5 dimensions to grow your idea into a successful innovationBy Venkatakrishnan Balasubramanian
Many people who develop small ideas don't realize that they can be nurtured and developed into big ideas by following a simple process of conceptualization and improvement.
A case in point is Steve Jobs and Apple: They did not just create sleek devices but conceptualized an ecosystem that included iOS, carrier and music label partnerships, iTunes and the App Store. This expanding ecosystem is the main reason behind the success of Apple, not the individual products. Successful innovators like Apple focus on conceptualizing their ideas - developing them into more fully-realized innovations - to make a bigger impact in the marketplace.
When conceptualizing an idea, it is essential to ask questions like these:
- What is the problem that the idea solves?
- Who is the consumer for the idea?
- Does the idea solve consumers' problems?
- How will the solution be delivered to the consumer?
Two important perspectives to conceptualize your ideaThe availability of new technologies enables you with some powerful options to conceptualize and build upon your idea. Your success will depend on your application of the idea to solve a problem and the market environment in which you choose to play. It is also very important to relate your idea to the strategic objectives of your organization. Apple has been enormously successful with products like the iPod, iPhone and iPad because of its laser-like strategic focus on convergence of technologies and on media and entertainment. Apple chose to position its ideas in a specific marketplace that is aligned to their strategic intent.
Innovators need to explore the myriad of opportunities that are available to succeed with their idea. They should study the customer need, market environment, competition, business strategy of the enterprise and the ecosystem - which consists of partners and suppliers in the market for the idea.
It is essential to design your idea like an entrepreneur. The two views that help the innovator to think along this direction are developing a business model for the idea and looking at the business strategy of the enterprise.
Business model viewA study of literature on the importance of business models for successful innovation uncovers many interesting findings. According to Henry Chesbrough and Rosenbloom, established companies as well as startups take technology to market through a venture shaped by a business model, whether explicitly considered or implicitly embodied in the act of innovation. In some cases, an innovation can successfully employ an existing business model that is part of the firm's core competencies. In other cases, managers must expand their perspectives to find the right business model. John Seely Brown states that a successful disruptive innovation often demands an innovative business model that is enabled by technological innovation.
Innovators must select the right business model for an idea to be successful. The innovator must have a good understanding of the components of the business model to nurture and grow the idea. The framework defined in this article has important dimensions to help the innovator in this direction.
Business strategy viewInnovators need to have a clear understanding of the strategic objectives of the organization, and the idea needs to be aligned with them. It should also be clearly differentiated from similar competitive offerings. The two important aspects of the business strategy view for the innovator are the competitive positioning for the idea and how the core competencies of the enterprise can help to support and sustain the idea in the market place.
According to Michael Porter, strategy is the creation of a unique and valuable position, involving a different set of activities. This means a company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both. In other words, innovators must articulate a well defined competitive position for their idea to succeed.
For example, Nintendo designed its gaming console with a clear understanding of its competitive position. Nintendo was very successful with Wii gaming console because of its focused strategy on a wider segment of customers than the traditional gamers; this helped them tremendously in a market dominated by Sony and Microsoft. For innovators, it is very important to ask what is the positioning of the idea: Is it based on cost, differentiation or focused strategy?
When developing competitive positions, it is also important to think about target customers and their needs. Is the target segment at the bottom of the economic pyramid? Tata Nano, for example, is successfully positioned based on the bottom of the pyramid strategy. If an idea is not strongly aligned with the core operating activities of its organization and its competitive strategy, it cannot evolve successfully.
Another important contributing factor to competitive advantage is the core competencies of your organization. C.K. Prahalad and Gary Hamel define core competencies as the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies. They quote the example of Sony and Philips. For many years, the successful innovations of Sony were associated with its competency to "miniaturize" electronic products; for Philips, it has been technical expertise in optical media. Innovators should design their idea to leverage the core competencies of their enterprise. Apple’s competency in experience design has been a critical success factor for many of its innovations.
