Everyone wants breakthrough innovation. But few people know what it really entails.
In May 2023, I highlighted the importance of aligning your innovation efforts with your company’s growth strategy. To boost sales, most companies focus on growing their core business. More innovative companies might reach out to new consumer profiles with product variants or extend their core business with new value propositions. The most innovative leaders, such as start-ups, often build entirely new businesses with novel value propositions for new consumer profiles.
It’s crucial to understand your company’s role in the market: Are you a market leader, a quick follower, a challenger, or a disrupter? A clear understanding of both your growth strategy and market role will help shape your innovation objectives.
Clarifying "Breakthrough Innovation"
With buzzwords often clouding reality, it’s essential to align all participants on the true meaning of “breakthrough innovation.” The Cambridge Dictionary defines innovation as a “new idea or method” and a breakthrough as an “important discovery or event that helps to improve a situation or provide an answer to a problem.” Therefore, breakthrough innovation refers to innovations that successfully bring valuable solutions to consumers.
Each year, NIQ BASES reports that breakthrough innovations often involve range extensions and new products that consumers recognize as valuable, even if they don’t seem groundbreaking. Breakthrough innovation is not necessarily a game changer or disruptive. While a game changer significantly alters a situation, it doesn’t always add value in terms of sales and profit. Similarly, breakthrough innovation isn’t necessarily disruptive.
Clayton Christensen from Harvard Business School defined disruptive innovation as creating a new market or transforming expensive or sophisticated products into simpler, more affordable ones for a broader market. Disruptive innovations can fail and typically operate with different business models to succeed in low-end markets. Examples include Lidl, Aldi, Ikea, and Netflix. However, companies like Uber and Tesla represent incremental innovation, not market disruptors.
Why Most Companies Focus on Breakthrough Innovation
Most companies do not seek game changer innovation as it might not be enough to boost growth. Nor do they seek disruptive innovation, which may not suit their market or capacity to build a new business from scratch. Instead, they focus on breakthrough innovation, aiming to provide more value to consumers and increase sales.
Understanding and agreeing on definitions is crucial for aligning your innovation objectives and choosing the appropriate processes, inputs, and tools. Consistent language among employees and partners fosters clarity and coordinated action, while varied interpretations lead to confusion and missteps.
Steps to Achieve Breakthrough Innovation
- Identify the Type of Innovation Needed
Base this on your company’s growth objectives and strategy. - Understand Your Market Role
Are you a market leader, a quick follower, a challenger, or a disrupter? - Clarify Stakeholders’ Definitions
Ensure all key stakeholders have a unified understanding of “breakthrough innovation. - Consider Expected Payback Time
Different innovations have varied payback times. For example, Netflix took 9 years, Nespresso nearly 20 years, and Tesla 15 years. - Choose the Right Process and Tools
With clarity on the above points, select the appropriate innovation process, inputs, and tools to begin your breakthrough innovation journey.
Conclusion
By following these steps, you can set a clear path to achieving breakthrough innovation and bringing valuable solutions to market successfully. Clear and precise wording is essential for successful innovation. The right inputs, processes, and tools are crucial for increasing your chances of success. Many innovations fail because of unclear objectives, leading to inappropriate inputs, processes, and tools, and thus, poor outcomes.
