In our previous post, we covered the importance of identifying your purpose in any innovative endeavor. In this post, we’ll cover the reasons that the pursuit of a purpose in a competitive environment requires a process to convert ideas into value.
One of the most abused phrases in the English language is value chain. That’s because it means something different to everyone who uses it. And every undertaking can be said to have a value chain. Perhaps the most poignant example of a value chain — and of demonstrable market value — is Milton Friedman’s explanation of pencil-making. Since we discussed why? (purpose) as opposed to what? in our last post, we’ll discuss what? in this post in the context of creating a discernible value chain.
What’s Your What?
The pursuit of a purpose in a competitive environment requires a process to convert purposeful ideas into value. For that reason, what? — the processes by which ideas yield market value — can be said to constitute an innovation value chain. The chain is a series of connected steps, leading to innovative products, services, or business models that provide discernible, desirable value. These are the steps in that value chain:
- Deep Market Insight. The first major step in structured innovation is to define a problem worth solving (market insight). The complementary step is to see what exists or is in the works to solve the problem you’ve identified (competitor insight). You may need to address regulatory hurdles as well.
- Structured Ideation. This is the most creative and elusive step of innovation and the source of the fallacy that you can’t teach innovation, that, instead, innovators are born. But ideation isn’t science or magic. It’s an art. It requires sustained practice; permission to fail and, so, to learn; a deliberate mindset from which to continuously generate ideas, good and bad. Ideas aren’t random occurrences: They’re triggered intentionally by intellectual stimuli. We can create stimulating environments and exercises to deliberately generate ideas. In addition to serving pre-defined objectives, ideation sessions can lead to new products, services, business models, and markets.
- Concept Qualification. After qualifying some ideas by various criteria, you’ll get to the stage of assessing their worth. Ask these four questions before investing any resources in them: (1) Do they add value to a customer, a user, a consumer, and/or society? (2) Can you deliver them profitably? (3) Do they fit your purpose and your ethical standards? (4) Are they legally compliant?
- Creative Execution. Most organizations have stable project management and gated processes to mitigate execution risk. The ability to learn and adapt is the key to successful innovation. A balanced portfolio approach can provide stability and growth. Successful outcomes require making assumptions at each step, validating them at next steps, going back if required, and building on new learnings to conclude each initiative.
As you create your processes in answering what?, you also define how? — that is, you create the mechanism by which you produce value through the innovation value chain.
Having come this far — and by having combined why? what? and how? — we come to see innovation as a single comprehensive system. We also come to see we’ve developed the skills to innovate consistently.
In our next post, we’ll show the results your organization can generate from that system and from consistent innovation.
See you then.