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Of all the myths about innovation, perhaps the greatest is this: that it happens in a dark room somewhere among a select group of people who present their latest idea as a fait accompli to the rest of the business to implement.
In fact, innovation goes hand-in-hand with collaboration — between teams, between organizations and even between sectors. For manufacturers, learning from and building on the successes and setbacks of others — both within their own company and outside it — is a great way to supercharge any innovation program.
That is why I speak regularly with peers from across the industry, and recently I was lucky enough to meet up with John Nottingham, Co-President of business innovation and product design firm Nottingham Spirk.
Innovation — not invention
During our conversation, Nottingham and I discussed the importance of viewing innovation not as a silver bullet but as a process. One in which invention is not the end game, but just a single step along a whole innovation journey through to commercialization.
It is an approach that is proven to work. In the product manufacturing industry, an average of just 5% of new innovations make it to market, with the rest simply lost or abandoned somewhere along the way.
For Nottingham Spirk, those figures are flipped. Of the innovations they have worked on since launching 47 years ago, 95% have been commercialized — which is the reason they now have more than 1,200 patented products operating in homes and businesses all over the world.
The journey to commercialization
My conversation with Nottingham gave me a fascinating insight into the anatomy of true disruptive innovation. And I came away with three clear lessons for any manufacturer looking to turn their ideas into commercial reality.
- The 70-20-10
Typically, companies invest around 95% of their resources in improving their existing products — what is commonly termed “core innovation.” They then spend about 4% on adjacent innovation. So, if a firm makes toothbrushes, an adjacent innovation might be mouthwash. Meanwhile, a meager 1% of resources go to genuine breakthrough disruption — the development of a completely new product type or market.
However, if manufacturers can just shift that to a 70-20-10 split, their potential returns skyrocket. By increasing investment in genuine disruption to just 10%, organizations can expect about a 70% return. This is compared to just a 10% return for core innovation and 20% for adjacent innovation investments. Why? Because breakthrough innovations are almost always focused on real customer needs and offer a tangible edge over the competition.
- Start with a pain point
While the majority of manufacturers have become much smarter about the risks of innovation for innovation’s sake, there remains a tendency to fall back on an ideas-led approach rather than an ecosystem-led one. Often, companies will brainstorm a range of new concepts, prioritize the “best” one, then go away and work on implementing it in whatever area of the business it happens to fit.
This is a mistake. Instead, the place to start is with a pain point — a genuine problem or challenge the firm is experiencing right now, no matter where in the value chain it falls. After that, it is all about leveraging the ecosystem, working with suppliers, distributors, customers and even competitors to first really understand the pain point and then, together, develop a targeted, commercially viable solution.
- Don’t forget the last mile
It is now a widely accepted aphorism that research and brainstorming do not lead to true disruption. In the former, because it tends to constrain thinking within the guardrails of the past and, in the latter, because it usually results in ideas that are not sufficiently focused.
In these situations, progress almost always grinds to a halt during the development phase, stalled by a lack of disruptive impact and/or a diminishing business case. Once that has happened, it is very difficult to get things started again. As Nottingham puts it: “The innovation process can be like quicksand; if you pause, you sink.”
The answer here is to, once again, think in terms of the journey. Yes, one of the first stops on that journey is the idea itself but, after that, come a series of continual, iterative steps en route to the ultimate destination: commercializing it. What materials will we need? How do we tool for it? How do we ship it? All are vital questions manufacturers must ask (and answer) during this “last mile” of innovation if a new product is to have a chance of making it into the hands of customers.
What’s next?
Of course, the development of original and disruptive products is nothing new — it is how organizations and industries have moved forward for generations. Yet in a world of rapid technological advances and evolving customer expectations, it is now a challenge that reaches well beyond ideation.
Far from a quick fix, manufacturing companies must now treat innovation as a process — one that Nottingham says can take up to 18 months to do properly and something we will explore in more detail next month.
The views reflected in this article are those of the author and do not necessarily reflect the views of the global EY organization or its member firms.
