worksection
Blog
I for Innovation: How Much Does a Pound of Innovation Cost?
  •   9 min read

I for Innovation: How Much Does a Pound of Innovation Cost?

“All rad­i­cal inno­va­tions come from peo­ple who are not experts.” – Orange Telecom
Inno­va­tion. The word became a sta­ple in the Ukrain­ian busi­ness lex­i­con rel­a­tive­ly recent­ly, fol­low­ing waves of inte­gra­tion into the glob­al envi­ron­ment in the mid-2000s. After that, inno­va­tions became a top­ic of dis­cus­sion at all lev­els of gov­ern­ment and busi­ness sec­tors. The rea­son was sim­ple – an ide­o­log­i­cal cri­sis in busi­ness. The post-Sovi­et space need­ed a breath of fresh air, ideas, new mod­els, and some­times even a com­plete restart.

With­out any mar­ket­ing, PR, or a well-struc­tured pol­i­cy even in large cor­po­ra­tions, com­mon sense forced a reeval­u­a­tion of val­ues and a turn to West­ern expe­ri­ence in inte­grat­ing inno­va­tions into busi­ness processes.

Accord­ing to Forbes mag­a­zine, 9 out of 10 star­tups fail. Some sources claim that Bloomberg did not pro­vide such infor­ma­tion, but this is a mis­in­ter­pre­ta­tion that led to a myth: a Har­vard study indi­cates that ¾ of inno­va­tions fail due to mis­al­lo­ca­tion of finances and poor man­age­ment.

It’s not enough to just say, ​“I for Inno­va­tion,” it’s cru­cial to know how to imple­ment them.
Is it worth invest­ing in risky inno­va­tions dur­ing glob­al eco­nom­ic insta­bil­i­ty? Should funds for inno­va­tions and devel­op­ment be includ­ed in the annu­al budget?

Even the expe­ri­ences of polit­i­cal lead­ers show that inno­va­tions are always rel­e­vant: the suc­cess­ful imple­men­ta­tion of new tech­nolo­gies in North Korea’s mis­sile pro­gram made an Asian dic­ta­tor a fig­ure of inter­na­tion­al sig­nif­i­cance (hope­ful­ly, just on TV).

The The­o­ry of Every­thing New

In the book ​“Cre­at­ing Inno­va­tors: The Cre­ative Meth­ods of Net­flix, Ama­zon, and Google” by Clay­ton Chris­tensen, Nathan Furr, and Jeff Dyer, inno­va­tions and tra­di­tion­al busi­ness can be illus­trat­ed by the sky­scrap­ers of the 1960s. Under the exist­ing tech­nolo­gies, using any­thing oth­er than straight angles and beams was expen­sive, risky, and led to a chain of unfore­seen events.
In the clas­si­cal approach, it is dif­fi­cult to go beyond stan­dards, but sim­i­lar build­ings stood and per­formed their func­tions well. Inno­va­tions, how­ev­er, involve uncon­ven­tion­al angles, new mate­ri­als, and a delib­er­ate depar­ture from standards.

Висотки Китаю Designed by victor217 / Freepik

Sky­scrap­ers in the UAE and Chi­na have become sym­bols of archi­tec­tur­al inno­va­tion, while the Empire State Build­ing has lost its for­mer glory.

The authors of the book believe that the innovator’s method con­sists of:

  • Per­son­al Expe­ri­ence and Insight: You can’t come up with an orig­i­nal approach with­out fac­ing sim­i­lar sit­u­a­tions and know­ing the basic spe­cif­ic fac­tors of the seg­ment. How­ev­er, non-spe­cial­ists often cre­ate new visions because their per­spec­tive isn’t ​“cloud­ed.”
  • Iden­ti­fy­ing the Prob­lem: Demand always gen­er­ates sup­ply. Busi­ness must con­stant­ly see what prob­lems peo­ple face in every­day life, con­sid­er­ing the flour­ish­ing tech­nolo­gies and services.
  • Solv­ing the Prob­lem: If no one has seen the prob­lem, there are no solu­tions yet. Such a solu­tion will be a unique sell­ing propo­si­tion (i.e., innovation).
  • Busi­ness Mod­els: The orig­i­nal idea must under­go test­ing and sta­tis­ti­cal analy­sis to func­tion ful­ly. Dur­ing this peri­od, the direc­tion of the inno­va­tion, a full busi­ness descrip­tion, and its unique fea­tures are formed. A bud­get for inno­va­tions and imple­men­ta­tion algo­rithms is laid down.
  • Busi­ness Expan­sion: Prop­er pri­or­i­ti­za­tion allows the busi­ness to grow rapid­ly, thus imple­ment­ing new tech­nolo­gies with­in the mar­ket seg­ment and expand­ing into neigh­bor­ing seg­ments (or enter­ing new ones).

