For many companies, innovation means one thing: cool ideas! The more eccentric and outlandish they are, the better. This mindset is what leads many companies to pool huge amounts of resources into the wackiest idea they can think of and then be left wondering why it didn’t work out. Totally unrelated to this, did you see Samsung’s new folding phone….?
Innovation is more than mind-blowing, new ideas and 10x leaps. It requires a lot of hard work executing those ideas to be successful.
Here, we’ll show you why innovation is important, the formula for success and how innovation works in real life.
Let’s jump right in.
Innovate quickly or die trying
The only way for companies to stay ahead, especially when they are facing constant competition and fast followers, is to innovate. Companies stagnate and customers drop off when they are doing the same thing over and over (and over and over) again.
However, asking your team to be “innovative” is one of the worst things you can do as a leader. Does it mean “come up with crazier ideas” or “think outside the box”? Nobody knows. Nobody dares to ask. Instead, you need to build systems into your company which allow your team to go on auto-pilot and automatically work in a more innovative way.
But what even is innovation? Steven Sinofsky defines innovation as ”the result of an invention meeting the best execution of product, price, place, and promotion, usually taking many iterations from many companies.” Simply put, this means that innovation is a combination of idea, execution and market needs.
An innovation formula for success
One of our favourite illustrations of innovation comes from the book “Anything you want” by Derek Sivers. He reveals that ideas should be treated as multipliers of execution. What this means is that a mediocre, “so-so” idea could be worth millions if executed well, while a “brilliant” idea can completely flop with bad execution. Here’s a reproduction of his formula in the book:
Note: The numbers above don’t actually correlate to exact profits, it’s just an example of the principle.
Sivers’ illustration clearly shows that innovation success is more dependent on execution, rather than on one brilliant idea. What do we mean by execution? Execution includes everything from prototyping, development, promotion, marketing and finance to market fit, positioning and integration.
Let’s put this into practice...
Apple’s success with innovation
Apple is a perfect example of a company which prioritises execution over ideas. They patiently watch what other companies are doing and wait until the market has iterated on a product. Only then do they release a similar product but absolutely nail the execution.
Note again, the number above doesn't actually correlate to exact profits, it’s just an example of the principle.
Let’s take the original iPhone as an example. This product was an anomaly of sorts, as it is one of the few products which combined a “great” idea with “brilliant” execution (looking at the multiplier graph, this = $150 million).
The latest iPhone 11 Pro by contrast is nothing new in terms of innovation. Its biggest innovation is the 3 cameras on the back - definitely not a revolutionary or new invention. At best, we can call this a “weak” idea. However, Apple’s execution is still “brilliant”. So we still have $10 million. An innovation worth $10 million is not too shabby, eh?
Nintendo’s 3 experiments with innovation
Another great example that illustrates the power of product execution is Nintendo. In the past few years, Nintendo has come up with 3 products: the Wii, the Wii U and the Switch.
The Wii had the genuinely unique, “brilliant”-level idea to introduce motion sensing controllers. It was unbelievably successful as it combined this idea with “brilliant” execution (20x $10 million = $200 million). It is one of the fastest selling game consoles of all time and it completely took over the market.
The next product was called Wii U and it had a touch screen controller for the first time. This was a “great” concept but the execution was absolutely terrible. So even though this product was very interesting and innovative, the end result was 15x $1,000 = $15,000.
Finally, Nintendo took the Wii U concept of having a combination of a portable and a dockable console and tried it again with the Switch. The idea was “so so” as it was already done before with the Wii U, but the execution this time was “brilliant”. So, 5x $10 million = $50 million. Much better! In fact, Nintendo Switch is on its way to overtake Wii sales.
Bottom line? The exact same idea can either make no dent in the market and damage your share price OR become a market hit and make your share price skyrocket like crazy. The only difference between the two scenarios – execution.
How does innovation work in real life?
So how can businesses apply all this knowledge about innovation to their own products? They need to work on integrating systems which ensure a high level of execution, e.g. Agile, Design Thinking or Design Sprints. These are all great ways to combine an amazing idea with excellent execution.
They provide the structure and processes companies need to innovate on a regular basis and outsmart the competition. When using Design Sprints, for example, you are able to iterate quickly and beat your competitors to the punch to bring the best product on the market quickly.
If you want to learn more, check out our video on How Lego Uses Design Sprints to Innovate!
We hope this article clarifies what innovation is and more importantly what it is NOT. Innovation is definitely not fancy idea-generation, you-have-to-be-a-genius-to-innovate thing. It is the slow and boring combination of being able to execute something well and executing it better than your competitors.
Want more? Join 200,000+ people subscribing to our AJ&Smart YouTube, Linkedin and Instagram channels for free content to help you and your team do more valuable work.
AJ&Smart is the #1 Design Sprint firm in the world, the official Design Sprint training partner with Jake Knapp inventor of the Google Design Sprint and partner of choice for the world's most successful brands.