Innovate to Thrive (Part 5) …Value Creation
Successful innovation turns ideas into money. All the processes, all the creativity, all the time and effort and research and dreaming and refining and modeling and re-testing – what’s it all for?
To enhance stakeholder value. To build incremental revenues, by filling a consumer need. And burnish your brand in the process.
Customer value can be created through the actual value-added of the new product, once you find that delicate balance between cost, price and return. It is essential to get customer input and feedback during development, in order to create – ideally – a launching customer.
Important, too, is the interrelationship between cost, manufacturability and end-user or consumer perceived value. Value can be seen in the very medium of the product. A perfect example: the foaming hand soap developed by my Airspray firm. The older, liquid hand soaps were a household staple for decades – convenient, or more convenient, that is, than bar soaps.
But liquids were not the ultimate medium consumers wanted, as history would prove. Foam is what they really wanted and the perceived value of the instant-foam hand soap at first surprised all the industry experts in terms of the velocity of worldwide demand.
This is my cue to segue into the importance of understanding consumer drivers and of doing a good job in market assessment, mapping the competition and weighing benefits versus price. Consumer or user input should be considered a several key junctions along the path to NPD, but be careful regarding heavy weighting of consumer focus groups very early-on in the process. To quote my long-time Dutch colleague, Edgar van der Heijden, “Consumers can’t imagine what they don’t know.”
As for stakeholder value, this comes in two ways, first as return-on-investment (ROI) then through enhanced product value. Longer term, enhanced product value begets higher margins, greater returns and superior company valuation, through the careful nurturing of your organization’s intellectual property portfolio.
Innovation, intellectual property (IP) is protected through patents. Patents protect and define the Innovation and are the key step on the way to commercialization and enhancing value. It is imperative that – in the quest for enhanced value through Innovation – companies protect their technology and expertise through aggressive patenting programs.
Renew, refresh, update regularly with new patents. Despite the expense, it is more than worthwhile; the solid sale price for Airspray was largely based upon our patent portfolio and value. Patenting is a powerful value driver.
Value Creation Tips
In the discussion of optimizing sustainable Innovation programs, here is the key: Value Creation. The real challenge is successfully managing the process and ensuring that the positive outcome results in superior return-on-investment (ROI).
– A Means to an End: Think of Innovation as a process that uses intellectual capital to generate positive business results and, in the process, new findings – which spurs more Innovation, and leads to further financial returns, etc. etc.
– The Customer is King: The value proposition is the key to successful Innovation. Develop an Innovation with high perceived value to your customer, and strong sales will follow.
– IP Protection: Part of the three-legged stool (technology – business acumen – law) I referenced earlier, IP and patent protection locks in your competitive advantage that supports the sales results and market share increases that result in overall stakeholder value.
To read more on IP see:
Robert Brands is a professional Speaker, the founder of InnovationCoach.com, and the author of “Robert’s Rules of Innovation”: A 10-Step Program for Corporate Survival, with Martin Kleinman published in March, 2010 by Wiley.