Is your enterprise thriving or struggling to keep up? Are your R&D and marketing departments systematically creating one major breakthrough after another? Is your business being commoditized? If your answers are negative, you are not alone. Innovative performance is generally poor. In America more companies are dying than being born, and the lifetime of the S&P 500 is under 20 years. These trends are world-wide and accelerating.
In all the companies we have worked with, generally less than 30% of their new initiatives turned out to have any value for the enterprise. Most were interesting projects for those involved, but not important to the enterprise. Remarkably, less than 10% of these companies had a thoughtful innovation process. Senior management claimed they did, but when middle-level managers were asked to describe it, they gave back blank looks. That is the test. If a manager can’t describe their company’s innovation process, there is none. It should not be surprising that the company’s innovative results are poor.
The process of creating an innovation — value creation — is about learning fast and efficiently with an understanding of the essential questions that must always be answered. But there is great confusion about this. People often say, “Fail fast to succeed early.” That is not only demoralizing, it is wrong. The goal is to “Learn fast to succeed early.” The solution for improving innovative outcomes must be based on the fundamentals of how professionals learn and create the fastest.
The Fundamentals of Innovation are a highly interactive method, focused on the big, important ideas required for innovative success. They provide a common language, a conceptual framework, and core value-creation skills. It defines important customer and market needs, customer value, quantitative value propositions, and enterprise-wide value creation processes. It is based on how professionals learn the best: by doing with real-time feedback and with multiple representations, teams, mentors, and positive incentives. Concepts such as risk reduction, bringing it to life, key insights into customer needs, and having working hypotheses for both the product and the business model, are natural elements of the framework. By integrating these ingredients into an efficient system, high-value innovative outcomes become almost inevitable.
This post is an example of an NABC value proposition, the most basic framework for getting essential answers quickly. Value propositions can be hundreds of pages long, but they cannot be more concise than an NABC. It is the starting point. But most presentations look like this, nAbc. They are all about the Approach, while assuming everything else is obvious. It never is, which leads to confusion and enormous waste. If an enterprise doesn’t start with the most basic elements of a value proposition, and answer them quickly and completely, it is impossible to efficiently focus on the most important initiatives.
Benefits per costs
Since today less than 30% of most company’s initiatives have any value, eliminating that waste gives an immediate return of 3 times on the resources spent for R&D and marketing. But the major return is not from eliminating waste, it comes from enabling the rapid identification and development of major new innovations — important customer and market needs, not just interesting ones.
The Fundamentals of Innovation do not proscribe what innovators should focus on, that does not work. Rather they provide the conceptual framework for accelerating progress. Because the focus is on the most important ideas, they neither require large organizational changes nor require major new resources. Returns can be extremely high.
Finally, the Fundamentals of Innovation makes all employees more effective and valuable. The understanding and use of the Fundamentals of Innovation, with an unrelenting focus on creating customer value, becomes both a major source of competitive advantage and a recruiting tool for hiring the best staff, who increasingly understand the importance of having these skills.
Competition and alternatives
There are many other excellent innovation concepts, like Crossing the Chasm and Blue Ocean Strategy. They are typically focused on one element of the innovation process, like pioneering a new market, or finding a new market white space, or teamwork. These are extremely valuable, but they do not create the rapid-learning ecosystem needed for systematic success. Because the Fundamentals of Innovation provide this, it amplifies these other concepts and makes them even more valuable.
The Fundamentals of Innovation are a proven methodology. It has helped create tens of billions of dollars of new marketplace value at SRI and other companies around the world. In addition, these concepts are taught by proven, world-class practitioners and innovation pioneers; people
who have repeatedly created significant new customer and marketplace value. These are not just academic ideas. The professionals teaching them have succeeded because of them.
My partners and I know that the world’s innovative potential can be profoundly improved through the use of fundamental innovation best practices, as exemplified by the leading venture capitalists and companies here in Silicon Valley. That is how SRI International, while I was CEO from 1998 to 2014, became a world-leader in creating high-value innovations worth many tens of billions of dollars of new economic value.
We say “Our most important innovation is the way we work” because that determines our rate of progress. We look forward to working with you, your teams and enterprises, and your universities and governments, sharing innovation best practices and developing the next generation of best practices.