Is Your Innovation Portfolio Relevant?

There was a lot of talk today on MSNBC about green innovation and how it is poised for growth: "Cleantech" could be economy"s next boom

. This is chiefly because government sponsorship reassures entrepreneurs that there will be "paying customers". The article also discusses how there is a flood of investment pouring in, even if companies are not turning a profit, since green is 'hot'.

As with 'cleantech', many companies are once again looking at re-igniting their innovation efforts in anticipation of an economic upturn. The major question is: Are these efforts poised to succeed in the new economy? According to the latest Congressional Budget Office projections, unemployment is still slated to be 6.4% in 2013, with 9.1% in 2011. Pembroke Consulting's Adam Fein, speaking at the, 2010 Economic Forecast for Wholesale Distribution, told participants that the current recovery is not likely self-sustaining, and that until employment growth returns, conditions will remain fragile. So, it will still be tough out there for several years to come, just as a majority of current innovation efforts will start to bear fruit. But, this is not necessarily bad news - if your innovation efforts are synchronized with changes in customer value.

Industry value curves shift with every economic upheaval. Customers' willingness to pay for the same levels of performance diminish, as does their valuation of new capabilities - therein lies the opportunity. Businesses which can offer dramatically improved perceived performance at a substantially lower price point can capture a dominant market position. Sounds like econ 101, but surprisingly few companies do this in a cost effective manner. Rather than focus on doing more, better - focus on doing less, well.

Customers typically have a plethora of things they want when considering a purchase. Yet, time and again, there are only a few statistical drivers of both purchase intent and willingness to pay. These are called key buying factors and are your customers' most important considerations. Companies can create superior perceived performance by doing very well versus competition on those, reducing their costs by matching competition on the lesser important criteria. They can often lower prices as well, based on the new, lower cost structure. In a few cases, radically superior value can be created, enabling a business to secure dominant market position.

So, in the end, evaluate your innovation portfolio. Is it top heavy with new advanced, upper end capabilities? If so, perhaps you should consider a more focused, stripped down approach: excellence on the fundamentally important buying criteria, ok on everything else. You might be surprised how successful you can be.

by: Joseph V. Marigliano

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