Apparently, this is a simple question.
Unfortunately, innovation is highly misunderstood word. In Google search, innovation shows up as lightbulbs, with spark in them.Commonly, innovation is perceived as the creative spark in the mind of genius—giving the impression that only genius innovates . with spark in them.C
It’s also perceived as just a different way of doing thing.Here, I will address innovation from the perspective of taking an idea to market to generate profitable revenue.
From this perspective, innovation can take three major distinct forms:
- 1. Innovating new product,
- 2. Improving existing products, and
- 3. Improving the processes to make products.
The journey of taking a new product, usually around a new technology core, begins with a loss making revenue. Initially, the product shows up in a bit primitive from, and the cost is also high.
Turning this natural tendency of loss making revenue is a challenge.The journey then gets upgraded to continuously improving the underlyingtechnologies, adding new features, and also improving the existing ones.
The process of producing the product also become the subject of improvement. Objective of these improvements are basically to keep improving thequality and reducing the cost of subsequent versions, for turning the loss making revenue into profit.
Unfortunately, many innovation journeys fail in turning the loss making revenue to profit.
This has been the root cause of high start-up failure. Despite the great idea and charismatic leadership, Tesla has beenstruggling to reach profit, in taking the electric vehicle idea to market.
Once the innovative product starts showing the indication of making profit, followers show up. To counter this imitation force, the product is to be kept improving at a faster rate than followers can imitate.
Some of the imitators also graduate as innovators—succeeding in bringing better version. For example, Samsung entered the smartphone industry as imitator, but graduated as an innovator.
Dealing with this competition force is a serious challenge in succeeding with innovation.With the success of generating profitable revenue, innovation faces the challenge of substitution, with the threat of disruption.
To counter it, often the option is to switch the technology core. But when to switch becomes a question. Nokia’s failure to make such a switch led to catastrophic disasters. To succeed in innovation, it’s more than having creative ideas.
Here are some basic principles in articulating the journey of innovation in taking ideas to market at profit.