutilized.
  • Overlapping job descriptions, disengaged employees who have trouble seeing “the big picture.”

All of these inefficiencies ultimately stem from the same root cause — an organization that’s not connected up.

Define Your Win

One way to define your organization’s win is to use objectives and key results (OKRs). In an agile organization, OKRs can help define the win or overall strategic direction of the organization by setting ambitious and measurable objectives that align with the organization’s mission and vision. Clear and measurable OKRs can ensure that everyone is aligned towards the same goal — buying wins, not star power.

OKRs can be cascaded down from top-level objectives to departmental or team objectives, ensuring that everyone knows how their individual contributions will help the organization achieve its overall win. Regular communication and transparency within the organization are essential to ensure everyone is aligned towards the same goal.

From Runs to Wins

To get from runs to wins requires a systemic, not an isolated team or departmental approach: Once OKRs are defined, runs can be converted to wins, by focusing on the right metrics, using data-driven decision making, finding market inefficiencies, and identifying undervalued talent.

  • Metrics: Leaders should align their metrics to OKRs that drive business outcomes, such as revenue or innovation ROI, not vanity metrics to show “activity” without business consequence.
  • Data-driven decision making: Leaders can use data to understand customer needs, behavior, and preferences, making informed decisions about product development and marketing strategies.
  • Market inefficiencies: Managers can look for market inefficiencies, such as gaps in the market or unmet customer needs, that can be addressed through innovation. By identifying these inefficiencies, managers can develop products or services that better meet customer needs and create a competitive advantage in the market.
  • Undervalued talent: Leaders should also look for employees with unique skill sets or innovative ideas that can contribute to the organization’s success. By recognizing and empowering these individuals, managers can foster a culture of innovation and create a competitive advantage.

In conclusion, buying wins means buying runs, and organizations need to ensure that everyone is aligned towards the same win. This starts with defining what the win is and cascading it down to individual contributions through clear and measurable OKRs. By fostering a culture of openness and collaboration and regularly tracking progress towards objectives, organizations can optimize their resources and achieve better results – just like in Moneyball. Don’t play for star power, play to win.

Putting Together Your Innovation Team

This management re-think is also seen not only in the composition of the team and the specialties of its members but in the training of the individuals that make up the group as well. Upskilling is becoming more prevalent as organizations are realizing that with technological changes happening on a constant basis, not to mention the rise of artificial intelligence, that team members need to be retrained and skills upgraded to meet this new, complex reality.

Roles & Responsibilities

To foster a culture of innovation, and to drive transformation at the business level, it takes a variety of disciplines and functions. Composing a talented innovation team requires the right synthesis of strategists, technologists and communicators, as put forth by author and innovation expert George Krasadakis in the article, “How to Build the ‘Innovation Dream Team.’” Krasadakis is also the author of The Innovation Mode (Springer). Some of these activities and specific roles will depend on the type and size of the company. What industry the company works in will also impact the roles on the team.

That being said, in general the team should be strategic, tactical and agile. Krasadakis notes, “In the typical case, companies need a driving force from within— a solid team to naturally diffuse the innovation thinking, introduce the right technologies and the best practices regarding innovation and creative thinking; to make sure the overall innovation program is also in alignment with the ongoing business; to manage the noise and the risk of (internal) disruption from the ‘innovation machine.’”

The responsibilities of the innovation team should include setting the strategy, as well as defining success. The team must provide the innovation framework, which includes technology, and the development of an innovative culture. To communicate, diffuse, and inspire, as Krasadakis notes, is also part of what innovation leaders and their team must implement within the company. Measuring and evaluating progress should also be an important part of the team’s role.

The innovation team must further constitute, notes Krasadakis, “creative members, engineers, and technologists to showcase real innovation, at pace; the team needs to clearly connect the theoretical, abstract notions of innovation with the commercial context of the company; it must demonstrate how innovation can bring concrete commercial results, fast.”

Tapping into Talent

The approach to innovation talent has evolved in this new globalized work world. While common themes have emerged, different organizations have chosen distinct paths. In this recent Innovation Talent Roundtable, the innovation community shared several thoughts on the search for innovation talent and fostering a culture of innovation.

Igniting innovation culture and talent is fraught with danger as, if you’re not careful, it can lead to burnout. Finding innovation talent that fits within a given organization is, to put it simply, challenging. Good innovation talent itself is elusive. Add to the equation that a given person not only needs to have the specific skill set being sought, but that same person must fit with corporate and innovation culture already established.

Talent management is transforming. Despite an organizational evolution that breaks down functional silos, most companies are still fairly traditional with their hiring practices defined by a hierarchical talent operating system. On the other hand, some companies do feature cross-functional project teams that encourage innovation and collaboration. Other systems may have an option for employees to opt-in to rewarding, innovation focused work.

