Innovation ideas are easy. Selecting the best among them is hard. Choose wisely.
Even the most narrowly focused innovation research projects produce a long list of possibilities. You may find it surprisingly easy to produce a rich pipeline of innovation concepts, especially when they are solving for well-understood needs. This wealth of opportunity can stymie executives. This is the province of early stage venture investors. Most corporate leaders have little experience placing bets among unproven concepts.
The devil’s in the details. Seek out your better angels.
Do not get stuck. Fight the common inclination to try to get it right right now. There lies the demon analysis paralysis. Instead, strap on your halo and invest like an angel. Prioritize innovation concepts according to five criteria:
How “desirable” is this solution to our target market? How deeply is it felt (how acute the pain) and how prevalent is it among the populace (how pervasively is it suffered)?
How reasonable is it to expect our company to deliver on this solution? Do we have the will, the resources, the expertise, and the perseverance to see it through? Do we have the qualified volunteers who are prepared to bet their careers on bringing it to market? Do we have the kind of culture that rewards those brave risk-takers? Can we invert that – so that our best people are clamoring for the opportunity to innovate, rather than ducking for cover because all our metrics punish risk?
Does this hold the promise to meet our economic thresholds:
- Scale: how large is this opportunity? What incremental revenues does it promise at scale?
- Speed: how rapidly will it grow? Can it achieve the desired scale in the requisite timeframe
- Profit: can it deliver accretive margins at scale?
- Risk: are there any deal-breakers – such as brand or reputation risk, litigation exposure, conflict of interest, or regulatory boundaries?
Does this solution give us potential to earn revenues beyond the original target market? Would it extend across our other business units? Does it enhance revenues or profits on the assets or relationships we already have?
Do the combined selection of concepts balance our risk? (This is important because you should always take a portfolio approach to risk. Never prototype fewer than three different solutions.) Do they represent a range from big, bold market disruptors (high degree of difficulty/risk and high reward) to closer-in offerings that are only just hard enough to test our innovation appetite (moderate risk & reward)?
Of course, none of these assessments give you certainty. Mostly they are a vehicle for decision-makers to debate merits and reveal risks. That triggers insecurity – “we just don’t know!” You can either get comfortable with uncertainty, or do something more tactical…
Set a tight deadline.
Delays compound tough decisions. Speed is important. It is easy to fall victim to analysis paralysis. Stop. No matter how many spreadsheets you torture, you cannot wring out reliable indicators on a future that does not yet exist. The answer is to prove it by prototype. If your assumptions prove flawed, you correct for them and keep the project on track while constantly reorienting the solution to best serve the market. Remind your decision-makers that innovations often fail for good reason. That’s okay. That is the cost of innovation outside of your core business. This is not just another new product introduction. This is a new business. Like any startup or offering that is new to the world, you have to expect, plan for, and offset high failure rates.
Proceed boldly by mitigating risk in three ways.
First, always start with a tangible point of pain. Get out in the field and discover real needs that you can taste. That’s the only way to assure yourself that your solution matters – to design to meet an identified need to fulfill latent demand.
Second, prototype. Rather than presuming you’ve got it right, recognize you’re better off going to market fast with something that’s maybe only directionally right – and letting the market refine it with input before they do so by voting with dollars (and before we invest more capital).
Third – take a portfolio approach. Develop at least 3 separate ideas to prototype so that we have coverage if one or more fail to meet our success thresholds. Alternatively, you can give in to the tempting demons of complacency. Why take a risk? Abandon potential breakthroughs. They’re totally unproven! Too hard to forecast. “Seriously guys, this sounds crazy. Who knows if this is going to work? We could be betting our careers on a fool’s quest! Let’s just double down on the stuff we already do well…”
It’s a choice.