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Successful Innovation — five tactics

Successful innovation demands systematic tactics in helping customers to get jobs done better by profitably growing ideas in a competitive market

  • Rokon Zaman
  • Created: August 17, 2022
  • Last updated: December 16, 2022
Successful innovation demands systematic application of tactics
Successful innovation demands systematic application of tactics

As more than 75 percent of innovative products retire without generating profitable revenue, the question of what makes successful innovation is crucial.  Furthermore, in the early stage of the life cycle, all successful innovations create little willingness to pay among a small group of customers, generating loss-making revenue. The challenge of successful innovation is to keep growing the customer base and lowering loss, leading to expanding profitable market. On the other hand, externalities and competition pose opportunities and challenges on the path to successful innovation. Moreover, irrespective of the excellent performance, invariably, all successful innovations suffer from saturation in market expansion and erosion of profitability. Such reality demands creative destruction out of reinvention to find a new life of growth. But sometimes, innovations pursuing successful innovation suffers from disruptive effect. Hence, this article presents five essential tactics to nurture ideas into successful innovation.

Outline of the article:

  1. Review of commonly cited tactics for successful innovation
  2. Successful innovations begin with a focus on getting jobs done—functional, social, and emotional
  3. Incremental innovation for expanding the market
  4. Sustaining innovation tactics in a competitive market
  5. Pursuing creative destruction to overcome saturation  
  6. Successful innovation progresses, causing disruptive innovation effect

Review of commonly cited tactics for successful innovation

In an article in Forbes on Feb 1, 2022, Claus Jepsen presented 10 tactics for successful innovation. It begins with an external perspective. The following top four tactics are (i) the right team of people, (ii) ready to take action, (iii) willingness to challenge, and (iv) a system for managing the transition. The middle three tactics are (i) appetite for change, (ii) culture for risk, and (iii) courageous leadership. And the last two are (i) follow through and (ii) continuous innovation. They are undoubtedly helpful but fail to offer tactics for successful innovation in a competitive market. It does not shed light on how to determine features and respond to competition. Hence, these tactics are insufficient to guide a team for successful innovation.

In a lengthy article in Ivy Business School Journal, former HBS professor Roger More came up with a list of observations on successful innovation. Despite their breadth and depth, they fail to offer tactics to the practitioner in making product ideas successful innovations. As this article focuses on generics and economy-level innovation, professionals get little help in facing the challenge of creating innovative products successfully.   The article of Alissa Mariello in MITSloan Management Review also falls short of offering tactics for managing successful innovation at a specific product level. Many other articles on this topic of successful innovation suffer from giving practice-level management guidance. Hence, this article attempts to step in with five management tactics focusing on the reality of successful innovation.

Successful innovations begin with a focus on getting jobs done—functional, social, and emotional

What it takes to get jobs done better should be the starting point for successful innovation. Customers are on a relentless journey to recruit improved products to get jobs done better from three dimensions. Functionally, it should perform the jobs better than before. For example, the next car should be functionally better than we use now, whether in the form of additional or improved features. The next one is that people would like to uplift their social position with the products they will use. The next one is that people would like to feel better by having the effect they will buy.

Unfortunately, people don’t exactly know what products could be most suitable to meet these three-dimensional requirements. Furthermore, if you ask, they often provide misleading feedback. For example, Henry Ford once said, “If I’d ask customers what they wanted, they would’ve told me a faster horse.” In the early 20th century, people had an intense desire to reach their destination faster than ever before, but they could only imagine faster horses as the solution. Hence, despite being plagued with horse manure, they could not imagine any alternative—other than faster horses.

To overcome this challenge, the tactic is silently observing with empathy to figure out the internal state of the target the customers would like to achieve. The focus should be on understanding the progress customers want to make, as opposed to asking them how they would make it. The onus of figuring out the alternative products that would effectively and efficiently help customers progress is on innovators’ shoulders.  

For successful innovation, innovators’ job is to reframe products to understand the progress people want to make. It should lead to forming ideas for product advancement in a differentiated way from what already exists.

Incremental innovation for expanding the market

Unfortunately, all successful innovation begins the journey in primitive form. Examples of humble beginning successful innovations include a smartphone, iPhone, word processor, computer, television or automobile, light bulb, airplane, and many more. At the beginning of the life cycle, perceived value is low, resulting in little willingness to pay among a small group of customers. Hence, the journey of successful innovation invariably begins with loss-making little revenue.

