Everyone, and I mean everyone, talks about innovation. We’ve got CEOs, academic leaders, the President of the United States, talking about innovation. It’s clear everyone thinks that innovation is important. The challenge with all of this talk of importance is that few people stop to define WHY innovation is important. What’s driving the need for more innovation? We all seem to agree that more innovation and more frequent innovation is important, even necessary. But are we to accept this as an article of faith? Should we allow innovation consultants, elected officials and business leaders to tell us innovation is important, but not demonstrate the underlying reasons why innovation is increasingly so important?
I’ll try to describe at least four factors that I think are driving the need for more innovation. Given the time, I’m sure we can jointly come up with many more drivers, and you are welcome to add those in the comments section. These are distinct factors yet intertwined and to some extent mutually reinforcing.
1. Decreasing Product Life Cycles, Driven by Increased Competition, Customer Expectation, Environmental Shifts
Used to be, in the dim, dark recesses of history, circa 1980, that a company could design, develop and commercialize a product and expect it to have a long useful life. Those days, sadly, are over. Many products, driven by expectations of lower cost, are less robust and less reliable. We consumers are more willing to use something and throw it away rather than repair or recycle. We have short attention spans and demand new capabilities from existing products. The media leads us to new shiny objects and causes us to reject our existing products. Whatever the reason, the expectation of long product cycles is a fallacy. And as product life cycles shorten, firms must engage in discovering new needs and generating new ideas for new products far more often than they did previously.
2. Increasing Global Trade, Opening the Door to More Competitors from Every Region
Trade barriers have fallen globally. This means far more competitors have access to markets, and far more product offerings in a range of features and price points. Where a customer may have had only a few choices in years past, he or she has literally dozens of choices now. This range of choices has increased competition, increased customer choice and developed in consumers an expectation of constant change. Buyer’s remorse is growing, as any new device is immediately replaced by something slightly better the new day or week. Innovators understand that while the treadmill this creates is difficult, they must either get on the treadmill and create a stream of new products and services, or be able to disrupt the treadmill.
3. The Rapid Distribution of Information and Education
Time was, most advanced education happened in only a few countries, which were the sources of most innovation. Today, India generates far more highly trained engineers than the US does. Elite educational systems are being distributed in many sectors of the globe. Look at major US universities opening locations or partnerships in Qatar and China. As more education and knowledge is distributed, more insight and more capability is developed globally. That means more regions have a greater depth of knowledge and are able to generate far more valuable ideas at a far greater pace than ever before. This simply accelerates the global ability to generate more interesting and valuable ideas.
4. Reduced Cost of Entry into Markets and Industries
Open markets and lower trade barriers have provided increased access to markets, but other factors have reduced the cost of entering many markets. The internet by itself has transformed the marketplace, making it far easier to find interesting products in regions that may not have been available previously. The internet has lowered selling and marketing costs dramatically and linked many more people across the globe. Increasing wealth in many emerging economies means more capability to develop products and services. Lower cost of marketing, lower cost of development, increasing access to capital in emerging economies means more ideas, more products and services.
Shorter product/service lifecycles, reduced barriers to trade, increasing access to information and lower cost of entry and lower cost of capital globally drive far more product and service development. To simply keep up with the change, innovation is important. To get ahead of this wave, innovation is a must.
Don’t miss an article (3,950+) – Subscribe to our RSS feed and join our Innovation Excellence group!
Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of “Make us more Innovative”, and innovateonpurpose.blogspot.com.