“Not innovation for innovation’s sake.” – Use this principle to further facilitate success for your business! [Tuesdays: Return Driven Strategy]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Are you familiar with Return Driven Strategy (RDS)?
As someone who’s been in the business and consulting industry for 30+ years now, RDS is one of the frameworks I truly find effective in managing my team.
Explained in the book, “Driven,” RDS is a pyramid-shaped framework that has 11 tenets and 3 foundations. When applied properly to your business strategy, this framework can help you achieve wealth and value creation.
Today, let’s talk about the second “Competency Tenet” in RDS.
Keep reading to know why innovation is important in the success of high-performing businesses.
Return Driven Strategy
According to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven,” the words above all describe ways in which creativity is channeled towards developing offerings that fulfill the needs of targeted customer groups.
This means high-return businesses conduct creative efforts not simply for improving their products and services, but also for delivering any other offering that addresses customers’ pain points in ways no other offering previously could.
As Professor Litman and Dr. Frigo said:
“Innovation of offerings is one of the necessary competencies for any successful business. Firms with the highest returns have skills, experience, and a focused intention for changing their offerings on an ongoing basis.”
Let’s take a look at a business example relevant to the successful innovation of offerings…
Medtronic is a medical device company with operational and executive headquarters in Minneapolis, Minnesota. While the company primarily operates in the U.S., it also has businesses in over 150 countries and employs over 90,000 people across the globe.
Medtronic’s impressive financial performance is driven by its focus on fulfilling its mission statement, which has been in place since the 1960s.
The main idea of the company’s mission statement?
“To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.”
Because of that, Medtronic is committed to enhancing its portfolio through INNOVATION. In fact, in 2021, the company conducted 300+ clinical trials and received more than 200 approvals from regulatory bodies in the U.S., Europe, China, and Japan.
Medtronic’s pipeline has also proven successful in the long term. Many of its products in the cardiovascular, medical surgical, neuroscience, and diabetes segments have become industry standards.
What does this example tell you?
The firm’s focus is a good example of how innovation, offerings, and needs should be defined together as the path to the creation of wealth.
Inspiration for Innovation
Professor Litman and Dr. Frigo believe innovation stems from creativity and experimentation—meaning, this process is not limited to firms that are only in “creative” industries like advertising or design.
Innovation has been a core of EVERY firm that sustained high returns and growth rates for a notable period of time.
However, businesses must also be careful and ensure they innovate properly. This is because innovation should not be simply done for the sake of internal systems and processes, but also for ensuring executability and efficient delivery of offerings.
Here are two things Professor Litman and Dr. Frigo say about what innovation is NOT:
- Innovation is NOT for innovation’s sake.
It’s not enough that a firm is creative for it to be called an “innovative” company. REAL innovation is focused on the creation of new offerings that fulfill customer needs that cannot be fulfilled elsewhere.
Innovation activities are not necessarily represented by expenditures of research and development (R&D).
Professor Litman and Dr. Frigo say R&D expenditures are a crude measure for innovation. This means one should not conclude that by simply spending more on R&D, a firm’s valuation will improve. It also depends on how that firm is conducting R&D.
- Innovation is NOT for the sake of internal processes.
“Should we be technology-driven or market-driven?”
This is a question that comes up regularly whenever some business owners, leaders, or managers consider the process of innovation.
In other instances, some management teams state a specific need for innovation in a specific instance:
“We have manufacturing capacity. We’re innovating new products to use up that capacity.”
Here’s the thing: General uses of the term, “innovation” is important to companies, such as in innovating systems and internal processes. However, Professor Litman and Dr. Frigo say being cognizant of necessary changes in the business is key to successful innovation of offerings.
Sure, improvement of a manufacturing process could be seen as an innovation, but it’s not the sole focus and aim of the fifth tenet of Return Driven Strategy (RDS).
Innovation of processes is important, but in a return-driven context, it should be part and parcel of RDS’ fourth tenet, which is about the effective and efficient delivery of offerings.
For example: Many tech companies have existing platforms to build on or innovate. While these platforms could be an important asset to these firms, they could also be a distraction against longer-term success.
As Professor Litman and Dr. Frigo say, “assets” are worthless to a business if they don’t lead to future cash flows.
So… what’s the answer to the question as to whether innovation should be technology-driven or market-driven?
Instead, innovation should be return-driven. This is because regardless of existing technological platforms or lines of business, companies should fulfill otherwise unmet customer needs to justify the resources required for innovation.
Professor Litman and Dr. Frigo say innovation of offerings is the fifth tenet and second “Competency Tenet” of the RDS framework. According to them, through this tenet, more customer needs can be met, and that could further facilitate business success.
That’s why innovation of offerings should be continually inspired by insightful information about customers’ primary unmet needs.
Through this, the creation of a product or service will be focused not only on its functionality but also on the other attributes and influences that will help address a customer segment’s pain points.
We hope you learned a lot from today’s topic!
Always remember to be cautious about innovating for innovation’s sake, and to separate innovation of offerings and innovation of internal systems and processes.
By keeping these key points in mind, you will ensure your target market’s needs are always the focus of your business’ innovation.
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Tuesdays: Return Driven Strategy”
In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that the goal of every long-term successful business strategy should incorporate the combined necessity of “making the world a better place” and “getting wealthy.”
That is why they created Return Driven Strategy and Career Driven Strategy―frameworks that were built to help leaders and professionals plan and evaluate businesses so they can also help others achieve their organizational goals and career goals.
The frameworks describe the plans and actions that drive returns for anyone in an organization such as independent contractors, marketers, brand managers, communicators, and other people in any field. These actions lead to the creation of wealth and value for customers, employees, shareholders, and the society.
Every Tuesday, we’ll highlight case studies, business strategies, tips, and insights related to Return Driven Strategy and Career Driven Strategy.
In planning, building, or managing brands and businesses, these strategies, case studies, and guidelines will help you choose what specific actions to take and when to take them.
Hope you found this week’s insights interesting and helpful.
Stay tuned for next Tuesday’s “Return Driven Strategy!”
Head of Marketing
Valens Dynamic Marketing Capabilities
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