Dimensions of the framework for conceptualizing an ideaThe two views of the business model for the idea and the business strategy of the enterprise combine to give five important dimensions that an innovator can use to think through and conceptualize the idea.
1. Competitive advantage: The unique selling proposition for the idea is the key differentiating factor. It should provide a unique competitive position for the enterprise in the marketplace for the idea. Nintendo is successful with Wii gaming console because of its unique differentiating qualities when compared with its main competitors of Sony’s PlayStation and Microsoft’s Xbox. Nintendo focused on how customers want to play rather than on their competitors focus on the graphics engine component of the console. Similarly, iPod’s unique differentiating factor is the positioning in combination with iTunes. iTunes allowed customers to buy individual tracks that are of interest rather than the entire album. Apple also provided a simple and attractive interface to further differentiate its music players from its competitors.
2. Business alignment: It is essential for the innovator to relate the idea to the current and future business direction of the enterprise. The differentiating factors of the idea should be conceptualized around the key strategic focus of the enterprise and its goals. It is also important to consider how the idea leverages the core competencies of the enterprise. Many of the innovations of 3M, like Post-it notes, magnetic tape and photographic films, are the results of leveraging its expertise in substrates, coatings and adhesives. RIM's success with Blackberry smartphone is based on designing its features around the company’s strategic focus on enterprise business. RIM’s recent innovation on Blackberry PlayBook is again based on its business-centric features.
3. Customers: Knowing the customers for an idea is very important to conceptualize it based on the wants and needs of the customer. For example, Blackberry has a clear view on its target customer segment – business executives. The result is the unique features of its PlayBook tablet device. Nintendo defined a wider customer segment for gaming. It focused on attracting females and families in addition to hardcode gamers, and this helped it to gain significant success in a market dominated by Sony and Microsoft. A key learning for an innovator is to define the customer segment, understand their wants and conceptualize the unique differentiators along what is perceived as important for the particular market segment.
4. Execution: Execution incorporates the complementary capabilities that are required to develop the idea into a successful innovation and to take it to the market. The innovator should think about how to incubate the idea, what technologies are best suited to develop it and how to co-create it, leveraging the competencies available in the enterprise. The innovator must develop a clear plan for execution of the idea. Identification of resources, processes, risks, partners and suppliers and the ecosystem in the market for succeeding is also important. Apple had to build an ecosystem of its own engineers, designers, contract manufacturing plants, suppliers for components and agreements with music labels to successfully launch iPod and iTunes. It has continued to expand this ecosystem to develop the AppStore, which has contributed significantly to the success of the iPad. Some of the execution tasks are required in the later stages in the innovation life cycle are business incubation and commercialization.
5. Business value: Business value refers to the mechanisms that will bring value to the business if it pursues the idea. It includes how revenues will be generated, market size, how revenue will be shared with any partners, what is the cost structure and how will profits be generated? This dimension addresses the important benefits for the enterprise in pursuing the idea and how they will be realized. The value definition is a critical aspect of the business model of the idea and forms the basis for the selection of the idea as it progresses through the various gates in the innovation life cycle.
ConclusionInnovators who have a good understanding of the two perspectives – business model and business strategy - will increase their odds of uncovering unique positioning for their ideas. At times, the original idea contributor may not have all the required skills to conceptualize the idea. It is very important in such situations to co-create the idea with other experts. A team of innovators with diverse skills in various aspects of technology and business will help to successfully develop the idea. Also, in organizations that promote collaboration, enthusiasts and innovation community leaders should be on the lookout for good ideas and help the innovators to conceptualize their ideas.
The dimensions we have defined in this framework will be very useful to help innovators to conceptualize new product ideas and evolve them. The innovator needs to continuously be in the lookout for opportunities to strengthen each dimension during the evolution of the idea. The key to success is to build upon dimensions that already show signs of strength and to develop questions that help the team to further conceptualize the idea.
This article was originally published on InnovationManagement.se