On average, eighty percent of product innovations fail. These products disappear from the market within two years, often because they don’t sufficiently meet the target audience’s needs or aren’t launched at the right time. While this failure rate is high, some companies perform significantly better than others. Is it a matter of fate, luck, or chance? With Stijn Smet, managing director of Verhaert Innovation Academy, BEACON recently organized a workshop on this subject for a small group of clients. Based on this first-hand experience, we explored what sets these successful innovators apart.
Key principles for successful innovation
1. Alignment with business strategy
To achieve predictable success in innovation, the first requirement is that innovation must contribute to the business strategy. Every innovation effort must be aligned with the overarching short- and long-term business goals. As Stijn Smet emphasized during our workshop, “When innovation is not strategically aligned, it becomes a distraction rather than a growth driver.”
2. Portfolio approach
Rather than putting all eggs in one basket, companies should diversify their innovation efforts across multiple projects. This approach spreads risk and increases the likelihood of overall success. During the workshop, Stijn Smet illustrated this principle with a compelling case study of a leading tech company that adopted a diversified innovation portfolio. By spreading their efforts across various projects, they significantly reduced their failure rate and enhanced their chances of success.
3. Following the right process
Finally, the third principle is that innovation can be predictable if the right process is followed. This involves establishing a structured, measurable approach to innovation. A tool often recommended for this purpose is ‘innovation accounting,’ which consists of setting measurable parameters (metrics) and monitoring them throughout your innovation projects.
Making innovation measurable
Innovation accounting allows companies to measure their progress objectively. Metrics are divided into two types: activity metrics and impact metrics. During our workshop, a diverse group of professionals, including business directors, R&D managers, innovation delivery team leads, CEOs, and directors of product design & development, identified the top three measurable factors for successful innovation:
- Number of validated assumptions (activity metric): This was unanimously chosen as the most important metric. Validating assumptions early and frequently helps ensure that innovation is on the right track.
- Percentage of risk reduction per period/phase (impact metric): Measuring how much risk is reduced in each phase of the innovation process helps companies manage uncertainties effectively.
- Number of milestones (gates) passed per year (impact metric): Tracking the number of milestones achieved annually helps assess the overall progress and adherence to the innovation plan.
Implementing a structured process
Companies that truly excel in innovation understand that it’s not about eliminating risk but managing it effectively. They embrace the inherent uncertainty of innovation while utilizing structured processes and measurable metrics to navigate the unpredictable terrain. In the end, predictable innovation success is not about creating a rigid formula but finding a balance in a system where both creativity and structure can flourish by working side by side.
Struggling to make your innovation success predictable? A well-organized governance framework, supported by periodic checks and objective metrics, can significantly enhance your innovation success rate. Contact us to discuss how we can implement a structured innovation process tailored to your company’s needs and turn your innovation efforts into predictable success.
