Innovation's ultimate outcome is relevance

Relevance is the most important outcome in innovation. Organisations are often caught in the headlights in search of radical, disruptive, digital or whatever the next buzzword is. The objective of relevance in innovation is as simple as validating that a new audience will pay for your new idea in a certain way. The startup world call this the product = market fit . The reality is for organisations to use innovation as a tool to grow, you have to start with the simple question. Where will growth come from?  This is not as easy as it used to be looking at data from the past to try and predict the future. I believe innovation and high risk growth should focus on the customers you dont have, not on the customers you do as looking after your current customers is just good day to day business.

The challenge is that organisations use the term relevance in a very self centred way as their focus is about relevance to them and the way they currently operate. The use and connotations of the word within an organisation forgets the main importance of new growth opportunities coming from who is willing to pay or how to create demand. Conversations around growth opportunities lead to statements like.

‘It is not relevant for our current capabilities’.
‘It is not relevant for our current audience’.
‘Its not relevant for our brand’.

This just exacerbates a range of organisational and individual bias to keep everything the same, it does not focus on the importance of growth. Growth can often mean changing or evolving what you are known for or can do. I do believe there are opportunities to grow within the three areas of capabilities, current customers and brand space but this be done in your day to day business not in the higher risk, higher reward innovation space.  In the book Blue Ocean Strategy, they highlight this space is a Red Ocean that is cluttered market that currently exists where the sharks attack each other for scraps. This accounts for 86% of new launches, 62% of company revenue and only 39% of company profit. As I have highlighted in previous posts, this plays in the world of known knowns, and known unknowns but doesn’t look to explore the unknown. 

The most important area of a relevant approach to innovation is with new customers. To find new customers you need to find what is relevant for them. Questions like : Who is not engaged in a particular market and why ?? Who’s expectations have not been met and why ?? A great example I tend to use is GiffGaff a UK MVNO created by Telefonica / O2 under the discovery that there was an audience who would never connect with any corporate high street telecommunications brands. They created a service with no stores, no customer service centres it was all driven by incentivising a social media community to help each other and a few community managers. 

To put this into hard context, I know everyone talks about Apple but lets take a slightly different approach and go back to the beginning as opposed to using hindsight to evaluate. Can you imagine walking into the Apple boardroom in the early noughties when Jobs had just returned had a couple of wins but was not 100% safe yet. In the midst of early signs of the music industry’s demise with napster driving file sharing in 1999-2001 even though the music industry hit its peak in 2000 with CD sales. Can you imagine the presentation that could’ve gone like this:

" I know we are known for making computer hardware and software but what if we could use our iTunes software as a shop front to buy music files capitalising on this audience’s love of music but lack of need for the physical version ’  

Surely as a business that made tangible goods they must have laughed at him. But its the perfect example of a Blue Ocean strategy or what I see as innovation. Blue Ocean strategies only accounts for only 14% of new launches but 61% of profits showing high risk, high reward. Apple saw the relevance for an audience in streaming music not owning a tangible object, as well as a willingness and new approach to paying for it. (oh by the way we have an object for them to play it on as well)

Next time you look to create new innovation streams at your organisation start by asking the questions Who is the new potential audience, what are their needs and expectations that are not being met by others? What are they willing to pay for ??. How can you validate this through prototypes or minimum viable products to test our hypothesis and assumptions. Apple was a computer company one day and took over the music industry the next. IBM was a PC and Mainframes business, now a consulting firm. I bet you they struggled with bias I have detailed but they still persevered.