Innovation is probably key for any company wanting to make their mark in their industry. Many have created teams, events, and initiatives to stimulate innovation in their company. But innovation can’t simply be summed up in a single declaration. Innovation for innovation’s sake alone serves no purpose.
Fact: Only 10% of innovation projects are a success
Behind the attractive showcase put on by companies claiming to be innovative, the outlook is much less optimistic. Over 90% of innovation projects end in failure, never seeing the light of day or generating any benefit for the company.
A good number of large companies have however begun innovation initiatives which are highly structured, almost industrial processes to stimulate and manage innovation. The right intentions are there, but the fundamental mistake is in structuring these innovation processes without really anchoring and integrating the market component into every stage of their management.
Failure to focus on marketing
The main cause of failure in innovation projects is clear: in 75% of cases this is due to failure in marketing, poor alignment between the proposed offer and the actual needs of market. The real pain points are missed.
However, 100% of entrepreneurs and intrapreneurs have generally validated their innovation with their close networks (family, friends, colleagues, clients, etc.) and received feedback that their idea is wonderful and will be a great success.
Result: 95% of innovative startups end after 5 years. Intuition and experience alone are not enough to make an innovation a success.
Some projects find no outlets in their markets, but how many innovations with high potential haven’t yet found their market? Around half of the patents worldwide remain completely unexploited to this day.
The wrong approach
Innovation ≠ Invention
We often mistakenly believe that invention is synonymous with innovation. But by definition, an invention always remains on the shelf and generates no revenue for its creator.
Others associate an invention with a target market when talking about innovation. This approach is also flawed, as when the target market is approached in the conventional fashion, that is to say studied based on past behavior. Focusing only on the study of the past and historic market trends is not the right approach for innovation as it fails to measure the impacts that your project may have on the market.
Simple market research will give a static image of the market and is the reflection of an ageing process. But innovation focuses not on the past, but the future.
Changing the rules
By definition, an innovation project is new and uncertain. It will impact the market, change the rules, and perhaps even create a new market. The challenge is therefore not to see the market as it was, but how the market will react to an innovation.
Solution: market-centered research
In other words, it’s not about knowing if the market grew by 3% or 5% last year, or the size of the market you might be able to achieve (if your project is a success). The real question to ask to best approach an innovation project is this: will the market adopt my innovation?
Focus on the pain points
There are two points that are important to focus on for any innovation project:
Market focus: Who can I sell to, who has a problem to solve?
An innovation is a new offer that tackles pain points and recognized needs, confirmed by the market itself. You need to precisely identify the issues suffered by your target markets, and gauge their criticality to orient yourself towards the right market.
Product focus: What am I selling? What is my value proposition?
You need to define which solution that is most minimal and sufficient to meet these needs. Checking that the issue is a real issue for market actors is just as important as validating the relevance of your solution.
Experiment with the market actors themselves
To really understand the potential impact of an innovation on a market, only real market actors out in the field can provide a reliable answer. They alone can put an innovation into perspective with the pain points it aims to address. This is why you need to collect what is known as market insights.
Learning how market actors will react to and perceive your innovation in view of their actual needs provides much more valuable answers than simple sectoral data that is already obsolete by the time it is analyzed.
Many experts (consultants, self-proclaimed thought leaders, etc.) may give you their opinion on your innovation project, by the most reliable response can only come from those who would be directly impacted by your project: users, clients, manufacturers, distributors, etc. As many actors as may be involved once your project is launched.
Sell before you produce
What people buy is not the end product, but an idea. And the idea can be seen and sold from the very first steps of the innovation process.
Sell before producing, rather than going flat out to sell later on. To do this, define the minimum offer that meets the single primary need in your market, confront your project, adjust, pivot, and restart.
Aborting a project sooner due to a lack of market need is always less expensive than seeing through a project (technical and industrial development, etc.) that generates no revenue.
An innovation project is a long and risky process. In the end, the market will be the judge. The challenge is thus to access the right actors and their feedback to make informed, reliable decisions on how to orient your project. But how do you do this? Download our last white paper for more insight!