8 Remarkable Innovation Best Practices

Highlights

  • Innovation can be learned. That means it can be taught. Innovation best practices repurpose the actions that lead to successes and therefore lend themselves to effective teaching.
  • Innovation best practices enable staff to work backwards from successful outcomes. That reduces risk, increases focus, saves time, and shows the most direct route to predictable results.
  • Innovation best practices show which actions drive results and which don't. That helps prioritize what to do and is equally helpful in determining what not to do.
Johnny Grow Revenue Growth Consulting

There is no one way to create innovative products and services. But there are innovation best practices that share valuable lessons on what works, what doesn't. Here are eight of those lessons.

1

Start with a Methodology

Breakthrough products are not suddenly created from random ideas or eureka moments. They are created by feeding good ideas and eureka moments into an innovation methodology. It's a framework that scores them based on measured potential and systemically advances the most promising ideas from concept to commercialization.

Innovative solutions solve problems that are difficult to solve. They create change. That's no easy task but becomes manageable with a methodology that applies a dynamic roadmap for non-linear progression. Your methodology should bring structure to an unstructured process. It must bring measurability to a difficult to measure effort. And it must systemically transform ideas into tangible products or services that drive projected revenue growth.

Research from the Boston Consulting Group shows that 78% of innovators that have achieved repeated successes have a well-defined and repeatable methodology. That compares to 46% of innovators without a similar framework and who struggle to achieve their first success.

The lesson here is not to begin a program before you have a methodology that brings visibility, measurability and predictability.

2

Reduce Risk with Continuous Learning

Everyone knows creating novel solutions comes with risk. Fewer seem to know that risk is best mitigated with institutionalized learning.

The top innovators capture knowledge throughout the creative lifecycle and prototyping processes. That's because they know continuous improvements come from continuous learning.

They integrate their process frameworks with knowledge-bases or content management systems. They use these applications to harvest knowledge and make knowledge easily accessible with categorization and search.

Our Johnny Grow methodology goes a step further and applies artificial intelligence (AI) to deliver push-based lessons, recommendations, benchmarks, and insights at exactly the time and place they can be applied. We've learned that shifting from manual methods that require users to seek out knowledge to automated and push-based recommendations that deliver relevant and contextual content increase knowledge reuse exponentially.

This innovation best practice is to leverage tools to manage knowledge in a deliberate way and measure knowledge reuse.

3

Skunk Works Projects Can Do More Harm Than Good

Let me share with you how innovation dies at many companies.

At most companies there are a few staff who are intellectually curious and seek to create new products and revenue streams. Many executives show a tacit willingness for these informal and often unapproved exercises. There is no executive sponsorship. It's more of a decision to look the other way and wait and see what happens.

There may be multiple projects occurring in different parts of the company. Some known and some unknown. Some are skunk works and fly under the radar. Each of them applies an ad hoc and inconsistent approach. None of them apply a measured and mature framework.

There's little learning applied from prior projects or shared learning among projects. They may occasionally deliver an incremental solution but are far more likely to spudder out and vanish into thin air.

Eventually, executives recognize the money that's been spent and the absence of anything to show for it. At that point, there is a knee jerk reaction to suggest that it just doesn’t work for their company and must be halted.

The lesson here is to be all-in if you're going to innovate. Avoid the skunk works projects and organize a team that applies a proven framework and is accountable for their investments and a forecasted ROI.

4

Separate from the Corporate Machine

Innovation at big companies fails when it is inextricably tied to the corporate bureaucracy.

Teams need a judgment-free zone. Essentially a safe space to exercise ideas and feedback. An environment that doesn't require a multi-step approval process that takes longer than the actual experiment.

Teams may reside in virtual or physical spaces. But in either case results will accelerate when their space is separate from business as usual. Many of the most successful innovators have learned the process is improved when incubated outside the corporate walls.

But that freedom comes with some responsibilities. It's unacceptable to duplicate efforts or resources. So, the teams must integrate with the company and each other to repurpose data, assets, or expertise.

They must also demonstrate accountability. They have the freedom to fail but that doesn't excuse the requirement to justify their investment with revenue, profit or other financial upside. Failures must be learned from in a way that they contribute to future successes.

