Managing innovation is a key enabler of growth since long-term growth happens through innovation. Failure in managing innovation is the main reason that eventually led many once-powerful Companies to failure.
How to assess innovation?
When we look at Tech Companies, we should always look at innovation from different viewpoints:
- The technical side is explored by science and technology.
- The human side is explored by marketing, user research, psychology, and anthropology.
Innovation is complex almost by definition, and not recognizing such complexity is among the first reasons for failure.
The two ladders innovation-space
To properly assess innovation in tech, we should evaluate the market and the technology. Technical Readiness Level (TRL) is the standard ladder evaluating the maturity of a given technology. Developed by NASA to track advancements in space technology, TRL spans from bibliographic analysis to lab-scale and full operativity.
However, TRL alone doesn’t say anything about the willingness of people to use the technical novelty. TRL cannot say anything about the value of a market for your innovation; we should then add a second ladder to TRL: The innovation ladder.
The innovation ladder
The innovation ladder spans from evaluating trends, then focusing on a specific idea and evaluating such an idea from a business perspective, to a Minimum Viable Product (MVP) and scale-up.
The innovation space
You can see in the above model how the two sides can be evaluated together. Through this model, we can assess the advancement of new products/services both from technical and the market standpoints.
One project can evolve among the two ladders in many different ways. And, most of the time, you will see different go-back and start-again points in project life.
However, the best path is the one in orange: First, evaluate the market and soundness of a project, even before having the technology ready. Then, manage to have your working pilot when you are also at the MVP evaluation stage. From then, the two ladders will evolve almost in parallel till scale-up.
MVP and pilot
MVP stands for Minimum Viable Product. The product with the one (or two) features that your customers are actually looking for. It’s different from a pilot only because the pilot is your working product from a technical point of view.
Why an MVP?
With an MVP, you are testing not only if it works (technically) but also if your customers really want it, or not, and how they do use it in the real world. This is extremely useful to avoid the “engineer mistakes”: Thinking that because one thing is working, everybody wants it.
Also, think about “gadget products”. Gadgets are, usually, tech products that are working well from a technical standpoint and that people are even willing to buy. At least once.
However, after that, one can find out that people are not really using them. Because not useful, not helping them with their actual pain-points.
This can be a serious problem in a business model. And should be found out before going to scale-up*, through proper user-research.
*Unless your business model is selling gadgets, of course. Usually, startups are not advised to do that.
Nowadays, everybody working in innovation is talking about “startups”. There are many reasons for that. Surely is no stranger the ability of a few startups to become huge corporations (think Facebook, Uber, Airbnb, Tesla, or SpaceX).
This increased the sense of vulnerability for already established Companies doing “business the old way”, also starting huge research about what’s making the difference between Corps and startups. Eventually resulting in intelligent analyses and new methods such as “agile”, “lean”, “scrum” and so forth.
Probably one missing piece of the equation is that, while large Corps are dreaming about the agility of startups, startups, by definition, are dreaming about becoming large Corps, one day. Indeed, only a few startups can make it.
Building successful collaborations with startups is one way for Corps to apply the motto “if you can’t beat them, join them”. Also and simply because the know-how outside of a Company is usually larger than the one developed inside. The general rule of thumb of VC investing, the 100/10/1 rule, should be applied also in selecting startups for collaboration.
When collaborating with startups, one should clearly define the strategic KPIs and set clear strategic targets. Usually, startups should not overlap with the core business*. Instead, collaborating with startups is an excellent way to explore adjacent businesses in a faster and safer mode than by internal teams doing the same thing.
In the case of internal innovation, the one where “customers” are users inside the same Company (e.g. other Departments or Business Units) they can help with optimizing faster some specific operations.
Selecting startups at the right maturity stage is key to achieve the perfect fitting with the strategy of the Company.
*Unless one is looking for M&A. Which is not a simple thing with startups. The risk of getting only the “box” without the people inside (the “talents” running the startup) is quite high. And, in addition, the so called “synergies” are not evident with such a small company as a startup.
The 100/10/1 rule
The rule states: Screen 100, pick up 10 for further investigation, and then choose one where to invest. From real-world experience, those numbers are even too optimistic. That’s why the 100/10/1 rule is a rule of thumb. But you get the idea: Lot of screening and assessment before finding the right matching.
The World Wide Web dates back to 1989 when Tim-Berners Lee invented it at CERN in Geneva. Today, an Internet connection is vital in every home almost as electricity and running water. Despite that, many companies are struggling with the adoption of valuable digital tools to achieve their targets, avoid redundancy and overlapping and keep pace with the competition.
Digital Transformation is a vital point in manufacturing, in a World where very advanced tools, generally referred to as AI (Artificial Intelligence) are becoming part of business life, still too many companies are struggling with the basics of digital transformation.
The reason is that Digital Transformation in the end is not only about machines but humans. Digital Transformation cannot be achieved without investing in proper education and training of employees and managers.