The discussions on importance of innovation are all over Social Media. The calls for innovating ourselves out from the current economic malaise are coming from the President of Consumer Electronics Association to the President of the United States. In the words of Louis XIV (or was it Mel Brooks?) – “It’s good to be the King!” – for the rest of us it would be helpful to put some definitions around these terms. I do not pretend to be an expert on the subject of innovation, but I like to be specific and want to offer some ideas for discussion.
So what differentiate commercially successful product or service from the innovation?
I would like to propose that successful products gain market traction, meet their sales forecasts and generate anticipated profit margins. Innovative products re-shape the market place, create new categories, and generate blockbusting profits. Innovative products successfully defeat the competitors’ assaults for long periods of time.
Development and introduction of successful products or services is a very challenging and risky endeavor, as we are well aware.
The Recent Portfolio Management Benchmark Survey sponsored by Planview, reported that only 52.3% of products meet with commercial success, while 21.2% were “killed prior to launch”. They did not specify the type of products or industries covered by this survey, but my personal experience pegs the success ratio well under 40% mark.
The risk level for innovation is even higher. It is estimated that only 1 out 3,000 new innovative ideas becomes a commercial success. We also know that most innovative products rarely have anything to do with technological inventions, but have everything to do with the scale of market adoption. Peter Druker, the father of modern Management Science, wrote in his book “Innovation and Entrepreneurship”, that a 15 year “gestation” period is the average time observed between the time of an original invention and the time of its commercial realization.
We all know examples of such innovations as Ford T, Microsoft Word, iPod and iPad to name a few that dominated and still dominate their product categories. These are very different products, however the thought process, methods and techniques of the people who are behind the creation of these products, are a mystery we want to discover.
I would like to propose that the key difference between really good Product Managers and the Innovators is in a way they perceive and understand the markets they target.
While a Product Manager segments the markets in terms of demographics or personae for which they develop a product, an Innovator is focused on the Customer Experience of people, who struggle to use existing products to do their chores, and interprets these struggles into the definition of innovative vision for new generation products.
In other words they concentrate on improvement of EXPERIENCE as oppose to improvement of a PRODUCT.