Top 5 Ingredients for Successful Innovation

Top 5 Ingredients for Successful Innovation

Through my long career starting, building, managing and consulting on innovative businesses, products & services, I’ve gained an understanding of what I believe are the critical ingredients for successful innovation. I’ve learned this from thousands of hours well-spent on successful projects – and I’ve learned even more from experiments that didn’t achieve their initial vision.

I’m happy to share some of the most important learnings with you in this article. The five foundational elements I describe below apply to any business wanting to innovate, pivot or diversify, and for pretty much any industry or market type. The success rate for your innovation, pivot, or diversification projects is enhanced by getting these five key ingredients right at your project’s start. These elements apply regardless of whether you are a small construction company, tech start-up, large established service business or a Fortune 500 company.

1) Leadership

Successful innovations require a determined project CEO whose clear vision and sense of purpose are so firm and unwavering that it can withstand the wild roller-coaster ride that comes with starting, building and scaling a successful innovation. This very driven leader must be (or quickly become) a subject matter expert on the industry they are operating in, the customer, problem & solutions.

This leader should be humble, empowering employees and enabling their career growth. And they must be a great listener and communicator. A great leader is calming and remains positive regardless of the issues the company is managing. A respected leader stands upfront in the tough times and shares the podium in the good. And they can both take blame & share praise graciously. Bringing a new product, business or service to the market and then successfully growing it is neither quick nor easy. Committed, effective leadership is a must.

2) Team

The core of a high-quality working team must also be expert in key implementation roles – basically, an action team that can plan, test, build, validate, market & sell your product. The positions will vary depending on your project and industry. Examples of crucial roles for your project may include technology/engineering, product/project management, production, sales, marketing, design, writing.

In the beginning, when cash is tight, some workers will need to fill more than one of these roles. And some functions will need to be served through outsourced contractors. The best and fastest moving teams are lean, full time and 100% focused on the product, service or business you are trying to build. Side project distractions such as billable hour client projects or splitting time with other core business responsibilities are a significant drag on rapid and effective innovation.

Once your business has committed to pursuing an innovation project, you must allocate a small core team and make this their only focus. Just like the CEO, this team also needs a deep understanding of the customer, the competition and your new innovative solution.

A successful team is also one that has chemistry. Whether you are remote or not, you will be spending an enormous amount of time working collaboratively on your project in often stressful situations. Essential factors for a team getting to a project finish line include getting along, having friends on the team, respect & trust of colleagues’ abilities. It is also essential to be a good listener and know your teammates hear you. It takes the strength of many to lift and carry an innovation to its ultimate goal.

If your project is part of a larger corporate innovation initiative, the team may include a smart & patient corporate executive level. A good executive team will continue to support, mentor and financially back a good project and its leader throughout all the uncertain times, so long as it sees progression in the key targets and measures.

3) Product-Market-Fit

There are three critical things in the Product-Market-Fit category that you have to get right. 1) Identify the right customer segment; 2) Confirm you’ve identified a significant problem; 3) Prove you have the solution.

It is surprising how many projects go many months & dollars down the road of building, marketing and trying to sell an idea without reducing risk by first doing proper early validation experimentation to confirm that what they offer – is something prospects would actually pay for to solve a significant problem:

• Customer: You need a clearly identified customer group. Know your target customer intimately and write detailed personas for them. The more targeted or niche the customer is, to begin with, the better. It would be best if you had a strong client beachhead to start from and a few evangelist fans on your side to help build momentum.
• Problem: You must clearly understand your target customer and their major pain points. And this defined customer group must have a problem so significant that they are willing to pay you to resolve it. Don’t build a solution that goes looking for a problem to solve. Identify the critical problem first.
• A unique Solution to the problem: You need to have a better solution than the existing problem-solving methods these customers are using. Your solution must be painless to use, priced right, and one you can easily explain, sell, deliver and quickly get customers up & running and benefiting. You will achieve validation of Product-Market-Fit when you start making consistent sales of your solution.

4) Timing

There is such a thing as too early or too late. The best way to know if this is the right time for your innovative B2B or B2C solution is by investing significant time into talking to lots of your target customers. Learn how they live, work and play to understand and empathize with their daily problems and the pain those problems create for them on and off the job.

You need to understand how your target customers are solving these problems today and whether the existing solutions are good enough. If they are currently happy with their solutions, there’s little/no opportunity for you. However, if they aren’t satisfied with the status quo, there is potential. Ask a lot of open questions and really probe to find out if there is a strong likelihood these customers would actually pay you, at your price, for your better solution.

Also, spend enough time researching the competitive market and industry trends. Is somebody already offering what you are planning to build? Are they doing something similar cheaper than you can? Are there competitive blocks or technical or other dependencies that are going to be significant hurdles to overcome? You need to put effort into information gathering because accurate, timely knowledge is less risky than just guessing or relying on hunches when it comes to the considerable expense of building and launching something new. You don’t want to burn time & money going down dead-end paths.

5) Financing

It can be true that finding Angel, VC and corporate investment is reasonably straightforward once you have proven Product-Market Fit and are showing strong growth trends in terms of registered prospects, tryers and paying clients. However, getting from the starting position on innovation to a proven entity worthy of external funding takes real-time & resources to accomplish.

Having sufficient start-up financing is critical during that period where you are just beginning – before you have proven Product-Market Fit and before you’ve established meaningful revenue from which your team can self-finance. Trying to raise money externally while still trying to build and prove your idea is challenging, time-consuming and a distraction that takes precious time away from actually growing your new product, business or service.

The beginning phase of a project is where so many new ideas die because they run out of cash and runway. Access to operating funds is critical. The most successful start-up I’ve been part of required that founders put in several rounds of funding plus personal loans before it could stand on its monthly cash flow. In that case, we were fortunate that our founding team was large and had some resources from a previous success, enabling the team to scrape enough money together to keep going. A well-known Seattle entrepreneur later acquired that business, but it would never have made it that far without adequate access to start-up funding through the lean early years.

Building a new product or service – and getting enough customers for it – takes time. Always more time and money than you ever think it will. You need enough up-front cash to survive this period. Make sure you are executing as quickly as you can to preserve cash and achieve validation. But before you start, ensure that you can get access to enough financial fuel to stay focused and keep going on your innovation journey.

Need more help getting started on your innovation project?

Every industry and project is different, and there are, of course, many other things that go into creating a successful innovation project. The five key ingredients I’ve described above are, in my experience, the most critical foundational elements you need to get right at the beginning of your project to give yourself the best chance of a winning outcome.

I hope you find this article helpful. Let me know If you have feedback on this post or your own list of key ingredients for innovation. Also, check out my playbook for creating an innovation pipeline at your company. And, see News for other current information. You can contact me at don@afdonex.com or visit the website afdonex.com for more information about our services.