Teaming Up

We asked ChatGPT, what constitutes an ideal innovation team? Of course, the team and the context may vary depending on the scope, size and goals of the organization. There may be some overlapping of skills and expertise. Collaboration, diverse perspectives, and a mix of skill sets are key factors in building a successful innovation team. Here are some common roles that are often found in successful innovation teams:

  1. Project Manager: A project manager provides overall leadership, coordination, and organization of the innovation team. They ensure that the team stays on track, meets deadlines, and achieves objectives.
  2. Innovation Strategist: An innovation strategist is responsible for developing the overall innovation strategy, identifying opportunities, and aligning the team’s efforts with the organization’s goals. They analyze market trends, customer needs, and competitive landscapes to guide the team’s direction.
  3. Design Thinker/UX Designer: A design thinker or user experience (UX) designer focuses on understanding user needs and designing solutions that are intuitive, user-friendly, and impactful. They apply design thinking principles and methodologies to drive innovation and create meaningful user experiences.
  4. Technical Expert: Depending on the nature of the innovation project, a technical expert such as a software engineer, data scientist, or hardware specialist may be necessary. They bring deep technical knowledge and expertise to develop and implement innovative solutions.
  5. Business Analyst: A business analyst evaluates the commercial viability of ideas, conducts market research, analyzes financial data, and identifies potential risks and opportunities. They provide valuable insights to help the team make informed decisions and create business value.
  6. Creative Thinker/Innovator: A creative thinker or innovator brings fresh ideas, new perspectives, and out-of-the-box thinking to the team. They are skilled in brainstorming, ideation, and concept development, helping to foster a culture of creativity and innovation.
  7. Marketing Specialist: A marketing specialist ensures that the innovation team’s ideas and solutions are effectively communicated and promoted to the target audience. They develop marketing strategies, messaging, and campaigns to generate awareness, adoption, and customer engagement.
  8. Data Analyst: A data analyst helps the team leverage data and analytics to gain insights, make data-driven decisions, and measure the impact of innovation initiatives. They collect, analyze, and interpret data to identify patterns, trends, and opportunities.
  9. Project Sponsor/Executive Champion: A project sponsor or executive champion is a senior leader who provides support, resources, and guidance to the innovation team. They help overcome barriers, align the team with organizational objectives, and advocate for the team’s innovations within the company.

Create the Innovation Mindset

In today’s agile organizations, the innovation team is no longer confined to a silo of the past. In the present, the team must have a renewed emphasis on multi-disciplinary skills and tactics, with the “right balance of strategy, execution, and communication experts,” write Krasadakis. It is this balance of skills that can ultimately take on the tasks of innovation while effectively communicating its endeavors to management and senior leaders, to create an innovation mindset and atmosphere with the company.

From strategists and product experts, to technical experts and program managers, to IP and insights experts, to innovation advocates and process leaders, the innovation team must stretch its boundaries beyond the four walls of a laboratory. As Krasadakis says, “The structure of the innovation team should be flexible and flat: there should be three lines of reference — the strategic, the practical innovation and the communication — all aligned but also with clear separation of concerns and well-defined, independent work streams and programs.”

The innovation teams of today take on new roles and responsibilities that the isolated teams of the past may not have considered. New challenges and responsibilities should work hand in hand with the traditional pathways, and roadblocks, to growth that innovators face. Only then can the innovation and transformation journey truly take place.

Video courtesy of Strategyzer

The Progress of Innovation

Pardon the Disruption

Peter Diamandis in his book Bold discusses the 6 D’s framework, and writes about how technology can progress through a sometimes predictable path on its way to having a significant impact at scale across the globe. Understanding this framework can create potential opportunities for businesses to innovate, look ahead to the future, glean insights and build solutions that can capitalize on the technology in question. “The Six D’s are a chain reaction of technological progression, a road map of rapid development that always leads to enormous upheaval and opportunity,” says Diamandis.

Understanding the growth cycle of digital technologies can support innovation efforts with an eye towards future growth prospects. The 6D’s of exponential growth include:

  1. Digitalization: Once something goes from physical to digital, it gains the ability to grow exponentially. Digital information is easy to access, share and distribute.
  2. Deception: Initial exponential growth is in such small increases (.01 to .02) that it goes largely unnoticed or seems slow to grow before exponential growth kicks in.
  3. Disruption: Either a new market is created, or an old one is overturned. You either disrupt yourself, or you are disrupted.
  4. Demonetization: Money is increasingly removed from the equation as the tech becomes cheaper. The major assets in the industry will become free. Free music, free reading, free communication.
  5. Dematerialization: Removal of the original physical product entirely, lumping alarm clocks, cameras, notebooks, and phones into one smartphone, for example.
  6. Democratization: The costs drop so low that the technology becomes widely available to everyone.

