Want a good way to get a group of executives to pause before making a decision about an innovation project? Ask them which of the following innovations they would prefer:
Innovation A: This innovation came out of the gates like a bullet, racking up first-year sales of more than $200 million. A clear value proposition, clever positioning, and a strong distribution network led to market success.
Innovation B: This innovation had first-year revenues of a mere $220,000. The innovation had proprietary technology, but the customer and the business model were very unclear.
It's obvious, right? Innovation A is the winning proposition.
Let's reveal more information. Innovation A was Vanilla Coke. It was a line extension that largely cannibalized sales of Coke's other products. Three years after launch, fizzling demand led Coke to pull the product from the market.
Innovation B was Google. In Google's early days, it had a technology and not much else. After a couple of iterations, though, it came up with its advertising-based business model, setting the stage for one of the greatest economic success stories of current times.
Far too many companies make decisions about which projects to fund based on a single set of metrics, with an overwhelming focus — particularly in today's challenging economic climate — on near-term sales. ...
Read the rest at Scott's Harvard Management blog, Innovation Insights.