If you are considering a new program, the lesson here is to consider physically separating it from the company.

5

Solve for the Customer

Inexperienced innovators often believe they must think up the next big idea. That's not the case.

The shortest path to success is to solve the most vexing customer problems. And customers will tell you their biggest problems if you know how to ask. Methods such as market research and Voice of the Customer work well but are periodic.

A more continuous method is capturing buyer insights and customer intelligence. That includes things like a 360-degree customer view, dynamic customer segmentation, personas and journey maps. The best place to manage this data is the customer system of record, which is the CRM system. In fact, many seasoned experts modify their CRM system to also be an innovation system.

Customer intelligence surfaces insights such as what's most important to customers or their biggest problems. Data categorized in the CRM application can be tracked and converted into metrics and insights that roll up to executives or teams.

The below design diagram shows how customer data elements and insights can be managed and applied in a CRM system.

Customer Insights Integration to CRM

This lesson is a reminder that value creating ideas are born from customer problems shared by customers through conversation or their data.

6

Innovate Like a Startup

Digital startups out innovate big companies.

While there are some big companies that can innovate, they are the exception and not the norm. They are also the companies that mimic the behaviors that startups possess naturally. Those behaviors include passion, culture, pace, agility and perseverance; in that order.

The startups also benefit from what they don't have. They are free from corporate politics, management fiefdoms and turf wars. Startups would like to have more resources, but even being free of that forces them to experiment quickly, make trade-offs without delay and rapidly kill poor ideas.

Being a startup is not about dressing in jeans and hooded sweatshirts or having a ping pong table in a rec room. It's about adopting the right behaviors. Things like performing fast experiments to remove uncertainty, advancing with a sense of urgency and producing innovative products without caring who gets the credit.

If you are a big company unsure if you can mimic a startup, check out Why Startups Out Innovate Big Companies.

7

Not Much Time or Money? Consider the Lean Startup Model

This model is designed for companies that need to quickly reduce market risk with minimal investment.

It shortens the product development and prototyping cycles by adopting a combination of hypothesis-driven experimentation, minimum viable product (MVP) releases, and customer validated testing.

When done correctly, it quickly validates assumptions, customer acceptance and market risk.

Here's how it works.

It starts with a hypothesis or assumption that may be articulated on a purpose-built canvas. There's usually multiple assumptions and risks so they are prioritized for validation.

Innovation Best Practice

It then applies a Build-Measure-Learn experimentation loop. Unlike other models it initially focuses more on qualitative than quantitative analysis. It's less about testing a defined product and more about testing the value proposition. The product can be iteratively advanced but if the value proposition doesn't work there's no point.

The goal of this model is to quickly use customer feedback to validate the viability and market potential for a new idea or concept.

8

Scale with Portfolio Management

Portfolio Management is a structured way to govern a program of multiple concepts and projects. It spreads investments and risk and manages a pipeline that delivers a steady state of new product releases.

Innovation portfolio management maximizes the value of the total portfolio by altering investments based on profit potential. It frequently reallocates resources based on measurable progress and shuts down concepts that fail to show progress or value.

The goal of portfolio optimization is to reduce risk and maximize overall financial performance.

There are many portfolio methods available. One of the most popular for early innovators is the Google 70-20-10 model. Sometimes called the Google golden rule, it's a low-risk model that suggests investing 70% of the budget into core product improvements, 20% on expansion to core product opportunities and 10% to disruptive or transformative concepts.

Innovation Portfolio Management

Another mature method is the McKinsey Three Horizons growth framework. In many ways it's like the Google model in terms of a mix of innovative concepts that span different time horizons and deliver progressive levels of payback.

The first horizon invests in the core business and delivers improvements that bring immediate cash flow and profit. The second horizon expands to pursue emerging market opportunities. It delivers a bigger payback in the future but requires additional investment in the present. The third horizon invests in long term growth. It may include converting research into new products or making a minority stake in a venture-backed business.

The innovation best practice here is to apply portfolio optimization methods among a mix of projects to balance your risk tolerance and strategic goals. It's a method to allocate your limited resources to maximize your financial return.

See the Innovation Best Practices that reduce risk, increase focus, save time, and show the most direct route to enthusiastic customer adoption and wildly successful product releases.

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