Senior executives often believe their organizations are innovative. After all, they talk about innovation with their stakeholders, they discuss their vision with employees, they hold focus groups with current and prospective customers and they are frequent guest speakers at industry conferences. Yet, when specifically asked about their organization’s innovation, they list dozens of product enhancements that are interesting, but certainly not innovative.
For example, in the software industry, they may cite that the user’s home screen now has three colors instead of two. In manufacturing, they may cite that their coffee cup in production now has a larger handle. In insurance, they may cite the use of a new color postcard to remind customers to pay their premium.
Organizations may understand why innovation is important in business as they continually review, update and renew their products and processes. This is a regular part of doing business. However, with this focus, they may neglect to spend effort and resources to create bold new initiatives that can enable them to achieve a dominant position in their industry. Their failure in focus may allow new competitors to seize market leadership.
For example, as the COVID pandemic spread worldwide, several companies with leadership positions in VoIP desktop video meeting software were positioned at the right place at the right time. Yet, a relatively unknown company became the dominant worldwide leader by developing a highly reliable, scalable technology that was vastly superior as compared to the incumbents. This new company out-flanked incumbents who had superior resources, capital and existing market positions and customer base.
To begin to assess the innovating environment relative to the differentiation between innovation and minimal product enhancement, consider the following questions:
- Within your organizations, who is responsible for new product innovation? Is this one person or a group?
- How does your organization differentiate between minimal product enhancement and new innovation?
- What is your organization’s definition of innovation? Is it to dominate the industry in which you are participating in?