It is becoming more and more challenging to find a profitable niche in the marketplace, with more and more businesses competing with commodities and/or commodity pricing everyday. How do you escape from that rat race? One way is by beating your competition through innovation/ research and development (R&D).
Innovation /R&D is not nearly as difficult as it appears, and it doesn’t have to be product-based and doesn’t require a degree from M.I.T. So, why don’t more companies choose this path to success? I’ve found that it is easy to get caught up in the idea of innovation/ R&D and miss the boat in terms of execution. How often do you imagine we get caught up in discussing the exciting aspects of new products and services, the new bells and whistles, etc instead of focusing on what will “work”, even if it is less enticing and interesting, doesn’t require the latest machinery, equipment, systems etc? I’ve fallen prey to this concept as well – it is surprising how easy it is to convince yourself that you are thinking of what the customer wants, and so you must continue to tweak the bells and whistles. But, is this what will make a difference to creating a new product and/or service that will lead to profitable growth etc? Typically, I’ve found the answer to be ‘no’. So, what are the keys to successful innovation/ R&D projects?
First, focus on customer value. There is a huge difference between customer desires and customer value. Who has met a customer that didn’t want every possible feature, service etc for the lowest cost? Instead, the key is to focus on what the customer values – that which will provide an increased benefit/ end result for your customer such that the customer is willing to pay an increased price for it. By focusing on asking questions and understanding your customer’s priorities, the reasons for those priorities, and potential win-win opportunities, you’ll find innovation ideas that will yield a significant difference to your business.
Second, remember the team. Focusing on people – the cross-functional team within your company and external to your company – is a critical component. No one is an expert in everything. For example, when designing a new product, what works best from a materials perspective (reducing the cost of materials while meeting the quality standards) might conflict with what works best from a freight perspective (the compression of the product, the packaging etc), which might conflict with what works best from a labor perspective (how it runs on the production lines), etc. And, remember to include what makes the most sense for your suppliers, your suppliers’ suppliers, your customers, etc.
Third, choose an objective that is a stretch and keep the team focused on thinking about how to achieve the objective – not why it cannot be achieved. Although this sounds obvious, it is important to keeping creativity alive. It is very easy to focus attention on the problems and tradeoffs (for example, the materials, freight and labor example above), which stifles the process. Now and then, it is a benefit to throw science out the window. Instead, ask how can we achieve this impossible goal? What would we need? Who has an expertise in this area? It’s surprising what can be achieved when you think you/ your team can figure it out.