The Dangers and Rewards of Innovation

“There’s no good idea that cannot be improved on.” – Michael Eisner

The Business Dictionary defines innovation as – The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Pretty straightforward isn’t it! For a company innovation means creating new products and or services that will enable them to serve the customers better or do things that they were unable to do to serve them before. But there are dangers and rewards of innovation, quite the same as with any new creation. How much of danger and rewards in an innovation really depends on how the company manages it – the choices it makes while implementing it. Do you think it is safer to drive a bigger car with a four-wheel drive or smaller car with a two wheel drive up the hills? Most people would think that the bigger car would be better but the statistics clearly show that accidents are common with both and hence it would conclude that innovation hasn’t really made driving in the hills too much safer.

There is nothing wrong with the innovation, however since people feel safer in a bigger car, their driving habits could possibly have got altered – driving faster over the hairpin bends in the hills is never a good idea! The risks of driving rashly will continue to remain the same irrespective of better, safer and sturdier cars. It will remain the choice of the users to lower their risk and allow the innovation to work for them. The dangers and rewards of innovation depends on the choices made by the users of these products and service and making better choices of use will raise the rewards and lower the risks. Every innovation has its limitations too and companies would be prudent to use these innovations keeping the constraints in mind. Despite best efforts, soon enough it becomes clear that some advances would be flawed and would need to be abandoned while others can still be improved on.
The dangers and rewards of innovation are also directly proportional to the set-up in to which they are presented. Being able to strike the right balance between both –dangers and rewards of innovation, its performance and its use is what makes an innovation a success or a failure. The more complex the set-up and infrastructure, the more likely the consequences will be severe. The baseline is that all innovations need to be coped with carefully and the trade-off between dangers and rewards assessed. To reduce the dangers and inadvertent results, companies and decision makers must make appropriate choices of what to do and how to use the innovation – product or services.

So what should users keep in mind while managing innovation? The fact is that innovation is a highly multifaceted process and involves many stages. Time, effort and money as investments would be required before any positive results or rewards can be had. Before investing the resources, companies must make a thorough analysis of the benefits of the innovation both for them and their customers. An innovation must be a value-add to the company and in turn to the customers. This is vital to stay ahead in a highly volatile and fierce marketplace and also to enhance the efficacy of the current business model. As said before, innovation must not be done for the sake of it – there must be a real need and a clear understanding of the rewards it will bring for the customer’s business. If the innovation is being done to better service to the customer, a company must first assess whether the customer wants the innovation or whether your company, acting as a business advisor, believes the innovation to be imperative. In either case, the support and infrastructure required to balance the dangers and rewards of innovation would be different.
For any innovation to be successful, companies must discuss it with their customers to get a deeper understand of their desire for innovation and to ascertain benefits that outweigh the resources being invested. Engaging subject matter experts will help to put the innovation in to perspective by benchmarking and use case studies of similar products and similar industries. A clearer picture will emerge showing the connection between the innovation and profitable and sustained growth. It is crucial however, as a business aid to let the customer know about both dangers and rewards of innovation before heading down the path. Let’s look at both:

Rewards:
– When implemented well there is long term increase in profits and they are also sustainable
– Expansion of the scope and range of products
– Would allow the products to stand out and be seen as unique
– Properly introduced innovation would go a long way in serving and satisfying the needs and demands of customers
– Raise the trust, fidelity and confidence customers have in the company and its products
– Increasing market share or at least keeping in line with what market share should bee
– Gaining and maintaining a key market slot
– Rise and utilization of new business prospects and developing the market in ones favour
– It will be easier to personalize and customize products and services according to the needs of a larger customer base
– Intelligent innovations increase the reputation of a company and position it as a market leader thereby gaining competitive advantage
– It would lead to reduced costs in the long haul and balance of the investment made

Dangers:
As with everything that is new or being tried for the first time, innovation too has its share of dangers, along with rewards. Companies would do well to understand and calculate these dangers in order to manage them better.

– The risk of operational failure – i.e. to say that the end product fails to match the quality expected, costs are way over and it is not done in the timeline required
– The resources invested may not get offset as the innovated product or service may fail to attract the right customers or even enough customers
– The initial analysis if flawed could translate to the actual project being unsuccessful
– Despite every effort, the market conditions could change in a way that it no longer accepts or supports the innovation
– The investments could prove much higher than the actual return received on the product even for its entire life
– Being unable to maintain the crucial balance between existing products and their quality standards and the innovated product. The quality of existing products could suffer severely making an unexpected dent in profits
– There is a very real fear of the company becoming overly dependent on the innovated products
– During the course of the innovation, which could have taken to long, the circumstances could have led to the company being unable to implement the innovation carried out.
– The innovation may become redundant or limited due to sudden changes in the customer’s business, the company’s business and or the complete business scenario
It is important for companies to understand the dangers involved in innovation and take concrete steps to mitigate these risks as much as possible.
– Consider enlisting the help of a professional who will be able to provide invaluable help and insights in to the market conditions and the effects of the innovation
– Spread out the dangers of innovation by involving a business partner. This is also helpful in benefiting from the added proficiency and supplies.
– Giving someone a part of the fee to bear the risks of evolving the idea for your company
– Seek out investors and people who can give grants to develop the product with higher quality but lowered operational risks
– Ensure that some amount of the investments are set aside to keep up to date with market trends, technological advancements and the existing products

There is no doubt that innovating and creating is vital for a company to stay ahead and also to help customers stay ahead, but equally crucial is the balancing of its dangers and rewards. Irrespective of what a company does, an innovation is a leap in to the unknown and indecipherable and in order to continue progressing, this is a fact that everyone involved with must come to terms with.

Learn about a new approach to better customer service!

Interactive Guides for Superior Customer Service

Create interactive decision trees for customer service management, cold call scripts or self-service. Improve sales performance metrics and customer delight across your call centers.

Interactive Decision Tree