Do all your innovation solutions make money? Here are 3 steps on how to create a sustainable innovation portfolio!

Would you like to have a portfolio of innovative solutions that do not make money?

Would you like to have a portfolio of patents that do not make money?

Did you know that mousetrap is the most patented invention in the US?

To be a successful innovator one needs to be aware of the “better mousetrap” paradigm.

When we ask people to define innovation with one word they often say: new or idea, when we ask them to explain invention with one word, we get similar answers.

So why is it so difficult to distinguish these two terms? Both invention and innovation are presenting something new and it is a new idea in its core. The difference is however whether the new thing or idea creates true value for someone or somewhere in the value chain.

Invention vs. Innovation

So, an invention is something new; a new technology, a new way of doing things, a new process, a new chemical compound, a new structure… Innovation is, on the other hand, the same but added for the value it creates, i.e. invention that creates value for someone,  someone uses it, the invention is useful. Innovation is more than just a (patented) invention. It can be also a new innovative business model, like a freemium business model that for example Spotify and many similar are practicing.

What does mousetrap have with innovation?

1) Be aware of innovation paradigm: “better mousetrap”

Going back to the mousetrap. In innovation, there is a known innovation paradigm “better mousetrap”. Since the USA Patent office was established in 1802, the mousetrap is the most patented item. There are more than 4.400 patents granted for different types and solutions of a mousetrap. More than 400 patent applications are applied on average every year for a new mousetrap solution. However, there is only one mousetrap patent that makes money. So, when coming up with new ideas that you and your organizations are trying to translate into innovation, one must be aware of not overproducing actually “new mousetrap patents”.  In other words, an organization has to evaluate to which extent constant pursuing of incremental innovations makes sense.

Incremental or sustainable innovation

Incremental innovation is when we talk about small improvements. Small improvements have one goal: to make an existing product or service a better version that previous one.  While iPhone when entered the marked, was a radical, transformational innovation (NB was not disruptive!), every new iPhone launched is incremental innovation, a new better version of its previous self. This is also called core innovation activities (Nagji & Tuff, 2012).  Research shows that it is usually the established companies that produce the most incremental innovation.

Do not be mistaken, incremental innovation is important, and they do create value! Small improvements enable us to cut the costs, to be more cost-effective, to be faster and more efficient. They enable us to fix bugs from previous versions and make the customer experience more smoothly. So, yes, they are an important part of an innovation portfolio, especially when they make the customer journeys more valuable.

2.) What creates value for companies in the long run?

Research says that companies that focus on creating value for customers, add and create the most value to the organizations themselves. It is important to have a strategically long-term focus on creating value for its customers.

3.) How to be a long term innovator?

Another research says that the permanent innovators, these that continued and increased innovation investments in difficult times, are organizations that focused on creating solutions that are new on the market. So, when the iPhone first time entered the market, it was something totally new on the market. It was absolutely transformational.  However, when Samsung introduced its Galaxy phone, the phone was new to the company (Samsung), but was not new to the market (iPhone was already there 😉) In innovation literature, this innovation type is also called adjacent innovation. (Nagji & Tuff, 2012)

Investing in “new to the market” means looking for innovation that is radical, disturbed i.e. transformational.

Radical, Transformational innovation

Radical innovation is when something was/is beyond our thoughts and imagination. This can be a new product or technology or even a business model. The most known example of an innovative radical business model is Google search engine business model:  free for users who seek useful information, but companies who want to be at the top search engine need to pay for it and adjust their webpages.

Transformational innovation means “developing breakthroughs and inventing things for markets that don’t yet exist” (Nagji & Tuff, 2012,HBR). This type of innovation implies the development of new products, services, assets and also creating new makers, and targeting new customer needs.

The core, adjacent, and transformational innovation theory was introduced by Bansi Nagji and Geoff Tuff. It is also known as three horizons of innovation ambitions.

Three horizons of innovation

 

Source: Nagji & Tuff, 2012

Conclusion

In other words, instead of focusing on creating new, more shiny mousetrap, maybe it should be considered if we could do traps for something else, or maybe this mouse trap mechanism can be applied in some other industry, serve some other customers. Do you need help with guiding you through this?

This process is our specialty and we can lead you through it.

 

 

Do you wonder how to make your company skilled for long-term growth and sustainability? Do you wonder how to make your company resilient to volatiles and challenges on the market? Do you wonder how to make breakthrough innovations that will make your company long-term resilient?

We have experiences and know-how to help you and lead you in creating answers to these challenges so that you can grow! We can help you build a resilient long-term innovative company. Our mission is your growth!

We will be glad to talk to you informally to hear what your organization want to achieve and to discuss a potential road map to reach the goal.

We are always availble for you.