Continuous Innovation is, in its essence, what moves an organization forward: project after project, adaptation after adaptation, one idea after another. It is given by the series of minimal, gradual, and continuous updates or improvements to existing technologies or products. It generally does not fundamentally change the dynamics of an industry or require end users to change their consumption behavior. The opposite of continuous innovation is discontinuous innovation, also known as “disruptive” innovation.
Each new implementation is then continuous innovation, and as technology and customer demand expand or change, so does the operational management of the organization.
Continuous innovation versus the risk of losing relevance
Continuous innovation has been a hotly debated topic for decades, not only in academia but also within the research & development departments of any sector or industry. Today, the fact that a product works, is marketed at a fair price, and offers good customer service simply means that it meets the minimum requirements to stay in the market. Certainly these characteristics are not sufficient leverage for growth. In today’s crowded and hyper-competitive environment, achieving sustained success requires innovation. But if innovations are not continuous and there is no innovation strategy to guide the innovation process, the risk is that we will gradually lose relevance, among other things in a period of time that is becoming shorter and shorter.
- Companies that invested in new products without consideration of the actual quantity, quality, and articulation of demand (think of the disastrous outcome of the New Coke market launch).
- Companies that misinterpreted, and just as often chose to ignore, the signals coming from their target market (e.g., Sony with Betamax).
- Companies that have overestimated the strength of their brand, placed too much faith in the staying power of innovations that were destined instead to be outdated, and believed they could come in late without eroding their position of strength (such as Nokia, which in 2012, by refusing to switch to digital photography, condemned itself to dismal obsolescence).
In all of these cases, which are widely cited in literature, large and powerful companies that were highly innovative in the not-so-distant past have gone through dramatic failures (in some cases outright) because they failed to implement a continuous innovation system.
Companies that adopt continuous innovation methodologies learn quickly and better than their competitors and are able to offer customers solutions to real problems not only in a limited time, but over the long term. In this post, we will investigate how continuous innovation projects can be conducted, summarizing some practices that have proven particularly effective in three lessons. First, however, we’ll explain how continuous innovation “works” by observing it in action.
The main steps in the continuous innovation process
There is no single continuous innovation process: each organization has its own specific needs that require tailored approaches. However, we can list the eight key steps (according to techfunnel):
- Focus. In this step, the focus is on the desired end result and the short- and long-term goals that are needed to achieve it.
- Exploration. This is the stage of actively searching for the tools and techniques needed to achieve the goals. It’s the time when even very different ideas are considered.
- Selection. The options introduced in the second step are carefully evaluated: only the best ones are chosen, those that are likely to ensure concrete prospects for development.
- Design. This is the design phase: all actions necessary to implement previously decided options and track performance are established.
- Action. The solution is tested: does it match the designed operation and achieve the expected outcomes?
- Evaluation. Is the action working? How well is it contributing to achieving the goals stated in the first phase? If performance is below that expected or new problems have arisen, it is at this stage that further solutions are developed.
- Creation. Creativity is a constitutive component of continuous innovation, and when exercised in the form of design thinking, it helps to establish a deeper connection with the target audience because it taps directly into emotional potential.
- New focus. This is perhaps the most delicate phase of the continuous innovation process, but it’s also the one that defines it the most. The end result is really only an intermediate step from which to proceed to achieve new goals.
A company that chooses a continuous innovation approach and succeeds in implementing its fundamental steps is a company that contributes not only to its economic growth but to collective progress. This is what has happened in the telephone and information technology sectors and is currently happening with digital transformation.
Virtuous examples of continuous innovation
One of the classic examples of continuous innovation involves digital transformation: an organization that used to store its data in paper documents takes the first step of digitization by choosing a different type of format (dematerialization and paperless experience), then moves to digital CRM storage and finally stores everything on the cloud for faster retrieval of customer files, is in fact implementing continuous innovation.
In the telephone industry, continuous innovation has been very slow for a long time. We went from rotary phones to touchpads, from switchboard operators to long distance plans. Then, in the 1990s, innovation accelerated. Cell phones, smartphones, and now touch screens were introduced. Companies that have continuously innovated with each technological leap are now industry leaders.
Computer science is the perfect industry where we can observe continuous innovation at work. Over a very long period of time computer science has produced continuous adaptations, moving from the use of the abacus to the quantum bit. Once again, step by step, the companies that survived were those that learned quickly. While leading cloud companies dominate the market today—Microsoft, Google, and AWS—none of them began by focusing on cloud sharing. We also cannot talk about continuous innovation without mentioning Amazon, which in its nearly 29 years, has moved from one industry to another and revitalized it, even if it meant restructuring it from the ground up (from home delivery to the cloud, from speakers to TV devices to streaming). A true mindset shaped by continuous innovation, an extremely effective approach to meeting the often unspoken needs of customers. Amazon is proof that, even today, the biggest change must be cultural.
