Innovation for Innovation's Sake? No thanks!

Innovation is much more than throwing ideas against the wall and seeing what sticks (though in many cases that's better than what most companies are doing these days).

Innovation is not something you do for your sake...it's something you do for your customers!

However, just coming up with the next doo-hickey or app that your team claims can solve the global crisis of technology overload is not the goal of innovation either.

Innovation is designed to do two things, and two things only:

1. Solve big problems for customers

2. Make the business more PROFITS!

We're not looking for just top-line revenue gains here people...

We want profitable ideas that spur either profitable customer acquisition, retention, or growth.

This means that innovation must meet a few different criteria (Which is what I help companies understand, test, and solve):

1. Is your new idea customer-facing?

2. Does the idea actually solve a problem, or is it just a better mouse trap? (seriously...the old mouse trap works just fine at catching and killing rodents, so that really isn't a problem...don't spend time trying to solve problems that don't exist)

3. Can it be implemented either now or in the near future in such a way that it solves the problem, makes the customer happy, and makes us profits in the meantime? (Again, not just revenue...unprofitable growth isn't what CEOs and board members/shareholders are hoping for)

If you can look at innovation through these three essential ideas, then you have a good start on your innovation.

Now, how do I help companies implement this?

Simply by first training people on lean startup and profit drivers for innovation. This means first interviewing customers, watching existing processes and procedures, seeing what works and what doesn't, and identifying pain points that are stifling growth.

Then we come up with ideas that we will literally throw against the wall (or white board, or flip chart), and start having discussions about the ideas...

But not without focusing on who might have these challenges and if they are really challenges at all.

Let's use a real-world example where I was leading a group tasked with changing the direction and future of investments and insurance:

Our goal was to develop a very cool product, for Millennial's, that would enable them to get insurance at a great rate, be covered for almost anything, and not worry about financial hardships after getting out of college, when they were first starting out.

Our assumptions were sound as we had millennial's in the group, and we had done extensive research around the challenges.

Then we hypothesized on how to fill these gaps.

Threw everything up on the flip chart, and started dissecting the ideas.

Next we had to develop even more questions to validate assumptions. (A note here: everything is an assumption until you actually sell your new product or service.)

Then we went out into the world again to try and find our perfect customer and find out if, in the situations we presented, they either had experience in that situation previously, or knew someone who did, and then what did they do about it?

What we found was validation...

That our ideas wouldn't make any money at all!

For example,

"When you broke your leg, were you able to work, and if not, how did that impact you financially?"

Answers we received included:

"Yeah, it sucked, but my boss held my position until I got back. Since I lived with my friends, I just told them I'd add more to the rent when I returned to work."

or...

"I still have insurance through my parents, so..." (not an ideal candidate)

or...

"I don't have any 'stuff' really, and I can defer student loans for, like, ever, so that's not a big deal really." (Maybe a little clueless, but also not an ideal candidate).

Now, we did actually find ideal candidates for our solutions, and then had to tailor the product to fit them instead of our supposed client.

This is of course part of the process of innovation, and an exercise you must go through to find the right product-market fit, as well as understand the key drivers of your prospect's decision making criteria.

If after the first round of ideas we just went forward and developed the product, we likely would have found our ideal candidates in such small numbers and hidden so well that we couldn't profitably market to, acquire, and nurture them!

This then, is why we must focus on customer experience and value before we move forward and create anything new.

New is fun and exciting, but if you're the only one excited about it, then call it a hobby, not a business!

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My name is Jeff Barnes. I'm a former US Navy Submariner turned Fortune 500 Director, Author, Business Advisor, and Consultant. I help business owners, executives, and entrepreneurs develop innovative solutions to growing their business and impacting more people through speaking, consulting, and advising. Learn more at www.SubmarinerBusiness.com.