For example, the market size of smartphones was valued at USD 273.9 Billion in 2021–forecasted to reach USD 520.7b by the year 2030. But the first smartphone, IBM’s Simon, released in 1994, faced the sale of only 50,000 units, at a price tag of around $1000. Similarly, after the rollout of Carl Benz’s automobile, after 15 years, German automakers succeeded in creating a market for only 900 cars by 1901. German carmaker Opel succeeded in producing and selling only 65 vehicles from 1899 to 1902. Similarly, despite the magical performance of the iPhone, Apple succeeded in selling barely one million units of iPhone 1. 

Incremental advancement is at the core of successful innovation. Innovators must focus on keep improving the current release, whether through adding, removing, or advancing features. To support this mission, innovators should have a passion for perfection. To help it, they need a suitable technology portfolio so that additional ideas keep creating far more value than the extra cost. Preferably, ideas for incremental advancement should lead to quality improvement and cost reduction. For example, cars in the 2020s are far better than the ones produced in the 1920s. Considering inflation, far better cars of the 2020s are even cheaper than their counterparts produced 100 years ago.

Sustaining innovation tactics in a competitive market

For successful innovation, innovators need to take advantage of externalities and counter the competition responses. Among the externalities are (i) infrastructure, (ii) 3rd party products and services, (iii) supply chain, (iv) compatibility and standardization, (v) information and experience gaps, and (vi) network effects. Innovators need to keep updating and releasing successive versions by leveraging prevailing externalities and influencing positive externalities’ growth. For example, to take advantage of 3G cellular network deployment, Apple released a 3G version of its iPhone. Similarly, the iPhone’s feature of 3rd party component plugins (or Apps) has created a strong externality effect.    

Competition responds with replication, imitation, and innovation to take a share of potentially profitable business. As a result, irrespective of the greatness, willingness to pay for the current release of innovation keeps falling. To counter it, innovators need to keep releasing successive better versions, preferably at less cost. Due to this reason, successful innovations like iPhone behave like a seasonal crop. This is about sustaining innovation tactics; in the absence of it, no great idea succeeds as successful innovation.  

Pursuing creative destruction to overcome saturation  

Despite success record through incremental progression and sustaining innovation tactics, every successful innovation reaches a state of maturity. To continue the success, innovation should be recreated by changing the technology core. For example, although Walkman is an excellent example of successful innovation, it reached maturity. Apple took advantage of it by recreating as iPod. Despite the success of giving second life to Apple, rapid technological progression created the opportunity of recreating again, leading to streaming over smartphones. The recreation wave grows as a better alternative causing creative destruction to the existing matured generation. The next generation helps get the job done better, often at less cost. Hence, successful innovations keep growing and diffusing deeper in the market through successive creative destruction waves.    

Successful innovation progresses, causing disruptive innovation effect

As explained, due to the maturity and availability of emerging technology core, successful innovation demands recreation, forming a creative destruction wave. Incumbent firms profiting from the current matured state of innovation are often reluctant to embark on regeneration through self-destruction. But once the undercurrent takes strong shape, new entrants jump into the recreation journey by changing the technology core. For example, despite the invention of electronic image sensor technology and its demonstration as the digital camera, Kodak did not embark on recreation of camera innovation. Similarly, Nokia did not lead the recreation of smartphones; RCA did not jump into the mission of recreation of TV, Radio, and many other consumer electronics products.

This recreation endeavor by new entrants often grows as creative destruction and incumbents fail to switch. As a result, existing firms profiting from the matured state of innovations suffer from disruptive innovation effects. Hence, profiting from successful innovation demands taking advantage of creative destruction and avoiding the burn of disruptive innovation effects.   Innovation opens profitable opportunities. But despite its potential, over 75 percent of innovative products fail to generate profit. Furthermore, success from innovation does not show up suddenly as the Eureka moment. Moreover, success from innovation is transient and also migratory. Hence, successful innovation demands understanding the dynamics of innovation in a globally connected competitive market. Five tactics presented in this article appear to be cornerstones for successful innovation.

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