How to Design an Innovation Management System that Creates Value for Your Customers

How can a task like innovation – if it is that critical for the long-term survival of a company – have such a bad track record in many companies? While the importance of innovation is proven, success rates of innovation initiatives are still surprisingly low. In a survey conducted by BCG, 80% of innovation executives said that innovation was a priority in their companies, but only 30% deemed their efforts successful. A meta-study engaged by innovation consultancy Strategyn averaged success rates of innovation projects at 8.5% (!). In this article, we will present six levers to increase the success rate of innovation projects and achieve innovation excellence.

Why is innovation success so difficult to achieve?

As literature shows, one of the main reasons for low success rates lies in a general lack of customer-centricity of innovation management systems and procedures, even if a shift becomes perceptible in more up-to-date sources: While many previous business innovation definitions did not even mention the customer or customer value, the contemporary International Standard ISO 56000 defines innovation as “The concept of innovation is characterized by novelty and value […] Thus, novelty and value are both necessary and sufficient characteristics of the concept of innovation. This means for example that insights, ideas and inventions without the manifestation of value, are not innovations.”

An innovation management system must be designed to create value for customers

“Creating value” is definition element as well as raison d’être of any innovation. Value creation happens when a problem or underserved need of a customer group is served significantly better than existing solutions were able to do. Value creation must run like a red thread through all aspects of the innovation management process, from developing an innovation strategy to preparing the market launch of specific innovation projects. Only then can value creation thrive and convey purpose to the customer by aligning departments and activities throughout the organization.

While the understanding of innovation and innovation management is slowly changing, giving the aspect of value creation the space it deserves, many companies still struggle to integrate customer centricity in their innovation management systems. It often lacks practical instructions and an innovation management system that is customer-centric to its foundations.

6 Levers to integrate value creation in your innovation management

Based on extensive research and a long-standing track record of successful innovation projects, we’ve developed a blueprint for a next-generation innovation management system, which will be published as a white paper in time for the “2nd JTBD Summit Europe” on March 24-25, 2021. This white paper will outline 6 levers to make an existing innovation management system more customer-centric:

  1. Innovation Culture: Create a common language for innovation. Speaking the same language is a basic requirement for everyone involved in innovation. Everyone charged with innovation must have the same understanding of what a customer need is, and know the specific underserved needs of the intended target group. The target is to define and communicate throughout the company 1) what kind of value and 2) for whom this value should be created, BEFORE any innovation activities are set. The clearer these parameters are for everyone involved in innovation, the more targeted and thus effective the result will be.

  2. Front End: Uncover what customers really want and where opportunities exist in the market. A customer-centric innovation management puts emphasis on the “front end” of innovation projects – which refers to activities like collecting and processing information, input and trends about markets and technologies at the beginning of an innovation project.

    From our point of view, this phase is often wrongly called “fuzzy front end”. The front end of an innovation project should NOT be fuzzy at all, it should be clearly defined, quantified and assessed through innovation market research for example with methods like Outcome-Driven Innovation®. Clearly defined customer need statements are the foundations for subsequent development and launch activities.

  3. Strategy: Define a customer-centric and data-driven innovation, new business & digitalization strategy. A strategy can only be as good as the information base on which it is built. To ensure that customer-centricity runs through all aspects of innovation, the market and product strategy should be built around long-term valid customers’ needs. With the Growth Strategy Matrix, the Jobs-to-be-Done framework provides the right tool for that.

  4. Organization: Align innovation activities throughout the entire innovation, development and launch process, and make innovation predictable. Innovation must be organized in such a way that efforts are mutually reinforcing, synergy effects become effective and everyone pulls together. “Alignment” is one of the main goals when organizing the task of innovation – throughout involved departments like product management, R&D, development, marketing and sales, but also throughout different strategies and incremental and radical innovation initiatives, as Edizon’s “Alignment” blog article outlines.

  5. Development: Supply a measurable guideline for concepting, testing and development. The framework and methods used in the development phase of an innovation project should precisely target the creation of customer value, being at the same time cost- and time-efficient. The Jobs-to-be-Done Design Sprint is a structured approach to create, prototype and validate new product / service concepts based on results of the previously mentioned Outcome-Driven Innovation® Process.

  6. Launch: Define the needs & opportunity-based language for communication and promotion. “Great marketing only makes a bad product fail faster”, the famous quote from illustrious scriptwriter David Ogilvy makes a case in point: crucial to the success of an innovation is the homework that is done BEFORE launching it (all the previous described activities around innovation culture, front end, strategy, development etc.).

    However, it is essential to convey the most convincing messages and arguments when launching a new product or service. Again, it’s about alignment in this phase: sales arguments that make a purchase decision are those that originate from customer needs – namely those unmet customer needs that have been identified in the front end and guided the development of product and service features in the development phase.

Do you want to learn more about implementing the six levers for your customer-centric innovation management? The white paper “Jobs-to-be-Done (JTBD) Based Innovation Management System” will provide you with more details and tangible tools. Drop us a message here to receive the white paper in advance.

Learn even more about customer-centric innovation management at the “2nd JTBD Summit Europe“, taking place on March 24-25, 2021 in Vienna, and at the same time streaming as an online-event. With six topics and more than 10 speakers, it will all be about “Becoming Customer-Centric and Achieve Innovation Excellence”!

JTBD Master Class , 16. Jun - 17. Jun, 2021

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