Three Groups of Innovators

  1. Com­pa­nies that have been inno­vat­ing since their incep­tion: Google, Ama­zon, Valve.
  2. Com­pa­nies that tran­si­tioned to a clas­si­cal busi­ness mod­el after suc­cess­ful inno­va­tions: Proc­ter & Gam­ble, Mon­delez, AT&T.
  3. Star­tups that began with a group of like-mind­ed peo­ple who received invest­ments through crowd­fund­ing and pri­vate investor groups: Steam, Uber, Dropbox.
​At the same time, many authors on ser­vice and the intro­duc­tion of new mech­a­nisms unan­i­mous­ly state that reg­u­lar inno­va­tions spoil con­sumers, turn­ing them into demand­ing egotists.

For exam­ple, McDon­ald’s expe­ri­ence in ser­vice (the raised hand of the cashier and the ver­bal mod­ule ​“Free cash reg­is­ter!”) was inno­v­a­tive, but over time the qual­i­ty of staff behav­ior decreased, lead­ing to neg­a­tiv­i­ty from offend­ed cus­tomers who did not see the famous fast and con­ve­nient service.

Ele­ments of Innovation

Nicholas Stafford, author of ​“The Social Entre­pre­neur’s A to Z,” demon­strat­ed his view of inno­va­tion. In his dic­tio­nary-text­book, ​“inno­va­tion” con­sists of the fol­low­ing elements:
  • I – I for Inno­va­tion: Inno­va­tion and its active imple­men­ta­tion are entire­ly dif­fer­ent things. Imple­ment­ing inno­v­a­tive tech­nolo­gies is pos­si­ble only with the resilience of the idea, while the new approach itself may be stillborn.
  • N – New Ideas: Com­bin­ing two or three ele­ments (famil­iar ones) is effec­tive for intro­duc­ing new and pro­duc­tive resources.
  • N – Nar­ra­tive: A log­i­cal chain of sequen­tial rea­son­ing and their via­bil­i­ty in the sur­round­ing world. Inno­va­tions are effec­tive when they meet peo­ple’s needs. Only then do they make sense.
  • O – Obser­va­tion and Analy­sis: Exam­in­ing reality.
  • V – Vision: See­ing the poten­tial of a project and cal­cu­lat­ing pos­si­ble devel­op­ment paths in advance.
  • A – Author­i­ty: With­out a cer­tain lev­el of knowl­edge and val­ued opin­ion in the eyes of oth­ers, it is impos­si­ble to shape an idea into a full-fledged inno­va­tion that brings profit.
  • T – Tim­ing: Man­ag­ing process­es in time and space.
  • G – Game with Mean­ings, Images, Forms: Using imagination.
  • O – Objec­tive Oppor­tu­ni­ties: Resources avail­able to the busi­ness and the sur­round­ing world.
  • N – Net­work: A well-estab­lished net­work in all busi­ness chains. Only effec­tive imple­men­ta­tion paths can allow inno­va­tion to succeed.

Suc­cess Sto­ries of Innovators

Jenn Hyman

​In 2008, Jenn Hyman had an idea: why not rent wed­ding dresses?

Her idea’s foun­da­tion includ­ed essen­tial ele­ments of innovation:

  1. Expe­ri­ence work­ing in bridal salons.
  2. Observ­ing acquain­tances and iden­ti­fy­ing a problem.
  3. Exper­i­ment­ing with the proposal.
Instead of writ­ing a busi­ness plan, Jenn and her friend Jean­nie bor­rowed mon­ey and bought 130 dress­es from well-known design­ers in the mid-range and upper-mid-range price cat­e­gories. Then, they post­ed fly­ers about the new ser­vice around the local uni­ver­si­ty cam­pus, rent­ed a space, and the result: near­ly 40% (out of 200) of the girls who came became cus­tomers, and all the rent­ed dress­es were returned in per­fect condition.

Then came the ques­tion of increas­ing effi­cien­cy: should they allow try-ons or increase the selec­tion? By expand­ing the assort­ment, 50% of those who came used the rental ser­vice. An online sur­vey of 4,000 girls fol­lowed, and 5% agreed to use the service.

Rent the Runaway

Rent the Run­way Fight­ing design­ers’ fears led to the inno­v­a­tive idea of Rent the Run­way. Even at the investor search stage, Jenn had no busi­ness plan. The mon­ey was obtained, and Jenn Hyman launched Rent the Run­way in ear­ly Novem­ber 2009 as a beta ver­sion with an offer­ing of 800 dresses.

