– Thoughts on Strategy and Management

The four benefit criteria of innovation

In my post last week I discussed innovation’s impact on corporate success. In the meantime I had a very interesting conversation with a student (business economics) related to innovation issues. The core of this conversation highlighted the character of innovation, the difference to inventions and the benefit aspects.

So let us start with a definition for innovation. (I have to mention that starting with a definition is good way to manage conversations and to avoid misunderstandings. I have observed some very controversial and unproductive discussions – some problems did only exist due to different or even unclear understandings and perceptions…). For the purpose of this post I would like to define innovation as follows: developing and delivering services or products which offer benefits. These benefits will be perceived by customers as superior, excellent or new.

Innovation opportunities can arise due to environmental changes. Those changes can create new customer needs and enable organizations to develop better solutions to current customer needs. Having this in mind it is easy to understand why the observation of environmental changes is so important for innovation (and for your company). Changes in living standards, culture, and lifestyle and so on and so forth create new needs. Furthermore environmental changes (e.g. technology, science, data analysis) can offer new solutions for firms to satisfy both current and new customer needs.

So what is the difference between innovation and invention? Inventions may fail to establish markets.

  • Invention = a new product!
  • Innovation = a new benefit!

What is the issue? A very brief example from one of my favorite industries: Do you need a loan? No, you don’t. You want to buy a new car, a new house etc. etc. Customers basically do not want new products (in this perspective I will exclude branding aspects) – customers want solutions which offer superior or new benefits. Hence true innovations – represented by a service or product – have to fulfill 4 benefit aspects:

  • Unique. The new benefits that generated from the new service or product should be perceived from the target group as unique.
  • Important. The new benefits should be perceived as important by customers. (Imagine your firm is a maker of digital cameras. Hence you should explain your customers how important an image stabilizer system is…and that your system will deliver the best results)
  • Sustainable. The new benefits should be sustainable or at least protected against followers. Measures to do so include patents, time to market and brand management.
  • Marketable. Your organization should have the resources, competencies and capabilities to market the product. This aspect also includes an effective and ready to market version of the product.

In the case that your innovations fulfill all 4 benefit criteria your organization is in a good position. Consider my recommendations from my last innovation post (strategy, complexity management!) and then…enter your market.

In one of our next posts we will have a look at the barriers to innovation and how to integrate innovation into strategic planning. Therefore: Come back to Eddielogic!


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  3. thanks for the blog.

    I have a company aimed at building innovative steel home furnishings–following your four benefit criteria. My first product line gives consumers of kitchen pot racks more functionality by allowing them to expand the rack to meet decorative and functional requirements. Retailers appreciate the ease of assembly and the compact packaging because of our patent pending rivet and adjust system.

    Thanks for the site and quality education.



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