There is no lack of great innovative ideas. In fact, most companies have far more ideas than they can ever possibly use. Accenture believes that what sets truly successful companies – the high performers – apart is that they take a systematic approach to innovation. This is what enables them to pick the best ideas, the ones that will work and generate profitable growth, win market share, or even create new high-growth markets.
But how do they do it, again and again? Especially given that the odds are against them, with a mere one in every 1,000 innovative ideas actually proving successful. The key to successful innovation is coming up with the right innovations for the right markets. The best ideas rarely appear out of thin air. The only way to come up with the best innovative ideas – consistently and repeatedly – is to make innovation an essential part of how you do business, of your strategy.
Accenture believes that to be successful, companies need to focus on the quality of their innovative ideas, not the quantity. After all, the more ideas you have and try to launch, the more time and resources you need to devote – and possibly waste – exploring those ideas. You need to be able to identify and focus investment on the right ideas, the right innovations. So how do successful innovators develop this focus on fewer, bigger and better innovations? As I’ve said, they take a systematic approach to identifying the best opportunities. What they do then is prioritize, based on in-depth customer and market insights. They really know their customers, sometimes better than the customers know themselves. They spend time identifying their customers’ unarticulated – or unmet – needs. They see the dilemmas their customers face each and every day and come up with solutions. And not just any old solution, but the best solution possible at that time.
Henry Ford once said, if he’d asked his potential customers what they needed, they’d have replied ‘a faster horse’. In other words, their dilemma was getting from A to B more quickly. Consumers don’t always see the full potential of new technologies, or the solutions they could offer. But a successful innovator combines the awareness of the dilemmas their customers face and their knowledge of the full potential of new technologies, to come up with the right innovative solutions to those dilemmas. In effect, they are identifying and defining future markets.
Because successful innovators also take a systematic approach to their markets. They identify their potential growth markets and look for innovations that can help them grow in those markets. They are in touch with key market trends, such as the world’s fast-growing middle class, which is set to grow to 5 billion from today’s 1.8 billion in the next 20 years, with 85% residing in Asia. Successful innovators are also up-to-date on key technological trends, as well as macro-economic developments and future regulatory and compliance issues, all of which will help define future markets. They know what their competition is doing and they’ve identified the white spaces where their innovative solutions will help them stand out.
All of this in-depth insight into what is moving your (potential) customers – their hidden needs – and what is driving markets enables you to take the next step: to develop the foresight required to identify your future growth markets. Because it is the combination of insight and foresight that enables successful innovators to come up with targeted breakthrough innovations in their chosen markets, the innovations that will make them winners in those markets. Accenture research has shown again and again that what this systematic approach to innovation does, in essence, is help companies remove the errors – the failures – from the process of innovation. If you truly understand your (future) markets and your customers, you don’t waste time and effort producing and marketing innovations they neither want nor need. A systematic approach creates a clear focus on innovations that will create new revenue streams and profitable growth.
In my next post I’ll be looking at how successful innovators create a balanced portfolio of innovations, distributing their resources and investments across innovation types, from breakthrough to incremental. Until then, I’d like to leave you with some questions:
1. How systematic is your company’s approach to innovation? For instance, what do you do to identify the hidden needs of your customers?
2. How aware is your company of emerging market trends and new technologies?
3 Is innovation in your opinion the product of pure genius and hence unpredictable, or can it be systemized and planned?