The playbook for innovation
If survival in business depends on the constant acquisition of new customers, the retention of those customers, and/or the increase in their lifetime value, then innovation is at the root of survival.
However, innovation has become an overly used abstract term. If I put 10 people in a room and asked them what it meant, I would get 10 different answers, none of which would help a company innovate.
As proof, here is McKinsey's answer:
In a business context, innovation is the ability to conceive, develop, deliver, and scale new products, services, processes, and business models for customers.
Here is Harvard Business School's:
Simply put: Innovation is a product, service, business model, or strategy that's both novel and useful. Innovations don't have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company's customer service or features added to an existing product.
Cool. I'll just go do that 🤔
Here's my best shot at a playbook for innovation:
Diagnose what you are innovating
Think of the word innovation. What image popped up in your head?
My guess is it's a piece of technology.
Which is fair, but impactful innovation is not limited to science or technology. Innovation can happen within a market, an industry, or within your business.
You may improve upon your customer service engagement. You may implement a hybrid approach to systems, which shortens product lead times.
You may find a unique way to onboard employees, getting them up to speed, and across company information faster than a traditional company can.
Each of these examples represents opportunities for innovation, which lie in waiting for us beyond the product alone.
2. Define the desired outcome
What are we trying to achieve through this innovation?
Words like faster, cheaper, more, and shorter are the buzzwords of innovative outcomes. Innovation can be costly, distracting, and difficult, so before you try and innovate for the sake of innovation, make sure you know what you are trying to achieve.
3. Identify who you are innovating on behalf of…
Who is benefiting from the innovation?
A member of your sales team.
Your team of developers.
An existing customer.
A new customer.
Innovation, for the sake of telling people about it, is worthless. Innovation for the sake of creating change on behalf of a specific individual or team is worth every penny.
4. Understand the way the world works
Humans are fickle creatures. We love to create windows of time when we are vulnerable to opportunistic exploitation. Those who pay attention to the direction the wind is blowing reap the rewards of doing so.
Sure, some innovation is entering the unknown and unexpected as the world tells you you're crazy, but most of the time, it's exploiting the obvious.
Like a new altcoin coin making the ocean red by cashing checks written by the predictable collision of fads and social media-addicted humans.
For more research, speak with NFT millionaires, chat with ChatGPT prompt writers, or call Pfizer.
5. Deeply know the ones you are innovating for
What do they need?
Solve needs, not wants. Needing is a necessity, wanting is a luxury. People are much better at identifying what they need than what they want. Most customers don't know what they want. To innovate, you must commit time to understanding what needs are unsolved by your existing customers or team members. The simplest way is by talking with them. Get to the fringes of your business where the action happens, and learn your customers' needs. You can't innovate from an ivory tower.
6. Innovate for tomorrow
Today doesn't matter in innovation.
Once you do your best to see into the future, you must innovate on its behalf. Innovation is the ability to put our customers into a future world and anticipate their needs based on how they behave today and how the world will affect their behavior tomorrow. If your target demographic is college students and you want to innovate, you need to understand how 10-year-olds behave in 2023 so you can serve them well in 2033.
That's a bizarre and challenging task.
7. Get sign-off on the outcome
Nobody has a crystal ball, so how do you know what to develop to reach the outcome?
This question is the key to identifying the need before spending a dollar on developing anything new. Ask your customers or your team this about your plan for innovation:
If we could get _________ done, what would it do for you? (or what could you achieve?)
With an audience mainly composed of young, growing businesses, I'd advise that your innovation focus on existing products and internal effectiveness. Innovation outside of what you know works in the early stages of business means you are diluting resources. The most valuable innovation is to lean into what has already proven to scale.
When the time comes to run into the unknown, this playbook will help; until then, use it to make what you already have even stronger.