Hyping the Disruption

Additionally, Gartner’s Hype Cycle is another framework that often coincides with the 6 D’s. This framework can graphically represent the maturity and adoption of technologies and applications, and how they are potentially relevant to solving real business problems and exploiting new opportunities. Showing how the technology will evolve over time, it can further provide a sound source of insight to manage its deployment within the context of your specific business goals, notes Gartner.

Each Gartner Hype Cycle drills down into the five key phases of a technology’s life cycle:

  • Innovation Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.
  • Peak of Inflated Expectations: Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.
  • Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
  • Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.
  • Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.

Defining Disruptive Innovation

Explored in a post on All Things Innovation, disruptive innovation is often a phrase used to make a splash in the business world. Some may debate that the label has been applied carelessly at times to anyone shaking up the market. Yet, just what makes an innovation disruptive? It depends on your point of view. But some make the case that it still remains a gradual process of change, as a smaller competitor gains a foothold in a low-end or new market, and moves its product upmarket to challenge the incumbents. Disruptive innovation encompasses a transformation at the core of the business and the marketplace.

So is disruption innovation theory dead? We don’t think so, but there are many factors at play regarding the competition between an upstart challenger and an incumbent company over a product or service. “Disruption theory does not, and never will, explain everything about innovation specifically or business success generally,” writes the late Professor Christensen, one of the original architects of the theory. “Far too many other forces are in play, each of which will reward further study. Integrating them all into a comprehensive theory of business success is an ambitious goal, one we are unlikely to attain anytime soon.”

Deploying the Framework

So how can an organization focus on their innovation while leveraging the 6 D’s framework? We asked ChatGPT this question and received six more D’s in reply: develop, digitize, disrupt, deploy, data driven decisions and diversify. To be sure, these frameworks are easier said then done, but deriving some knowledge into the future needs of your company offers invaluable insight.

  1. Develop: Develop the necessary strategies, processes and tools to understand how exponential growth will impact your business.
  2. Digitize: Invest in digital technology that can help increase efficiency, reduce costs and improve customer experience.
  3. Disrupt: Look for new ways to disrupt traditional models by leveraging cutting-edge technology or deploying innovative services or products that offer unique value propositions to customers.
  4. Deploy: Implement those disruptive technologies quickly and effectively so you can stay ahead of the competition and maximize opportunities for growth as they arise.
  5. Data-driven decisions: Leverage data analytics to make informed decisions about future investments, product development, marketing campaigns and other business operations that may be affected by rapid changes in the market environment due to exponential growth.
  6. Diversify: Diversifying your revenue streams is essential when dealing with a rapidly changing market landscape due to exponential growth—consider expanding into different markets or launching new services/products related but not directly tied to your core offerings.

The Digital Roadmap

The recently released Innovation Spend & Trends Report, brought to you by FEI and All Things Innovation, showcases how innovation leaders are changing mindsets, shifting priorities and spending allocations as they balance their innovation efforts with the current economy. Of note and in regard to the 6 D’s framework, many innovation executives have digital transformation, and artificial intelligence, on their minds as they weigh in on the issue of advancing technology in their data capture, analysis and visualization needs.

In fact, just under two-thirds of the community list digital transformation as the biggest opportunity for the innovation discipline. It seems that the innovation discipline is being tasked with taking digital transformation forward. While that might not necessarily lead to disruptive technology, the digital transformation efforts of many organizations in the field could provide a link and a pathway to the 6 D’s roadmap, leading to more innovative products in the future. Leading to the questions, what will the next tech disruption be and how will it impact society?

Video courtesy of Peter H. Diamandis

Innovation Weighs Advancement of Digital Transformation

The latest edition of the Innovation Spend & Trends Report has been released onsite at this year’s FEI: Front End of Innovation conference. Brought to you by FEI and All Things Innovation, this benchmarking report showcases how innovation leaders are changing mindsets, shifting priorities and spending allocations as they balance their innovation efforts with the current economic environment.

Click here to get a copy of the Innovation Spend & Trends Report

In identifying the biggest strengths, weaknesses, opportunities and threats to their businesses, executives in the field also looked back and ahead as they set the stage for the second half of 2023 and beyond. In terms of technology, digital transformation is clearly a key hot topic in this year’s Innovation Spend & Trends Report, as innovation executives weigh in on the issue of advancing technology in their data capture, analysis and visualization needs.

In the survey, just under two-thirds of the community list digital transformation as the biggest opportunity for the innovation discipline. About 65% of respondents listed digital transformation as the biggest opportunity in the field. Only creating new or next generation products and services ranked higher in the survey, with 78% of respondents selecting that as their top opportunity.

These digital initiatives have existed in primarily finance and IT over the past few years. Efficiencies have been gained and now it seems that the innovation discipline is being tasked—at least in part—with taking those digital technology plans forward.

