It might be helpful to provide a bit of context around one of the more commonly misused terms in organizations.
Innovation can evolve and expand in many areas and may include any idea that can be developed to address one or more desired outcomes for a customer. Customers can be internal or external. Having said that, innovation is (typically) referred to as:
"The process of creating and delivering new customer value in the marketplace"
Ideas can come from any stakeholder (employees, customers, partners, vendors, others).
There is an implied lifecycle around innovation that we may want to incorporate into our portfolio planning.
The above diagram illustrates the progression for taking an idea from concept through innovation. Everyone goes through the first 2 stages as a natural extension of human curiosity. The next 3 stages are a bit more challenging.
There is an implied lifecycle around innovation that we may want to incorporate into our portfolio planning:
Imagination – conceptualizing a new way of looking at a problem, or thinking of a new way for people to get something done
Ideation – ideas come in all shapes and sizes. What is important is to embrace each idea and provide prompt response to the author for their contribution.
Invention – the idea needs to be developed into a service and/or product (new or extension) that will provide new customer value. For now, we’ll refer to this as concept development.
Implementation – once an idea has been developed and vetted (confirmed that it does indeed deliver new value), it then needs to be operationalized via one or more sets of initiatives to improve service delivery (product and/or service extension). Depending on the complexity and impact of an idea, this may require a completely new roadmap of initiatives.
Innovation – once an idea is implemented, the (ROI and ROV – return on value) need to be monetized to complete the cycle. An idea only becomes an innovation when a significant number of customers (% of market) has purchased and consumed a product or service.
We all have read about inventors. They are often people who see an opportunity and have the means to build a prototype of their idea (a working concept). There is no shortage of concepts in companies. Many never make it past the drawing board or never get funded. Many also get built and implemented, but fizzle and are deemed as failures (wrong word, but a topic for another article).
The challenge for inventors is conveying the value of their idea in a way that addresses unmet or under met needs of customers (someone willing to pay for a product and/or service that helps addresses one or more desired outcomes). Most inventors (and many companies) struggle to identify and measure these desired outcomes. They rely on market analysis or rely on algorithms (applied to big data) to project what one or more customers will do (buying behavior).
Unfortunately, predicting product success based on behavioral analytics (projections) is more art than science. Decisions are made using a variety of inputs (behavioral patterns, experiences, desires, needs, etc.).
A better approach is to study what customers want and then measure the “value gaps” with precision so you know exactly how to assess the likelihood that a customer will buy a product or service.
This way, companies can improve the decisions they make for designing, delivering, and communicating the value that a product or service provides to individual customers within a market.