With­in a few months, Hyman attract­ed an addi­tion­al $30 mil­lion in invest­ments, and the num­ber of dress­es increased to 30,000. Accord­ing to Jenn Fleiss, the com­pa­ny’s mar­ket­ing direc­tor, 85% of women at Pres­i­dent Oba­ma’s inau­gu­ra­tion wore dress­es from their ser­vice. It was a victory.

Net­flix

​Net­flix is one of the bright­est exam­ples of an inno­v­a­tive approach. This ser­vice is now a major play­er in the film indus­try. The com­pa­ny start­ed as a small DVD rental deliv­ery ser­vice. In 1999, the busi­ness seg­ment and all its par­tic­i­pants were in the shad­ow of the Amer­i­can giant Blockbuster.

Netflix

In 15 years, Net­flix became the monop­oly of the film rental and stream­ing tele­vi­sion mar­ket in the USA and beyond (of its 80 mil­lion clients, 35 mil­lion are out­side the States). The main fea­ture of the com­pa­ny was the abil­i­ty to stream movies and shows via the Inter­net. A bright logo, learn­ing from com­peti­tors’ mis­takes, and a trans­par­ent and qual­i­ty ser­vice were the keys to Net­flix’s success.

The com­pa­ny now has part­ner­ships with Mar­vel and Dream­Works, rights to pop­u­lar shows like ​“Dare­dev­il,” ​“The Defend­ers,” and ​“Crit­i­cal House.” A unique fea­ture of the por­tal’s series is the release of the entire sea­son at once, anoth­er inno­va­tion that made Net­flix syn­ony­mous with binge-watching.

Sam­sung

​The main com­peti­tor of the world’s lead­ing high-tech inno­va­tor, Apple. Sam­sung is cred­it­ed with many pranks, includ­ing trucks full of coins to pay off a court debt. The com­pa­nies dili­gent­ly steal ideas from each oth­er like cyn­i­cal long-mar­ried cou­ples. How­ev­er, Sam­sung is known for its love of fresh per­spec­tives on famil­iar things.

Mark She­droff, Vice Pres­i­dent of the Sam­sung Open Inno­va­tion Cen­ter, says the cen­ter stands on four pillars:

  1. Part­ner­ship Pro­gram: Allows for the exchange of expe­ri­ence and tech­nolo­gies with oth­er companies.
  2. Invest­ment in Research: Helps devel­op the industry.
  3. Attract­ing Exter­nal Teams: For fresh per­spec­tives on set tasks.
  4. In-House Cen­ters: For reg­u­lar work.
Sam­sung reg­u­lar­ly attracts teams of 5 – 6 peo­ple to work on spe­cif­ic tasks, giv­ing them auton­o­my in cre­at­ing prod­ucts with­out approval of pre­lim­i­nary and inter­me­di­ate results. Then they are giv­en all the oppor­tu­ni­ties of a large com­pa­ny: financ­ing, dis­tri­b­u­tion, and oth­er resources.

Samsung

Mark notes that inno­va­tion costs pay off: the com­pa­ny sells 450 mil­lion phones and 50 mil­lion TVs annu­al­ly. The man­u­fac­tur­er’s goal is to cre­ate a cross-plat­form struc­ture that can unite all prod­ucts into a sin­gle net­work. Microsoft also strives for this but with much less success.

Lego

Lego stopped being just a man­u­fac­tur­er of one of the best con­struc­tion toys in the world and embraced inno­va­tion in the mid-2000s by sign­ing agree­ments with the largest enter­tain­ment fran­chis­es. Now it has prod­uct lines from FOX, Dis­ney, WB, and almost any product.

Lego

Eric Hansen, Senior Direc­tor of Open Inno­va­tion at Lego, says in many inter­views that the ini­tial task force was cre­at­ed to:

  • Assess the poten­tial for intro­duc­ing innovations.
  • Ana­lyze glob­al inno­va­tion experience.
  • Cre­ate recommendations.
Once the plans were approved, the com­pa­ny began dis­cussing joint projects with oth­er com­pa­nies, inter­view­ing suc­cess­ful inno­va­tors, and test­ing new prod­ucts on a large scale (for­tu­nate­ly, the com­pa­ny had the resource base).

Here are a few of Eric’s statements:

Peo­ple don’t have to work for us to work with us.
Con­sumers are cre­ative and smart. They expect you to lis­ten to them.

Hansen high­light­ed the nec­es­sary rules for devel­op­ing and intro­duc­ing innovations:

  • Indi­vid­ual cre­ativ­i­ty into col­lec­tive sys­tem­at­ic creativity.
  • Pri­or­i­tize strengths.
  • Achieve suc­cess with peo­ple who are inter­est­ed in success.
The best exam­ple of Lego’s suc­cess is the LEGO Ideas project.