As for what part of the budget is being forecasted for and focused on digital transformation efforts, respondents were optimistic, if a little more cautious in their anticipated spending habits. In the survey, about 11% of respondents said their budget would be greater than 50% for digital transformation; 16% of respondents said their allocation would be 26% to 50% of their budgets. And 37% and 37% of respondents said their budget allocation would be between 11% to 25% or 1% to 10%, respectively. This signals that while there is some optimism to accomplish digital transformation tasks, the budget is still likely to fall short of targeted projections to complete all major tasks in the category.

Still, it’s unclear from the survey just what exactly digital transformation means to some respondents. There is no one right answer. It can mean a variety of different things, from simply technological advances in data capture, research and analysis and more advanced data visualization, to perhaps a company undertaking a full-scale initiative to establish digital operations. One thing is certain, artificial intelligence developments are not far from survey respondents’ minds, as the AI topic looms over the innovation and insights communities.

This year’s report contributors also weighed in on the topic of digital transformation. Many see the opportunities as well as threats to the status quo that digital transformation entails. Some point to the need for a strong internal culture to support digital transformation efforts while others see the need for finding a “champion” in the company to support their future projects in this regard.

“Digital transformation is so interesting. From an insights perspective, AI is powerful for the speed of products, formats and testing. We also worked on large scale digital twinning. Do you have to physically make the product? Can you make a digital twin out of it? How do I build the widget right? Being able to accelerate that is a really big deal,” says Brigette Wolf, Chief Marketing Officer, My/Mochi.

Susan Penta, Co-Founder, Managing Partner, MIDIOR Consulting, adds, “The fact that this data indicates digital transformation is finally taking root is a big takeaway. If a significant portion of a company’s budget for innovation is focused on digital transformation then it is a good indication that digital transformation as the focus of innovation is finally crossing the chasm. Innovation is often tightly correlated with tech startups and entrepreneurial ventures but today, everybody needs to embrace innovation.”

The pace of change in the current digital landscape is accelerating, and many industries, including innovation, are trying to keep up with the rapid changes taking place.

“Organizations are grappling with fundamental questions about the meaning of digital transformation and whether it is different from what they envisioned 12 months ago,” says Gail Martino, Senior Program Manager, Unilever. “Digital transformation is the place where all the action is currently happening, and companies must come to grips with it.”

AI is certainly a subset of this conversation, and a subject that is rapidly coming to the forefront when it comes to budgeting, hiring needs, training and other research factors. Martino adds, “The advent of technologies like AI has made digital transformation even more pressing. Respondents recognize the importance of digital upskilling and acknowledge that they do not have the right people or skills on hand. Upskilling is crucial for success in the current digital landscape.”

“Digital transformation is one of the biggest challenges and opportunities,” agrees Leslie Shannon, Head of Trend & Innovation Scouting, Nokia. “Changing the processes, thinking and the management styles around that is challenging. Many industries face this as we move from the physical to the virtual and the virtualized. It takes rethinking.”

Still, to others, true digital transformation should be held to a higher standard. Change is difficult if not challenging to some companies and industries that have been slow to react and adapt.

“The innovation budget is now partly focused on digital transformation,” says Harsh Wardhan, Innovation Program Lead, Google. “However, some companies also have this burden of legacy, this baggage that they carry on in regards to the existing systems that they have. Due to which it is a difficult position to take to go all in, they always have to move slowly and test a little bit, make changes based on results and then evolve with time. And it’s important because they have to manage change.”

But, asks Wardhan, “Are they doing digital transformation? Some companies do, but many are only focused on digitizing how they used to work before and that happens because they are not focusing on real transformation. They are focusing on putting band aids on the current scenario, which is using technology for the sake of it, because everyone is doing so and you have to conform to the status quo.”

The FEI and All Things Innovation community completed the comprehensive Innovation Spend & Trends Report covering what innovation executives are thinking, how they’re spending and the issues they face. Per the results, this is a senior-level, experienced, cross-industry group that signals a broad range of business-oriented preferences and strategic insights focused on the innovation industry as a whole.

Click here to get a copy of the Innovation Spend & Trends Report

Sizing Up Your Innovation’s Impact

At this point in the lifecycle of an innovation, you have done the research and perhaps have brought your idea to life by building a product. Scaling the innovation, then, is about unlocking the value of the product to the majority of the available market. This will lead to expansion in the future and eventually a sustainable product and business model for successful growth. As Viima puts it in its blog on the subject, “Scaling Innovation,” “We can define scaling an innovation as the process of expanding the presence and the use of the innovation to be as widespread as possible to maximize that impact.”

Assuming your product is ready to go as you have envisioned and developed it, it’s also important at this step to have a goal or target in mind. Is it revenue or profits? Market share? The number of customers or users? Clarify your vision for successfully scaling your innovation—and how you will measure success.

