We often hear two chief frustrations from many within the innovation lab: it can be difficult to turn bright ideas into tangible new products or services, and it’s easy for executives to derail work on breakthrough initiatives to find short-term gains that impact the core business.
Just like corporate leaders need to judge innovation projects without the typical P&L metrics, they also need to accept that their innovation lab might not focus on output – new products, services or core product features. While it’s natural to want innovation investments to immediately impact the bottom-line, forcing output can force the production of flawed products built on fault assumptions.
Instead, enterprise innovation teams should be free to focus on outcomes over output: deeper customer insights, reduced overhead for services, or streamlined operations for the core business. Allowing a tolerance for outcomes rather than output helps reduce executive tunnel vision and expands the mission of the innovation lab.
A Focus on Outcomes
It’s not uncommon for corporations to invest in full product development merely because they’re spent time validating an idea and building a pilot program – a mindset that guarantees output, but does not guarantee a successful product.
It may seem like semantics, but innovation output creates tangible results while outcomes create the interactions, relationships and customer loyalty that make product and service output necessary. In the early stages of new product exploration and development, innovators should explore how their ideas will impact customers down the road, not just the short-term bottom-line.
Product development can bring about better results when constant feedback from potential or existing customers along with actionable metrics are applied. These principles help to launch the products and services that customers really want.
Develop a Learning Agenda
Achieving successful outcomes involves creating a learning agenda that lets you test an idea and demonstrate progress through validated learning. First, come up with some educated guesses; then, make a minimum viable product, which can be as simple as a PowerPoint slide or a clay model; determine impactful metrics; and last, conduct experiments.
While there are clear barriers to lean startup within corporate systems, a true minimum viable product seeks to gain insight as quickly and as inexpensively as possible. Rather than gaining full knowledge around a potential product, innovators should focus on gauging the potential users’ reaction to the minimal viable product.
Identifying Core Metrics
The core metrics you select will help demonstrate your validated learning. Validated learning is when positive change comes out of those numerous tests to see what works and what doesn’t. However, determining your metrics isn’t always easy. While some traditional metrics have been valuable, they aren’t as effective in today’s competitive environment. In addition, attempting to measure everything can result in the mismanagement of time and create conflict.
Instead, Innovation Point suggests taking a look at metrics that drive innovation like return on investment metrics. These metrics take into account resource investment and financial returns. Organizational capability metrics are also helpful. They target infrastructure and the process of innovation.
Managing the outcomes of an innovation won’t necessarily result in all the answers you need, and it will often depend on how well you know your customer. Mapping full product commercialization to clearly defined outcomes, backed by real consumer insights, allows for more efficient use of innovation budgets and increased the likelihood of delivering products that resonate in the marketplace.