Where to Get Ideas?

Oth­er people’s expe­ri­ence is use­ful, but brain­storm­ing with­in the com­pa­ny’s cre­ative depart­ments can be more beneficial.

Sources of inspi­ra­tion for ini­ti­at­ing new ideas can include:

  1. Lit­er­a­ture on inno­va­tion: There is a wide selec­tion of Eng­lish-lan­guage and adapt­ed lit­er­a­ture on ideas, suc­cess­ful cas­es, and inno­v­a­tive meth­ods. A sig­nif­i­cant dis­ad­van­tage of trans­lat­ed lit­er­a­ture is out­dat­ed infor­ma­tion, but there are also cur­rent mate­ri­als, such as Clay­ton Chris­tensen’s ​“The Inno­va­tor’s Solution.”
  2. The­mat­ic webi­na­rs in Eng­lish: This option is bet­ter as all tru­ly rel­e­vant trends come from the West. You can famil­iar­ize your­self with the pro­gram here.
  3. Open inter­na­tion­al forums: These take place annu­al­ly in major infor­ma­tion cen­ters world­wide. For exam­ple, the pop­u­lar Japan­ese forum Inno­va­tion Week­end. In Ukraine, the open forum InnoTech Ukraine has been held for the third con­sec­u­tive year.
  4. Client ser­vice and feed­back ana­lyt­ics: Through sur­veys, ques­tion­naires, and focus groups.
InnoTech Ukraine 2017
InnoTech Ukraine 2017
Com­mu­ni­ca­tion with com­pa­ny lead­ers, top man­agers, and depart­ment heads pro­vides valu­able con­tacts, insights into suc­cess­ful cas­es, and poten­tial part­ner­ships in prof­itable projects.
Main Rule: You need to move, com­mu­ni­cate, and develop.
In most cas­es, crowd­fund­ing plat­forms and investors serve as resources for obtain­ing funds. It is nec­es­sary to prove through num­bers that the approach is inno­v­a­tive. The devel­op­ment bud­get should be cal­cu­lat­ed at the busi­ness mod­el­ing ver­i­fi­ca­tion stage.

Ver­dict

There are undoubt­ed­ly more promi­nent fig­ures in the world of inno­va­tion: Richard Bran­son (head of Vir­gin), the mad genius Elon Musk, and the late Steve Jobs.

They always pri­or­i­tize inno­va­tion and ben­e­fit not only from increased income but also from pub­lic inter­est, as in the high-tech era, infor­ma­tion is a much more valu­able resource than mate­r­i­al goods.

Any inno­va­tion car­ries the risk of becom­ing an unnec­es­sary prod­uct that does not meet con­sumer needs or fails to cre­ate them.
Although the infor­ma­tion that ​“9 out of 10 star­tups fail” is uncon­firmed, the per­cent­age of viable orig­i­nal busi­ness ideas remains low, so it is essen­tial to make every effort to ensure that your ​“Eure­ka!” becomes a real­i­ty and brings you profit.
⇆

esc
Share
или
PM school
Best Legal Project Management Software 2024
Specialized project management software has become essential for law firms. Legal practices benefit from these tools by streamlining case management, ensuring compliance with legal standards, and enhancing...
30 September 2024   •   12 min read
PM school
Best Engineering Project Management Software 2024
In 2024, engineering firms require robust project management tools to handle complex workflows, resource allocation, and tight deadlines. The right project management software can help engineering firms...
30 September 2024   •   10 min read
PM school
Best Project Management Tools for Nonprofits 2024
Nonprofits operate with limited resources and tight budgets, making efficient project management essential for success. Project management software can help nonprofits streamline operations, manage volunteers...
30 September 2024   •   11 min read
Get started now
Please enter your real email 🙂
Cancel
Digital UI Gantt chart Comments Kanban Project Management Notifications More 79...
Digital UI Gantt chart Comments Kanban Project Management Notifications Agile Crm Planning Files PM Projects Report Reports Calendar Time tracking Timer Interview Consulting Waterfall Task Management Priorities Plan Timetracker Reactions IT Emoji Agency Gannt SEO Optimize Sale Marketing Time tracker Architect People Asana Integrations UI Statuses Tags Search Project Folder Teams Integration SMART Entitling Tasks IOS Android Text editor Code Scrum Lean Bureau Mono Architects Y R Vintage Tebin BIM Egineering Labels Video Subtasks Migration Tasks App Filter Сhecklist Connections Privacy Telegram Advice PM secrets Export API TO-DO Google Documents SSL Security Топ 5 UPD Promo actions Tips&tricks Partnership