Much has been written and discussed about the connection between Innovation and Profitable Growth during the last few years. But why does Innovation really matter and how does it connect to developing effective Growth Strategies for manufacturers of all sizes?
Consider these facts from a recent article by Dough Hall from
5% Success Rate: Research on US companies by the Boston Consulting Group found that less than 5% of innovations met their Return on Investment (ROI) targets, which represents an 86% decline from the 35% innovation success rate reported in 1985.
83% Becoming Commodities: Copernicus Marketing found that in 40 of 48 categories consumers perceive brands as becoming more similar.
Only 12% of Growth Initiatives are Innovative to Start: As survey by Davis Research found that only 12% of senior marketing leaders consider recently launched products as being differentiated. This is confirmed by the Product Development Management Association’s (PDMA) annual survey showing only 12% of initiatives were actually innovative; while the remainders were incremental improvements or minor changes, neither of which was profitable.
So why do effective growth strategies need to be innovative? Because differentiated products and services are profit engines. Uniqueness of products and services is the single biggest predictor of profitability. If your new product or service is considered to be the same old stuff, why would your customers pay a premium for it? What is your competitive advantage if what you offer is not distinctive from your competitors? How can your sales team be successful if there is no meaningful difference between your products and services and your competitors?
So, Innovation is a critical component of any sustainable approach to profitable growth. But it needs to be real innovation that drives uniqueness and distinctiveness into your offerings, not incremental improvements that do nothing to distinguish your company from all of the other options your customers have. What steps can you take today to begin pushing Innovation into your Growth Strategies? Consider the following suggestions:
Revisit your Growth Vision for the next 10 years and make sure it calls attention to creating unique and differentiated products and services based on what you really do best and stand for a s a company.
Begin exploring how your company’s Hidden Assets can be leveraged to create new and unique growth opportunities for your company. (See my column from October 15th to learn more about Hidden Assets.)
Consider contacting your local
Charlie Alter owns Bentbrook Advisors LLC based in Sylvania, OH – he specializes in Growth Strategy Consulting & Executive Coaching, Charlie can be reached at firstname.lastname@example.org