The Three Dimensions of Scaling

The traditional model of scaling an innovation, also termed as the adoption or diffusion in the marketplace, is fairly well known. The early market features innovators and early adopters of the product. Eventually, the product crosses into the mainstream market, and will be adopted by the majority of the population and finally by the laggards.

In its article, Viim takes a more nuanced look at the three dimensions of scaling an innovation. The first stage is effectively scaling up. A key to this approach is making sure “you can produce enough of the innovation to scale; and that you can do that efficiently enough to be financially and operationally viable.”

Next is scaling out. This is simply the “geographical or demographical expansion of the innovation to a larger audience.” This gets your product or service out to a wider, more mainstream audience. Product or brand positioning may be in order if the scaling out expands the product to new markets, regions or verticals.

A third dimension of scaling is known as scaling deep, which is focused on more of a cultural shift or evolving consumer mindset. According to Viima, this step in the process “essentially means that you unlock more impact for your innovation by expanding and maximizing the use of it, typically for the people who already have access to it.” This might be the case if your product has changed consumer behavior to the point where they increase their engagement or use of the product.

Achieving a scalable innovation with some or a mix of all three dimensions could of course take years and prove challenging. There are advantages and disadvantages both larger and smaller companies may face. However, the benefits include the maximization of your innovative product’s impact, the growth in value, and the acceleration of sales. The increased demand will eventually lead to a better and cheaper supply chain, for example, and more efficient business and operating models.

Making a Splash

The road to innovation development is rarely a straight and narrow path. Often, there are many detours along the way. But taking an innovation framework approach could help create a blueprint for success. It’s not enough anymore to just throw an idea onto the wall and hope it will stick. Instead, these flexible and agile frameworks are strategic structures designed to give the enterprise and the innovation team the ability to tap into ideas. One can then evaluate the strengths and weaknesses of each idea, sharpen the decision-making around each idea generated and build strategies to turn them into value-generating opportunities.

In All Things Innovation’s “Innovation Ventures,” Seth Adler discusses the subject with Chris Varley, Principal of Goodyear Ventures, The Goodyear Tire & Rubber Company. Varley states that, “Big companies develop bureaucracy because they need it. What happens though is a lot of rigidity creeps in, and that can kill innovation. So, smart companies start looking at how we can keep the bureaucracy that we need to function as a large organization – but find better, faster, cheaper ways to get new ideas in-house and in the market.” This would be the origin of how a partnership with startups and corporate ventures comes into fruition.

Going Deeper

What steps can a company take to improve scalable innovation? We asked ChatGPT for some advice regarding the subject. Having the right technology is a key part of the ability to accelerate the scalability of an innovation.

  1. Establish clear goals: A company should establish clear goals to guide its innovation efforts. This will help ensure that the resources invested in innovation are being used effectively and efficiently.
  2. Invest in research and development: Companies should invest in research and development to identify new opportunities for growth and improvement, as well as create innovative products or services that meet customer needs and wants.
  3. Foster a culture of innovation: Companies should foster an environment where employees feel empowered to think creatively and explore new ideas without fear of failure or retribution. Encouraging open dialogue can encourage creative thinking, allowing employees to come up with solutions outside the box that could be beneficial for the company’s long-term success.
  4. Leverage technology: Leveraging technology can help companies scale their operations faster, reduce costs, increase efficiency, improve accuracy, manage data better, automate processes, enable collaboration across departments etc., thus helping them become more agile to innovate quickly while maintaining scalability at all times.
  5. Develop partnerships and alliances: Developing strategic partnerships or alliances with other organizations can provide access to additional resources such as talent pools from which a company can draw upon when developing innovative ideas or products/services. It also gives access to markets which may not have been available before due to geographic constraints, thereby increasing scalability potential significantly.
  6. Embrace change management strategies: Companies must embrace change management strategies if they want their innovations scalable over time; this includes having policies in place regarding how changes will be implemented within the organization (such as training programs) so that everyone is on board with any changes made.

Weighing the Options

Scaling an innovation is not an easy task. A larger company may have deeper pockets than a smaller startup, yet the smaller venture may be nimbler and adapt to change quicker. Whatever type of company you have, Viima advises to be prepared for challenges and be realistic with your expectations and timelines. Scaling an innovation takes time and many incremental steps. There will be many problems to solve. But scaling challenges and opportunities can bring your innovation to its fullest potential.

Video courtesy of Capgemini

Leading with Product Innovation

According to Harvard Business School’s article, “Product Innovation: What Business Leaders Need to Know,” there are three key types of product innovation strategies that shape the market.

  1. Sustaining innovation, in which a business consistently provides the highest quality products to its best customers.
  2. Low-end disruption, in which an emerging company enters at the bottom of the market, providing a “good enough” product with a low-profit model.
  3. New-market disruption, in which an emerging company creates a new segment in an existing market and moves upmarket, gradually rendering the incumbent products obsolete.

