Private companies should carefully manage their product development initiatives, and the resources applied to those initiatives, to derive the greatest possible value. Doing too much at once in the engineering and development space can limit the impact of all innovation efforts and quickly deplete the precious budget dollars that growing businesses have to allocate to these important projects.
Consider these tips for driving greater return on innovation:
- Act fast: Figure out which development programs are the losers and kill those quickly. Reallocate those resources back to the winning programs.
- Hedge bets: Do not bet all of your innovation dollars on one or two “perfect” ideas. The risk: getting so much investment, ownership and insular thinking that it becomes very difficult let the project die when it isn’t creating results. Fund five or ten ideas in the pipeline at the same time and staff them all appropriately.
- Critically assess efforts: One of the most important considerations in determining which portfolio and innovation initiatives have the most potential is whether they are aligned with key business objectives. After all, innovation by itself isn’t strategic. It’s only strategic if it enables the realization of corporate goals. Private companies need to focus limited resources on the greatest growth opportunities. Projects that aren’t aligned only get in the way.
- Consider the long term: Can the costs associated with developing the innovation justify themselves in the long-run? If the innovation comes with an astronomical price tag, it may take many years of operating in the black to pay off – if it ever does. Even if they could come up with the financing to support the development of the innovation, most mid-size organizations likely cannot afford to take that risk.
- Measure sales: Assess if the innovation is saleable. Do you have the interest of customers? If you can’t get a customer interested in it fairly quickly, it’s not likely to succeed.
- Prototype products: Rather than create and wait for customers to come, private companies should create prototypes of product innovations or pilots of service innovations and take them out directly to the market. If it is difficult to find participants to try the innovation, or if initial feedback is negative, it’s not likely to sell and investment dollars should be reassigned.
Under constant pressure of immediate deadlines, urgent crises, and today's commitments, it’s easy to leave prioritizing innovation to another day. But approaching innovation management in a controlled and thoughtful manner may be one of the most important investments you can make for your company’s future.