by Colin Jowell

If innovation has a one-word enemy, that word would be cannibalization. Often a great new idea never makes it past the starting gates because inside the company, there is a fear that it’s introduction might harm a core product of the business.

Budget setting often makes things worse. On the face of it, using your previous run rate of sales to set your marketing budget seems like a great idea. Back your winners, phase out your losers and your business will remain strong. But would you drive a car looking only in your rear view mirror?

It’s heartening to see more and more organisations dedicating additional resources to innovation. New job titles like “Chief Innovation Officer” are springing up.  However on discussion with some of them, the budgets they are allocated are still dwarfed by the mainstream marketing budget - budget that’s often for defense, rather than for driving the business forward. That protective mindset means that people only put up as much money for innovation as they are prepared to lose. This may be a sound strategy for visiting a casino or playing the pokies, but when it comes to business, this approach amplifies, rather than minimizes, risk.  

In business today, it really does pay to be an optimist. While counting on multiple returns from every innovation is foolhardy, the so-called safe strategy of defending a product that is losing traction in the market may not be as safe as it sounds. As far as innovation is concerned, the Australian Medical fraternity is far ahead of business in terms of world firsts. Maybe it’s because in this area, there is everything to gain and nothing to lose, while businesses are not as sure of the outcome?

The answer to all this uncertainty is solid customer research. But not necessarily research in the traditional sense, where it comes long before a product goes to market. This approach has a number of issues, most importantly, what is tested is often far from complete. And we’ve seen minor tweaks in experience totally change the impact of a new product. Instead, it’s better to develop skills in quick prototyping and using test launches to learn. This does not mean the traditional research agency has a lesser role to play - on the contrary, the good ones are an invaluable partner, included at more points in the development process than the traditional model allowed.

In a world of intense competition, rapid technological progress and a worldwide democratization of both development and production skills, your great new idea is probably sitting in R&D somewhere – either with a known competitor, or one you don’t even see coming. With that view, one has to ask - does cannibalization even exist?

Smaller businesses are far better at innovation than big ones, despite far more limited resources. Just look at the BRW fast starters list. Lack of resources makes you an expert at selling the idea and looking for ways to make something happen, rather than reasons for it to fail. But if larger businesses learn to make the most of their war chest and better fund their newly established innovation functions,  the Australian market could become a far more dynamic innovation powerhouse than it is today.

Things to think about:

  • How are you resourcing innovation? Are you using historical results to dictate an unknowable future?
  • Are you hampering your innovation process by using traditional methodologies?
  • How could you apply existing skills in new ways to open up opportunity?