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Jeffrey Phillips

Innovation

Define First, Innovate Later

Confusing the ends and the means

Published: Wednesday, November 11, 2015 - 13:46

I’ve written before (and often) about how challenges with clarity and consistency introduce difficulties when corporations try to create new products and services. Notice that for a blog about innovation, I didn’t use the “I” word. That’s because I think corporations confuse the ends with the means when they innovate, and create unnecessary barriers in the process.

First, let’s get our thinking straight because clarity and consistency matter. In descending order of importance, executives want profitability, cost control, revenue growth, and product differentiation. Many are good at cost control and will accept profitability achieved by decreasing costs in the face of flat revenues. A real win, however, increases revenues while holding costs flat.

Revenue and corresponding profit growth typically come from gaining more business from existing and new customers who buy existing products, or by introducing new products and services to new and existing customers. It’s in this latter case (new products and services to new and existing customers) where we typically think of “innovation.” But keep in mind what executives and shareholders “want”: growing revenues and profits. They are willing to hold revenue flat and decrease costs if it means gaining profit.

Now that we’ve established these relatively obvious base principles, let’s ask the next important question: How do we discover and create new products and services that existing and new customers want? We must first accept than only by creating interesting and valuable products and services can a corporation drive new revenue and profits from new and existing customers. At that point innovation becomes important. It’s a means to an end, not an end to itself. This is what so many corporations and executives fail to understand.

When these corporations and executives ask their teams for innovation, the executives assume that their people know what innovation is supposed to do for the company, and how to go about creating interesting new products and services that customers want. There are at least three false assumptions here:
• Employees know what innovation is supposed to do, or the benefits it’s supposed to create.
• Employees know how to create interesting new products and services.
• Employees understand customers’ unmet and unspoken needs and how to meet them.

These mistaken assumptions lead to poorly framed and executed innovation activities, which are compounded by a fourth assumption: that employees have the knowledge, time, experience, familiarity with innovation tools, and cultural acceptance to conduct an effective innovation activity. In reality, most teams don’t understand or appreciate the commitment, time, resources, or scope necessary to generate and realize really interesting ideas.

What everyone gets wrong is that innovation isn’t the “ends” that executives seek. They seek growth, differentiation, and inordinate profits. If those factors come from following the existing processes more efficiently, they will be ecstatic. But we all know that doing things more efficiently rarely creates new products or services, and hence, growth and profits, so these executives frequently are disappointed,

However, when executives are clear with their expectations, when they communicate exactly what they want from innovation teams, when they provide appropriate scope and time frames, when they apply appropriate resources, they establish that innovation is a set of tools to help achieve profits, growth, and differentiation by creating new products and services.

In a perfect world, we’d use the “I” word less often. Instead, we’d talk about the actual “ends”—new products and services that drive revenue and profits. We need to spend a lot more time talking about what we want and much less time on the means to get there. Once the ends are clear, then we can focus on the means.

First published Nov. 2, 2015, on the Innovate on Purpose blog.

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About The Author

Jeffrey Phillips’s picture

Jeffrey Phillips

Jeffrey Phillips is the lead innovation consultant for OVO, which offers assessments, consulting, training and team definition, change management, innovation workshops, and idea generation space and services. Phillips has led innovation projects in the United States, Western Europe, South Africa, Latin American, Malaysia, Dubai, and Turkey. He has expertise in the entire “front end of innovation” with specific focus on trend spotting and scenario planning, obtaining customer insights, defining an innovation process, and open innovation. He’s the author of Relentless Innovation (McGraw-Hill, 2011), and 20 Mistakes Innovators Make (Amazon Digital Services, 2013), and co-author of OutManeuver: OutThink—Don’t OutSpend (Xlibris, 2016).