Incorporating Innovation

It can be challenging for a business leader to balance sustaining innovations with current product offerings while attempting to create new products that break into new markets. In a Forbes article, “5 Tips for Product Innovation: Balancing Novelty and Necessity,” author Ryan Fritsch, co-founder of Cloud Paper, gives several factors to consider when balancing strategies and considering different types of innovation. These questions can help lead you to new approaches and develop new perspectives.

  1. Industry Retrospection: What has your industry done before and what could be done better? What problem does your product solve? Are there more problems it could solve?
  2. Industry Projection: What do the next ten years look like for your industry? Are there any emerging trends?
  3. Disruptive Industry Research: What are the aspects of your product or industry that no one is thinking about? What is so commonplace that no one has bothered to innovate it in years?
  4. Customer Research and Focus Groups. How do customers respond to your prototypes?
  5. Thinking Outside the Box. How is your product packaged? Could it be improved? What materials do you use? Could they be more sustainable?

“Innovation should not be a simple task on your to-do list, but rather an element of your business that is always considered and constantly in flux,” writes Fritsch. “In CPG, innovation is particularly crucial, as the demands of consumers are constantly evolving. We must be ready to pivot to meet shifting demands and that means investing in innovation in a variety of forms. Find a balance between renovating old products and introducing new ones and you will have a loyal customer base for years to come.”

Setting the Stage

A recent article on All Things Innovation, “Setting the Stage for Product & Brand Innovation,” further explored the delicate balance between product innovation and brand growth. Product innovation and brand growth are often tied together, as it is often said that you can’t have one without the other. Yet in a world filled with disruption, brands must innovate differently to survive and, indeed, thrive. Meaningful innovation drives strong brand growth. A brand growth strategy that focuses on disruptive innovation could be the winning ticket.

In addition, in a recent blog post, “Defining Disruptive Innovation,” All Things Innovation tackled this often misunderstood phrase. Disruptive innovation is often a phrase used to make a splash in the business world. Some may debate that the label has been applied carelessly at times to anyone shaking up the market. Yet, just what makes an innovation disruptive? It depends on your point of view. But some make the case that it still remains a gradual process of change, as a smaller competitor gains a foothold in a low-end or new market, and moves its product upmarket to challenge the incumbents. Disruptive innovation encompasses a transformation at the core of the business and the marketplace.

Staying Agile

What steps can companies take to focus on product innovation? We asked ChatGPT about the process. A theme emerged of dedication to the product innovation mission, by investing and gathering resources to further the company’s goals.

  1. Create a dedicated team of innovators: Establish an in-house team or outsource to a third party that specializes in product innovation and development. This team should be responsible for identifying new products, services, materials, processes and ideas.
  2. Invest in research and development: Companies should invest resources into researching the needs of their target market as well as exploring emerging technologies and trends within the industry. Consider creating a budget specifically devoted to R&D initiatives that will ultimately lead to more successful product innovations.
  3. Analyze customer feedback: Collecting customer feedback is essential when it comes to understanding what people want from your products or services. Utilize surveys, interviews, focus groups and other methods of gathering data on customer preferences so you can better understand how you can meet those needs with innovative solutions.
  4. Prioritize collaboration: Encourage open communication between departments such as marketing, engineering, production teams etc., who all have valuable insight about potential product improvements or new offerings that could benefit customers’ lives or experiences with your company’s products/services.
  5. Develop an agile process: Implement an agile process which focuses on iterative improvements over long projects by breaking down tasks into smaller chunks while allowing for quick changes if needed due to changing markets conditions or user feedback.

Getting the Job Done

A key takeaway in learning more about this category of innovation is that it is important for business leaders to set the tone and build a foundation for a strong product innovation strategy. Harvard Business School further notes that another key point is the “jobs to be done” theory. Identify your customers’ jobs to be done. Consumers hire a product to do a job or function.

“Consider what job customers hire your product to do. Are there other jobs they need done that you could solve by improving the product? Conducting market research with existing customers can offer insights into the variety of jobs people are hiring your product to do and highlight opportunities to innovate.”

Video courtesy of Professor Mark Wolters

The Value of Insights for Innovation

An essential formula for success is for a brand or company to gain insights, knowledge and information about their consumer. A more focused understanding of the consumer and their desires and preferences will support product development efforts. Researching insights from actual customers should be a key part of the process. Often by letting consumers participate in the innovation process, you are creating a community of consumers that are active in your co-creation efforts.

Failure should also not be considered a shortcoming. In fact, failures are an effective learning opportunity. This also aids speed to market initiatives. In the process of innovation, by quickly identifying what ideas are worth pursuing, and what ideas should be discarded, you can rapidly prototype and test the more ideal solutions. Capturing key consumer insights at the start of the process can lead to better chances of success with the innovation.

