It Isn’t Enough to Call Yourself an Innovator

The Danger of Not Innovating at All

In my previous article, I outlined the six innovation failures that can destroy your organization. For the next few weeks, I will explore each of the six innovation failures with greater depth and offer insights to avoid them. First up - not innovating at all. The hallmarks of products, services, and processes in want of innovation are low R&D investment, stagnant product lines, user frustration, workarounds, and inefficiencies. But innovation is so much more than just new products. Innovation also encompasses strategy, mindset, and business methods. The most innovative companies continually innovate at all levels of the organization. The companies that do not innovate are highly susceptible to loss of market share and profitability over time. In the short term, absence of innovation can exist within your business and it can remain nicely profitable and even experience growth. However, this is likely not sustainable and is certainly not the best version of your company or your people.

If you are COMFORTABLE, that should make you extremely UNCOMFORTABLE

Never underestimate the power of a disruptive innovator or how quickly an upstart can become a market leader. To understand this, you need look no further than the tale of Honeywell and Nest in the home thermostat market. Honeywell founder Mark Honeywell was an original disruptive innovator in the heating market in the early 1900’s. The business he formed, Honeywell Heating Specialties, went on to become Honeywell International - a global industrial giant that would dominate the thermostat market for the next century. But in 2011, Matt Rogers and Tony Fadell launched Nest – an internet connected programmable home thermostat with an elegant design and a simple, intuitive interface which quickly caught fire with consumers. Just three short years later, Nest was acquired by Google for an eye popping $3.2 billion dollars.

In this case, Honeywell WAS innovating. However, that innovation did not extend across their entire portfolio. In addition, Honeywell badly misjudged the appetite for connected devices, the pace of adoption and the tastes of modern home consumers. A century of market dominance may have generated some level of complacency at Honeywell, too. Not surprisingly, with a cash cow and market dominance at stake, Honeywell quickly sued Nest claiming patent infringement. In Nest’s legal response to the suit (Honeywell International, Inc. v. Nest Labs, Inc. et al; Civil Action No. 0:12-cv-00299 SRN-JSM; NEST LABS, INC.’S ANSWER TO AMENDED COMPLAINT, COUNTERCLAIMS, AND DEMAND FOR JURY TRIAL), they issued a blistering condemnation of Honeywell, who they viewed as a bully looking to “…protect its dominance in a thermostat field that has not kept up with the digital revolution that has transformed other areas of consumer and home electronics.” Nest boldly opened their counter claims with “Nest Labs denies that Honeywell is an innovator in the area of thermostat technology.” Pointedly, Nest noted that among Honeywell’s “Five Initiatives” that guided the company, "...there is a notable absence of any goal directed to innovation.” Nest also stated, “In seven decades, there appears to be little more technological improvement to the flagship Honeywell thermostat than the replacement of a mechanical display with an LCD display.” Ultimately, Honeywell and Nest settled the matter with a cross-licensing deal, but the damage was done and technology leadership had been surrendered.

In the end, it wasn’t JUST the innovative function of the Nest, but also the consumer appeal of the Nest design and integrated capabilities offered at an everyday consumer price point that set it apart. Clearly, Nest’s designers understood that design, delivery, and support systems are often overlooked elements of innovation. Ease of use, elegance and simplicity are strong drivers of consumer adoption - as much as functionality, reliability, and cost.

Out-Innovate the Competition

If you are a market leader, how can you avoid losing dominance through lack of innovation? If you are a challenger, how can you out-innovate your competitors? First, culture and reinforcement are what drive achievement of corporate goals. Your business should have explicit guiding principles that value and reward innovation across the organization. You should also have measurable metrics to continuously determine if you are achieving those goals. Finally, you need both words and actions that support innovation and reduce the tendency to revert to the status quo. 

Ask Yourself Some Critical Questions

·       How old is my (or my competitors) product or service line? 

·       Are there disruptive forces acting on the market (technology, consumer behavior changes, economic pressures, regulations, etc.) that might drive change? 

·       Has the fundamental design or delivery of a product / service changed in the last 5-10 years? 

·       Is my product / service easy to use or implement?

·       Is there an unmet need in the market that is not being adequately addressed?

·       Has an enabling technology come to market that opens new opportunities?

·       Are there repeat failures or shortcomings of the current offering or your internal processes? 

·       Are you continually looking for new ways to reach your customer? Are you regularly polling your customers to determine their needs or wants?

Asking critical questions can highlight innovation opportunities or development gaps. It is also valuable to think about constraints. What are the constraints that limit your offering? What is possible if you could magically remove that constraint? Is there a way around that constraint or an enabling technology that could remove it? Is there a similar constraint in another market area? How are those constraints managed in that other market? Often critically evaluating constraints leads to important insights about an offering or a process.

Seek Out Diversity

If you truly want to drive innovation in your organization, you must avoid isolated group thinking. Lack of diversity in viewpoint leads innovation teams to overlook opportunities that lie outside of their personal experience. Well balanced, insightful innovation comes from diversity in background, capabilities, age, race, gender, corporate function and skill sets. Cast a wide net when looking for ideas or critical review, and don’t forget about your clients during this process. 

The Voice of the Client is Critical

Always, always, always spend time with your customers while they are using your products or services. Make sure you ask your customers for honest assessments of frustration points with the product or service. They will gladly help you innovate to better serve them.

Don’t Wait for a Threat to Innovate

Once a competitive threat is apparent, it’s already too late. Successful organizations should constantly be looking to re-invent themselves, their strategies, their processes, their products, and their services to keep a step ahead. Successful innovation is an ecosystem, a mindset, and a continuous process. As such, it demands top-level leadership to institute it firmly in the corporate culture and to execute it throughout the organization.

Up Next in the Series: Failure to Understand What Your Customer Values