By Kelly Lawrence, Founder & CEO, Lawrence Innovation

Innovation is widely discussed. You may have innovation in your title or be responsible for it in some way. But, what is innovation? Is it really just new technology or is it more than that?

Innovation is the intersection of unmet customer needs, an internal capability to solve the problem better than anyone else and economic viability. In other words, there must be a problem to solve, your organization needs to be able to solve the problem and the numbers have to work for your organization and your customer. To be a true innovation, the solution must be commercialized and it must generate profit. Miss one of these critical pieces and you are likely going to struggle with innovation.

INNovation Definition

Technology & Capability

Technology sitting on a shelf that hasn’t been commercialized is a technical capability waiting for the right problem to solve. That technology might be patented. Many organizations use the number of patents as an innovation metric. Has the technology generated any new products? Are those products commercialized? Are those products generating revenue and acceptable profitability? If the answer is no, the technology is not an innovation yet. You’ll have to decide if it’s worth the cost to maintain patents in the event the technology can be leveraged to solve a profitable problem. Trade secrets also have a place.

Even if your organization has the technology, can that technology be scaled and commercialized? I’ve seen new products die that worked great in a lab, but just could not be successfully scaled. You’ll want to ensure scalability to an acceptable level when assessing if a technology is likely to make it into a viable product.

Market Desire

Having a problem that is a big enough annoyance that it needs to be solved is the root of an innovation. Why did you buy that specific new car? Why did you get a dog vs a cat? Why did you get that breed of dog? Why did you get a riding lawn mower vs a push mower? Why did you hire out the mowing versus doing it yourself? In each scenario, a need drove the decision. If you don’t have a need, you don’t buy. As an example, my household currently has two cats and one dog. Everyone gets along. The pets are all well cared for members of the family. As a whole, our family is pretty satisfied. You could bring me a really cute puppy or kitten and I’d say no thank you. Why? Our family clearly likes pets. Why not one more? The answer is, we’re satisfied. Another pet would not solve any problems. On the contrary, a new pet would likely bring in more problems. Apply this common scenario from daily life to your industrial product. If you make fasteners, why does your customer need your new fastener vs the old one? If you make medical devices, how is yours better, safer, more cost effective? In other words, how does your product benefit a potential customer. If the customer is satisfied, you don’t have the business case for an innovation. Find a new problem to solve.

Market Viability

Just because your organization can make a product does not mean that it can do so in an economically viable way. For every product, there is a price ceiling. This is the maximum amount a customer will pay for the given product. If your product is priced above the price ceiling, it won’t sell. Customer do not care how much it costs your organization to make a product. Customers only care about the cost to them for a given value. If the cost and value do not align. Do not expect to sell.

Your Innovation Portfolio

Under this definition of innovation that requires technology and capability, market desire and market viability, what percentage of your new products and services are truly innovations? If the percentage is low, you have a lot of company. Most companies struggle to build a portfolio of true innovations. The good news is that the portfolio and the skills of the team can be improved. Doing so will accelerate innovation success and drive results.

Need help accelerating profitable innovation? Contact me to discuss a customized growth plan.