A Broader Perspective

Innovation isn’t just about developing new products or technologies. It’s about creating value for the consumer. In an article on this subject in the MIT Sloan Management Review, “The 12 Essential Innovation Insights,” the authors discuss the danger of thinking too narrowly about an innovation. Often, companies innovate similarly to their competitors when it comes to research and development, systems and processes as well as branding. By thinking more broadly, and incorporating the consumer into your viewpoint, you can open yourself up to more innovation opportunities. The authors provide the example of Starbucks, which didn’t necessarily innovate with a different coffee product, but instead looked to enhance the customer’s coffee drinking experience.

In the MIT article, business innovation, the authors note, has to do with new value, not necessarily new things. The authors also presented an “innovation radar” so companies can consider 12 different areas in which they might innovate — ranging from method of value capture to operating processes to platforms. “When a company identifies and pursues neglected innovation dimensions, it can change the basis of competition and leave other firms at a distinct disadvantage,” the authors conclude.

The Start-Up Formula

All Things Innovation recently held a “Start-Up Partnership” roundtable discussion focused on partnerships between start-ups and corporations, and which can be seen through the lens of how insights can benefit such partnerships.

On one hand, the concept of corporations and start-ups partnering makes perfect sense. One side of the partnership is traditionally slower and more conservative based on the fact that tried and true processes have brought scale to a successful organization. The other side of the partnership is traditionally quicker and more progressive based on the fact that an unserved need has been identified and a small group of risk-takers has the skills to fill that need, but perhaps not the scale or processes necessary for success.

In the best case scenario, a partnership is formed and a corporation and start-up conceive of a completely new way of seamlessly doing business that delights current and new customers, leading to greater current market share and eventually introductions into new markets.

These start-up partnership dynamics often blend the faster/cheaper and bigger/better strategy within a structure that works for each entity. Ultimately, ensuring that each partnership is viewed as a unique collaboration while infusing each combined initiative with overall established insights can lead to a successful innovation launch.

Stepping Up with Insights

What steps can consumer insights take to benefit innovation at your company? We asked ChatGPT for a few pointers on the process. The answer seemed to indicate that an open environment of collaboration, encouragement and feedback, not to mention a lot of research and testing, is at least a starting point for developing better consumer insights to benefit innovation. It all circles back to the consumer.

  1. Identify the target audience: Identifying who you are marketing to is a key first step in understanding consumer insights and how they can benefit innovation. Understanding the demographics, interests, location, preferences, and opinions of your target market can provide valuable insight into what products or services may be successful.
  2. Conduct research: Researching your target audience helps to identify their needs and desires when it comes to new products or services. This could include surveys, focus groups, interviews or even online forums where consumers discuss topics related to your industry or product offering.
  3. Analyze data: Once you have collected relevant data from your research efforts, analyze it for trends that will help inform product development decisions. Look for patterns in customer behavior such as purchase frequency and amount spent over time as well as feedback about existing offerings that may indicate areas for improvement or potential new opportunities for growth.
  4. Test ideas: Testing out ideas with actual customers is a great way to validate assumptions before investing resources into developing them further and launching them publicly. Use tools such as A/B testing on websites or apps to gather user feedback on different versions of a product idea before committing too much time and money into building something that might not work well with users after all.
  5. Monitor performance metrics: After launching a new product/service, track customer feedback through reviews, ratings, analyze usage statistics (such as click-through rates) across channels (web vs. mobile), measure conversion rate optimization experiments etc. These insights will allow you to understand how successful an innovation was at meeting the needs of its intended customers while also providing direction around what should be improved next time around.

Understanding the Consumer

Innovation can start with the right customer insights. Insights can benefit innovation in various ways. They provide a greater understanding of the needs and wants of customers, which can help to inform product design decisions and create more innovative solutions to customer problems. Insights also provide valuable data that can be used to improve existing products or services, as well as identify new opportunities for growth and development. Finally, insights enable companies to gain an advantage over their competitors by allowing them to better anticipate market trends and capitalize on emerging technologies before the competition does.

Leveraging Data Analytics to Drive Innovation

According to World Scientific, innovation analytics is a specific, emerging model that integrates information, analytics, digital twins and even artificial intelligence to support and manage the entire lifecycle of a product or process from inception, through design and manufacture. With the use of data analysis tools, companies can then gain insights that inform decision-making related to product development, identify market trends and opportunities, zero in on customer preferences, streamline operations and more. Innovators can also leverage analytics to better weigh their development options and outcomes before they commit resources to a project.

Decentralized Versus Centralized Organizations

While data presents an opportunity for companies to innovate, there remain concerns about how best to use the large amount of data being generated today through more advanced digital means. Data quality and data overload are also concerns in today’s digital environment.

