There are plenty of inventions, but substantially fewer true innovations. Confusing the two is commonly done as proven by our highlighted articles below. The major problem lies in misunderstanding the source of where these two manifestations come from: innovation is defined by your clients through their eager and widespread adoption of your idea/product/service; invention is defined by the creator mainly as an internally driven endeavor. Key to remember is that innovation is not really about novelty, it is more about value creation.
These articles come from European author and innovation thought leader, Gijs van Wulfen, and the Wall Street Journal's Financial Editor, Dennis Berman, who both admonish CEOs and the business community overall for misusing and overly brandishing the word "innovation". Worse, they scold business leaders for fooling themselves into believing that they are actually agents of change.
Dennis Berman started a wave of, let's say, less-than-favorable comments and articles a few years ago in publishing his story, Is a Peanut-butter Pop Tart an Innovation?where he called to task Kellogg CEO John Bryant for christening his cereal company's new food product an innovation. Berman goes on to chronicle a host of other similar claims from other top firms uncovering a disturbing trend: Red Robin Gourmet Burgers executives on a November 20th 2013 presentation mentioned the words "innovate" or "innovation" 21 times to describe their food offerings; Hewlett-Packard executives on an Oct. 9 2013 conference call used innovation 70 times; Capital IQ reported that 197 companies in the S&P 500 mentioned “innovation” in their 2013 third-quarter conference calls versus 99 back in 2007. Berman further reports on a Boston Consulting Group study that asked 1,500 executives to rank their company innovation from 1-10 with more than two-thirds rating themselves a seven or higher. Apparently, most of them live in Lake Wobegon where ALL children are "above average".
Consider this a cautionary warning on using this word lightly!
Gijs van Wulfen added to the discussion on his LinkedIn posting The Word "Innovation" is Misused by arguing that we must address this misuse by revisiting the definition of innovation. He offers the following:
An innovation is something original, new, and important – in whatever field – that breaks in to (or obtains a foothold in) a market or society.
The key question he poses here is "original, new and important" according to whom?
Gijs draws the analogy that it is natural for the inventor to look at his creation as a proud father. Subjectively, their creation is "original, new and important" for them and their firm and consider it their latest innovation. But there's a major difference between breakthrough innovation that drives competitive differentiation and a product/service extension or upgrade that merely keeps you in the game. The difference is in the mind of the consumer as they determine how relevant and valuable that new product or service is for them.
That is why the surest way to reduce the risk of innovating and making sure you are on a successful track is to develop a deep feel and understanding for your target customers.Customer empathy is substantially much more, much deeper, than just customer-focus. This realization has driven many innovation efforts to explore and incorporate many techniques from the design world. Rolled up under the banner of "design thinking", it represents a human-centered problem solving approach, a series of steps and ethnographic techniques that are designed to uncover deep insights into what customers really need, especially unarticulated needs. Design thinking goes beyond data and surveys and focus groups to mine emotions, expectations and unvoiced needs.
There are a number of articles in our Innovation Library and a few videos in our Innovation Gallery on design thinking for members to further explore this topic. We will focus on design thinking in later posts. For now, the key point to this post is that innovation should start with your deep understanding of your customers, framing your new ideas and new services from their perspective on what their problems and emotional issues are, in order to identify best new growth and revenue opportunities for your business.
The Institute for Innovation Development wants to encourage and support advisors in further developing their client advisory boards, work to provide tools to more deeply mine what clients and prospects are thinking and feeling, as well as starting new programs like local innovation think tanks to help you provide leadership for your local business community and increase engagement with your clients and top prospects.
This article was previously posted on Financial Advisor Magazine Online.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here.
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Institute for Innovation Development