We have quickly reviewed the steps involved in a continuous innovation process and tried to contextualize its basic principles by sharing the success stories of innovations in some industries. Now we’re ready to take up the suggestions we have shared in three lessons, useful for companies that intend to adopt a continuous innovation approach.
Transform the business model
The implementation of Continuous Innovation often occurs in a confused manner and is ultimately ineffective. The problem has little to do with insufficient investment in technology and instead primarily concerns business planning, which in a great many cases is still stuck on anachronistic business models.
Many companies still set their overall strategies according to a “Waterfall” method even though they then disguise it as “Agile.”
- With the Waterfall method (also known as the Linear Sequential Life Cycle Model), the project is managed in a traditional, sequential manner: a cascading succession of distinct phases defined from the beginning, each of which generally ends before the next begins and the product is delivered to the customer at the end of the process.
- In the Agile method, time is divided into phases of defined duration. Each phase determines which product to deliver and by what date. If all the planned work cannot be completed, the work is redistributed and the information is used for planning the next phase. The work of each phase, once completed, is tested and evaluated by both the project team and the client. The progress of the entire process is iterative.
With the old methodologies, the process of launching, testing, and managing innovation projects is slow, tortuous, and quickly loses momentum. Moreover, if innovations are not monitored, they quickly disappear from the radar of business decision makers. Despite this evidence, only 18% of organizations surveyed consider business model transformation a priority (source: IDC Info Snapshot). It would seem, therefore, that most companies are still unclear about the extent of the change—primarily cultural—they are facing, and are merely reacting once the innovation is well established.
However, one thing is certain, the concept of continuous innovation is vital to the future of any organization and must be implemented now.
Incorporating an innovation capability requires the same commitment typically invested by software development teams (in fact, this is where the Agile methodology was born) and can only happen through adaptation of structures, methods, and personnel. Put another way, in a continuous innovation system, the solitary and heroic efforts of teams dedicated to innovation are replaced by participation, at all levels, in a culture marked by agile principles:
- identification of true customer needs;
- establishing a regular and predictable pace of innovation introduction;
- creation of a continuous flow of activities for smooth and steady advancement;
- transfer of knowledge to the entire organization.
Design products and services that customers really want
There are several ways that you can remain agile and continuously innovate:
- In the product design process: incorporate customer feedback;
- In the supply chain ecosystem: gain more insight into potential supply constraints or fluctuations in material costs;
- In manufacturing: adopting technologies that support the production of personalized products.
All of these innovations are just one example of the central trend toward continuous innovation: investing in defining the products and services that best suit customers’ real needs.
Technological progress offers enormous opportunities for innovation and is a real driver of change. The point, however, is not to reduce the innovativeness of technology to an end in itself or to employ it uncritically by chasing every new product trend or change in consumer behavior. Companies must design products and services that customers really want. To do so, it is essential to facilitate communication with the target audience: to gain accurate knowledge of customers (existing and potential), so as to send timely messages and offer consistent and relevant content that reflects the brand’s value system and manages to tune in to the target audience by conveying useful and meaningful information for each of them.
In this sense, continuous innovation is both a condition for the development of personalized experiences and the end point of a process that begins with the identification of personal preferences and needs. Thus, the basis of this second lesson is data.
Adopt the right tools to manage and analyze your data
Innovation becomes continuous—and therefore competitive—if the company promoting it can access the most comprehensive information possible about both consumers and target market. Equipping your organization with tools for data management and analysis is no longer optional, but now an imperative.
Yet even today many companies have difficulty coordinating and optimizing all their processes because they cannot access the correct data from the various functions: from R&D and administration areas to the supply chain, from marketing and sales departments to customer care. To develop innovative ideas and get them to market quickly, the collection, categorization, and interpretation of data from different sources should be done smoothly and frictionlessly. Connecting data and processes in the cloud is the choice most innovative companies make, the only one that offers a competitive advantage and supports new business models.
A platform for unified data management provides an excellent foundation for continuous innovation: it enables the transmission of information from idea development through design to production and service, and promotes process simplification. Companies can thereby accelerate time-to-market, anticipating and exceeding customer expectations.
Unlocking the potential of continuous innovation means acting on the dimensions we discussed in these three lessons: business model, personalization, and data. In any case, whatever concrete actions a company decides to implement, implementing a mode of innovation should be a top priority.