For more efficiency with data in their operations, companies may also find themselves balancing decentralized versus centralized initiatives depending on their specific needs. In her latest research, “How Data Analytics Can Drive Innovation,” Wharton professor of operations, information and decisions Lynn Wu looks at how different organizational structures influence the use of data analytics to spur innovation. The Wharton School is part of the University of Pennsylvania.

There are certainly advantages and disadvantages to each approach. According to Professor Wu, a decentralized structure is based more on an innovation and collaboration network, which could be comprised of a variety of smaller groups that are loosely connected together. A centralized structure is one where innovators are more concentrated, where a small group of individuals are mostly responsible for the innovations of the company.

As far as how these structures impact innovation—and what analytics can do for these organizational groups—Professor Wu found that data and analytics can drive decentralized innovation for several reasons. “What I find is that analytics can really drive the creation of recombinations, or combining a diverse set of existing technologies in a new way. Each individual technology already exists, but how do we recombine them in some ways to create a new innovation?” says Wu.

For Wu, decentralized seems to hold a slight advantage in that there are smaller clusters working on a specific problem, so they really know what the problem is in that domain, and may find a solution faster. However, a decentralized structure can lack the tighter coordination of a centralized group, which may also be better at looking at the big picture of a problem.

There is really no one answer to which organization is better equipped for innovation. But, this is where the power of data and analytics comes into play for either approach. “Analytics finds a way to cull through that and find you a new combination, a new way of solving your problem that you may not have easily found without analytics,” says Wu.

A Pivotal Solution

All Things Innovation looked at the aspect of how data can drive innovation in a case study, “How Data-Driven Innovation Brought a Deliciously Satisfying Solution to Market.”

Everipe is a growing startup that harnesses the power of freeze-dried technology to create nutrient-rich smoothies. But like many marketers and insights professionals, the founders found it challenging to quantify the concept’s potential.

To help the company get a sense of Everipe’s in-market potential and benchmark their product against core competitors, Dig Insights leveraged its innovation insights platform, Upsiide. Upsiide makes it easy to screen ideas and test concepts in whatever format they come – creative, messaging claims, food packaging, or logos. The team used Upsiide’s methodology to understand consumers’ intuitive interest and initial commitment to the Everipe proposition, as compared with the propositions of their key competitors. Dig then ran a study that dove deep into the Everipe brand and product portfolio to understand how consumers felt about the brand and packaging.

As one of the founders of Everipe put it, “It was a pivotal moment for us to hear from a robust sample set – [the data shows that] we have a very powerful idea. So, we’re now spending the dollars to bring a team of consultants in, solidify our brand and products, and scale production. Talk about actionability out of insight! I’m not sure we would have had the confidence to invest without the clarity that Dig’s study brought us.”

Welcome to the Machine

What steps can organizations take to develop innovation data and analytics tools to help drive innovation? We asked ChatGPT that question to zero in on specific steps to take that can ramp up a company’s use of data in their product development efforts.

  1. Establish an innovation data and analytics team: Organizations should create a team dedicated to developing, managing, and analyzing innovation data. This team should include experts in the fields of data science, analytics, design thinking, business intelligence, user experience research and product management.
  2. Collect data across all areas of the organization: Companies need to collect relevant information from all departments within their organization in order to develop meaningful insights into how they can innovate better. Data sources could include customer feedback surveys, sales reports or market research studies.
  3. Utilize predictive analytics: Predictive analytics is a powerful tool for predicting future trends based on past performance and other factors such as customer behavior or industry trends. By utilizing predictive analytics tools, organizations can gain insight into potential opportunities for innovative products or services before they launch them into the marketplace.
  4. Implement agile methodologies: Agile methodology helps companies quickly respond to changes in the marketplace by allowing them to rapidly prototype new ideas without investing too much time or money upfront. By implementing agile methodologies, organizations can quickly test out different concepts while collecting valuable feedback from stakeholders along the way.
  5. Leverage machine learning algorithms: Machine learning algorithms are used by businesses today to automate processes, identify patterns, detect anomalies, make predictions, generate insights, optimize operations and more. By leveraging these advanced technologies, companies can tap into vast amounts of structured and unstructured datasets that may have previously been inaccessible due to manual analysis limitations.

Staying Agile

As the suggestions from ChatGPT indicate, the world is changing rapidly with the advancement of automated data gathering and analysis tools, as well as the growth in data transformation and visualization technology.

But as the case study from Everipe suggests, there is a human element to analyzing the data and making the best decisions for the business or brand. These decisions can be utilized in both centralized or decentralized organizations, where the needs of humans can be balanced with the advances in technology to come up with ideal solutions that will be ripe for the picking.

Video courtesy of Gartner