Why you should rethink your innovation process every 4 years
The innovation process creates the framework for the structured development and implementation of new products, services or business models. Why it is important to revise the process after a few years is explained in this article.
Types of innovation are subject to strong change
The requirements for the innovation process depend primarily on the type of innovation sought. For example, a business model innovation requires a more comprehensive innovation process with different decision-making structures than an incremental product innovation.
However, since types of innovation change greatly in the course of a company's development, the innovation process must also be regularly adapted, changed or completely rethought. What exactly is meant by this is explained below using two examples.
1. New type of innovation due to changed markets
Until a few years ago, it was still sufficient for product manufacturers to develop and launch a new product on the market again and again. However, rapid technological progress and changing customer needs mean that customers no longer want to buy a product, for example, but only want to use it.
The example of the car is a wonderful explanation of this dynamic: Young buyer groups no longer see the car as a prestige object, ownership recedes into the background. Car-Sharing models come onto the market due to new technologies and are suddenly readily available.
The innovation process, which was previously focused on product development, is now faced with the challenge of developing not only products, but also new business models. So if the innovation type "product innovation" worked just a few years ago, the market now requires an adjustment of the innovation process in order to be able to develop the innovation type "business model innovation".
Example: Insurance and financial services industry
The insurance and financial services industry has always focused its product development efforts on developing new products based on financial and actuarial models in order to assess new target groups and their risk characteristics and thus design new insurance and financial products.
The innovation process in the industry is therefore usually not geared to dealing with a new sales channel, for example. However, the new target group of digital natives is used to buying products online. The young generation is not very open to the traditional sales channel via agents and brokers. It would therefore be necessary not only to develop new products, but also to rethink the sales model.
In many places, however, the industry still has difficulties in discovering new distribution channels for innovations. Instead of thinking about a new innovation process and product development process, many companies remain in their old ways. Quite simply because this type of innovation has never been in demand before and the innovation process is not geared to it. In addition, one does not want to compete with brokers and agents and lose them as intermediaries if other sales channels are also used.
As a result of the non-adaptation of the innovation process, established companies are being overtaken by start-ups that are disruptively rethinking insurance and financial products.
2. New type of innovation through market saturation
The saturation of a market is another reason for changing types of innovation: A company can no longer grow in a market and is faced with the challenge not only of creating innovations within the existing market, but also of developing new business areas.
The previous innovation process has not covered the innovation type "market innovation" or "new business development". In this respect, the company must adapt the innovation process so that new business fields can also be developed in the future.
Example: Hearing aid manufacturer
The innovation process of a well-known hearing aid manufacturer is geared towards dealing with acoustic implants in the head. So far, the company has only developed its expertise and products in the field of hearing aids and implants in the innovation process.
However, the company has already achieved market leadership in this market. However, as the company is committed to further development and growth, new business areas must be sought in a new market. The manufacturer is therefore faced with the challenge of adapting the innovation process in such a way that new business areas can be identified in the future.
Conclusion: Why you should rethink your innovation process every 4 years
The innovation strategy is usually adjusted annually. However, in order to take account of new types of innovation due to new technologies, changing customer needs or saturated markets, the innovation process should also be reconsidered every four years at the latest.
Born in Graz, Austria. After positions as project manager & head of innovation of the project management at LEAD Innovation, Daniel Zapfl has been responsible for the success of the innovation projects of our innovation partners since January 2018.