Let me first acknowledge the stimulus for this blog post – thank you to Jeffrey Phillips of OVO Innovation and his recent article on Blogging Innovation. Jeffrey correctly pointed out that markets with intense competition are more likely to contain innovative companies. It follows Darwinian logic - not survival of the fittest, but survival of those most able to adapt. The most successful are those who adapt best to the competitive pressure in their ecosystem.
It makes a lot of sense, but it raises a couple of questions. In highly competitive markets, how can you leverage the outside pressure to drive more innovation; and how can you strengthen your position in markets where you may be less vulnerable to strong competition?
The short answer is to set challenging innovation targets for yourself. The mere existence of strong competition does not by itself mean that you will deliver more innovation. The key rules of successful innovation execution still hold. Your strategy should direct your innovation portfolio. You need to understand your customer/consumer; what drives them, what they need, what will improve their lives; and gain key insights. Finally, you need a full understanding of your competencies, what you can and can’t do, and how you can use Open Innovation to complement your internal effort.
Then, it is crucial to set tough targets based on value, not just the number of projects. They can be based on:
1. The value of your portfolio.
2. The value you need to deliver by year over the timeframe of your strategic plan.
3. The specific number of projects of a certain value you need to deliver.
4. The number of platform technologies you need to deliver to develop future products.
The targets need to stretch your organization in order to maximize the return and strengthen your competitive position in the marketplace.
There is an argument that you can’t set targets on delivery of research or technology development programs, because there is a high degree of serendipity involved. I don’t agree. These programs should be commercially focused on needs and delivery, and targets are the way to ensure they produce a constant stream of new opportunities. Tough targets help people choose the ones most likely to hit the sweet spot, and if you couple delivery with value objectives you avoid the “low hanging fruit” syndrome that the focus on project numbers only will produce.
Everybody (I hope!) uses targets for innovation; my challenge is how well these targets leverage an external competitive pressure. The way to do this is make them stretching, with the aim of beating whatever the opposition produce. Challenge yourself first, and you’ll be better able to challenge your competitors.