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The “New Normal” for Innovation

There is no doubt that innovation in the form of new product and service introductions slowed over the last two years. New food and beverage product introductions, normally a very active area for innovation, fell by nearly half during the first quarter of 2009, according to Mintel. However, as we emerge from one of the worst and most frightful recessions of our generation, innovation will again have to take center stage, but perhaps in a different form from before.

Consumers now are more selective with their spending, focusing more on need than on want, delaying indulgences and walking through store aisles with a more sober and critical mindset. This relatively tight-fisted and critical buyer is the “new normal” and will require managers to take an equally critical look at how innovation fits into their organization and fits with this new consumer.

Wise managers will determine that innovation should still be a force in their organization. Recession and emergence from recession is a ripe time for innovation. Competitors have turned passive while a “new normal” consumer begs for relevant new solutions for their needs and rising wants. For example, Kraft Foods launched its Miracle Whip brand during the Great Depression in answer to the need for something more exciting and less expensive than mayonnaise to add “zing” to a diet made bland by the harsh economic times.

However, given the new consumer mindset, innovation efforts can’t follow the same path as before. They have to follow a more disciplined path, be more focused, and the risk has to be managed. As there is a “new normal” for consumers, there is an attendant “new normal” when it comes to innovation. Innovation practices will have to adapt.

The “new normal” for innovation must include: an adjusted attitude toward innovation in general, a rigorous innovation process, and management of the risk associated with innovation.

Update your attitude toward innovation. Your attitude toward innovation probably took a “wait and see” or perhaps even a negative turn over the last couple of years. However, really successful organizations have taken advantage of the last two years to continue marching forward in the area of innovation. Technology companies did not become passive. In fact, technology advanced nearly at the same pace in the last two years as it had in the time prior to the recession. They continued to focus on the productivity, efficiency, and capability which new technology would provide regardless of economic conditions.

Now it’s time for you to adjust your attitude. You must develop a new faith in the power of innovation to drive your organization’s growth.

Develop an innovation process. For innovative ideas to develop and come to fruition there has to be a process. Your innovation process must consist of three phases:

Idea generation: Often referred to as “filling the top of the funnel,” on-going idea generation is critical. Successful organizations don’t start to generate ideas when they need them. Instead, they have a regular process for generating ideas that result in a “library” of possible ideas to move forward. The beauty of a range of ideas constantly at your disposal is that you can choose to move forward with ideas that meet market needs as they arise. I recently spoke with one vice president of innovation who informed me that his company has a range of ideas that will probably keep it active in new products for the next five years.

Idea validation: This is the phase where new ideas are “battle-tested” to determine if they can be produced, if there is a true need to be filled, and if they can make worthwhile contributions to the organization. Reacquainting yourself with your consumers and customers can’t be overlooked as part of this step. Remember, there is a “new normal” that is going to affect what they need and how they are going to respond to your new ideas.

The one caveat at this point is to think broadly about the “worthwhile contribution” a new idea can make to your organization. New ideas can make a contribution beyond revenue and profit. I have worked with many leading organizations that view the opportunity of getting into a new market or product line just to establish their name in a new category—to get their foot in the door, so to speak. They start slow with some simple new product ideas and then build on that success as they gather a positive reputation and knowledge from their experience.

Introduction strategy development: It is simply not enough to generate a new idea. How it will be manufactured (if necessary), and how it will be moved into the marketplace and how it will be supported once there, is as critical. Oddly, this is the step which often is short-circuited, most likely due to the blind ambition and charisma that a captivating new idea can gather in the idea generation and validation phase. I tend to think of this phase as similar to family planning: having a healthy baby is steps one and two above. Planning for the baby to grow and develop into a healthy adult is what this third phase is all about.

Develop an appetite for risk and manage risk appropriately. Risk is at the heart of innovation. You have to be willing to take risk and accept that there will be failure. The best way to develop an appetite for risk is to learn how to manage it. Like any business process, there are ways in which you can manage the risk associated with innovation so that you don’t become either paralyzed or overwhelmed by assuming more risk than you can handle. The risk associated with your innovation efforts can be managed via a portfolio. Like any portfolio, you are seeking balance between high, moderate, and low risk.

About the Author(s)

Mike Mitchell  is president of Mitchell Innovation + Research, a market research and innovation consultancy based in Chicago and Dayton, Ohio. MI+R’s clients primarily consist of Fortune 500 companies and some of the best-known products and brands in the world. Mitchell is a university professor, prolific writer, and popular business speaker. For more information, contact: mike@mitchellinnovationandresearch.com or visit: www.mitchellinnovation.com