3 Steps to Achieving a High ROI on Your Innovation Dollars (Hint: Start with your Customers)

Share on facebook
Share on twitter
Share on linkedin

Are you skeptical of the return on investment (ROI) from innovation projects? Many of my clients are. Sure, they invest in incremental improvements – fix what is broken, adopt new technology to make their operation more efficient, train their people to increase their productivity. But when is the last time you actively pursued an innovation opportunity for your business?

Innovation takes time and money, and skilled people to set aside their daily activities to discover opportunities and try them out. Especially for small business owners, who are spending every waking hour just keeping their operation going, setting aside that time doesn’t seem like a good investment. Often these small business owners don’t have a strategy team to tap into, which means innovation efforts look like a late night lonely activity. To add insult to injury, the new digital world these businesses play in is moving so fast, it seems as though the opportunity to act was yesterday.

I challenge you to make 2017 a year of innovation. Studies show that the companies that innovate, that invest in innovation projects, are the ones that are growing. They are the businesses that are poised to succeed in the next five years. They are tackling the biggest challenges in their industry and their community. They have a more engaged workforce. The ROI of innovation is clear.

I won’t pretend that your innovation efforts will be easy, but if you break it down it will be smoother than you might expect. To determine whether an idea is right for your business, first start with your customers and your market. Many innovators try to skip this first step. After all, they’re the experts, living in their business day in and day out. However, this short cut is the number one reason innovation efforts take longer than planned, and often fail.

First, start with customer needs

Exploring customer and market needs exposes you to the gaps that exist today. These gaps are pain points, areas where current market offerings are missing the mark. The focus of your innovation efforts is to fill one of those gaps, not to provide a “better” solution. For example, car sharing started as a way for people living in cities to have easy access to a car for their errands or excursions; it didn’t start as a better solution for renting a car. While car sharing and car rentals share common features, the design focus of car sharing was on easy, short access for city dwellers. Had the design focus been to provide more car rental outlets in the city, the idea would have failed.

Here is a key way to distinguish whether you’re starting at the right place in your innovation efforts – are you starting with a solution, the proverbial hammer looking for a nail? Or are you starting with a customer and market need, a gap that no other solution fills? I have found that this template provides an easy way to capture some of the current gaps in the marketplace, along with trends that demonstrate a growing need. Use it to capture the background for your innovation project.

Next, design solutions that uniquely meet that need

Don’t be scared off by thinking that your innovation needs to be Einstein-esque. Yes, inventors create new solutions, things that no one has heard of or thought of before. Before anyone thought of travelling in space, there wasn’t a need for rockets. Before anyone thought of checking email on your phone there wasn’t a need for smart phones. These inventions are hard to find and build. They are rare, and in a different class than the innovation you are focused on. But that doesn’t mean your ideas aren’t equally impactful for your customers.

Your innovation explores novel ways to do things that people are already doing. They start with something your business does, something you are already experienced with, and grows it into something new. Nike started with their running shoes and explored other needs of the runners who were their customers, developing reflective jackets and comfortable shorts. HP took the ink heads from their printers and applied the technology to helping diabetes patients inject their insulin.

For you, the next key step is to think about your business strengths. Explore operational capabilities, brand value, people capabilities, key partnerships. Every business is a unique combination of culture and people. Compare this list to the gaps you identified. What combination of business capabilities will fill these gaps to create a solution that no one else will be able to match? Are there areas that with a bit of development and refinement could turn into a new capability?

Third, design your business systems to deliver an excellent experience

I remember the first iPod I received in the mail. I had ordered it for my husband, waited the extra week to have a personal quote etched on the back. It didn’t fall out of the box in a mess of bubble wrap; it opened like a present, each layer peeled back to reveal a bit more, to build excitement. The finale was the iPod nestled in the heart of the box, showcasing the quote against the simple, elegant design of the device itself. It felt special, cutting edge, like a beginning. Even something as mundane as the ordering and billing process invoked this same feeling of sophistication and anticipation.

Since then I have received items from retailers and service providers large and small. Some get it right, staying true to the value their product provides in all their interactions, but many provide an experience equivalent to the thunk you hear as your purchase falls out of a plain brown box to the floor. Certainly not memorable enough for me to buy from them again.

Delivering an experience is not rocket science, but it does take an attention to detail, a focus on the feeling you want your solution to invoke in your customers. Start with capturing the feeling in a few adjectives – is your solution life-saving, revolutionary, elegant? Then capture the benefit your customer gets from using your solution, the problem you are solving – is it time saving, easy-to-use, professional? Last, tack the adjectives on to the front of the benefit and voila – this is your customer value proposition.

The attention to detail comes into play as you engage every person, process and technology in your operation to deliver that value proposition. Can you describe your ordering, billing, delivery and customer service offering with the same adjectives you used in your customer value proposition? Does every customer interaction with your business convey that same value proposition? This will probably take some iteration, using customer feedback to hone and improve the experience.

Make this a year of innovation

Isn’t it time you challenged the status quo? Make this year a year of innovation for you and your business. If you need a strategic partner to help you quickly discover and implement innovation for your business, I’d love to help.

For more innovation tips subscribe to our blog newsletter, sent directly to your inbox.

Leave a Reply

Your email address will not be published. Required fields are marked *