We all know that innovation is good for business, good for our brands, it is good for people: employees, customers, suppliers and others. But we also know that innovation is difficult, problematic and lined with failures that were almost right, yet not quite there yet. In fact, the visionary analyst R. Wang discovered that 52% of companies in the Fortune 500 have dropped out or disappeared completely since the year 2000. Such is the nature of this new form of digital disruption. New technologies and business models are destroying entire industries and redifining our traditional categories in busines. Think about for a second the impact the laptop or iPhone has had on incumbent industries and steadfast products.
The question we’re always asking is… what’s next and where do we go from here?
Understanding exactly what’s happening inside the ebbs and flows of trends, technologies and consumer behavior requires a new approach to disruptive innovation. Rethinking models and even adopting business practices that we once believed were ‘uncool’ or even unnecessary.
However, the first step for innovation is, as we say in Spain, matar al dragón de ideas – or don’t fall in love with a BIG idea. It’s time to face the harsh reality of innovation and entrepreneurship and realize that ideas alone are not good enough if we deny the real purpose of innovation: addressing problems worth solving. The fact that many corporate initiatives and new businesses start with an idea, but are forgetting about the basic ingredients for positive change. For employers, this means that the struggle to find a formula for product market fit may take longer and be more difficult than we had originally planned. And for entrepreneurs, corporate agents of change means burning resources, and opening up a project to overcome limitations.
When most organizations try to increase their innovation efforts, they always seem to start from the same assumption: “We need more ideas.” They start using buzz phrases like, we need to “think outside the box” or let’s do some “blue sky brainstorming” in order to find some ideas that may become viable products or new systems. However, in most organizations, innovation is hampered not by a lack of ideas, but rather by the lack of a customer-driven approach, or working from the outside in.
Instead of concerning ourselves with product-market fit, we should be customizing our approach to the market itself. In other words, we must put the needs, expectations and demands of our existing target market in the highest priority. This will accomplish two critical objectives:
- Reduce risk of failure – we know our target market and already have established rapport and a relationship to build on
- Cross-selling and customer retention – much more cost effective than new customer acquisition
This approach aims to add immediate value to our existing customer base by focusing on what we call Targeted Market Innovation. A key component of this strategy is is the use of Distributed Research and Development, where an incremental mechanism for improvement is used to develop prototypes (minimum viable products) during periods of high focus and concentration. This method of innovation is preferable to giant leaps of faith that cost thousands (or millions) in R&D in order to develop new MVPs built from scratch.
To sum it all up, I’m not advocating for humdrum business as usual tactics that simply maintains the status quo. The process of killing the idea dragon and instead focusing on problems worth solving for your existing audience simply has a better chance of success than swinging for the fences in every at bat. Your customers already have a budget, you already have their attention and they already trust you. Keep them content with incremental improvements built through a mechanism for targeted market innovation. The learning you create through hyperfocused improvements will (hopefully) lead to the giant leaps of innovation your superiors so desperately want. Keeping with our baseball analogy, sometimes we have to focus on moving the runners and let the grand slams happen on their own.