On Selling Innovations: Part One

A successful innovation requires selling. This is what determines the difference between an innovation and just an idea. Failure of innovation, in my view, is very often not the failure of the idea, but the failure of bringing the innovation into market. In this respect it is alarming to see how little emphasis is put on how to actually sell innovations. Selling something new is what both established companies and start ups have great challenges with.

Selling something new is very different from selling something old, slightly improved or moderated. Selling the first car is totally different from selling cars today. Steve Jobs for instance never believed in market studies, because he knew the fundamental underlying problem with them: they tell what has been sold in the past and are at their best creating linear correlations from that about what might be possibly sold in the future. With any radical innovations this predictability does not work. Actually, the more interesting and more potential your innovation has, the less you can use any historical references in selling it.

The reason is that any radical or really new innovations is not actually conciously needed beforehand. If you think of the mobile phone 50 years ago, no one could have said that there was a need for it. It was maybe an interesting view of the future (Maxwell Smart and shoe phone), but not something one would have asked for. With the best innovations the customers don’t yet know that they actually need the stuff. This means that ability to sell the need is required at first. What is needed in selling the need, is a stepwise process. This is based on psychology how people make decisions and is required in one way or another in every sales approach. I’ll use my own company, GloCell Oy as an example in this case and specifically the SoftaCell product.

First you need to come to a joint understanding that the issue what we’re talking about is important. In SoftaCell the important issue is raw material savings for paper or board makers. One can discuss the problematic of Scandinavian production and pressure from cheaper raw material or cheaper production locations to underline this importance. This can easily be achieved, but too often it is forgotten. It is crucial that the importance of the new innovation is always understood by the customer.

The second task is to generate a common understanding that there is something that can be improved from current. In too many cases, after the importance is seen, the customer is blind in seeing the room for their improvement. They often think they’ve done  everything in their power to optimize their way of working or products or services. With SoftaCell we created first demos that were showing a new way in optimizing the raw materials used in paper. We showed the mathematics ofthe  approach and explained why the old fashioned way of “we know how to run the machines” or “you cannot model this complicated things”  is wrong. We actually showed that the old fashioned way often cost 10 to even 30 Euros losses per ton of paper produced. 

When customer sees and understands these two points, the need for what you have to offer is established. In the next steps you then have to show that your innovation is the best way to answer for the need. If you fail in selling the need, the customers maybe see your product as interesting, but not as something for them. Sales and management of innovative companies too often take for granted the customers' understanding of the importance of the innovation and the improvement potential the customers have.  Emphasize the need first to make sure the customer on the same bandwagon. This is the only way to make customers interested in something new.

Do you have interesting additional approaches regarding selling the need?

On the Importance of Innovation Value Estimation

The definition of innovation entails the concept of changing existing ways of working and added value it brings. The discussion on the topic is very much concentrated on the change aspect on either products, processes, services leadership or strategy. If we forget to get the estimated value in the focus of innovation work we are endangered to lose it all.

A company searches for value in everything it does. In our research we have collected data that innovation work in general has a ROI from 20 to even 400%. This figure is surprisingly lucrative since the average ROI for M&A is only at about 25%. The problem is that innovation work too often lacks this kind of measures and estimates on profitability.

I had a customer complaining about investing into an innovation project that had 50% change of making significant ROI (75%). The customer argued why he should invest into something so insecure when he simultaneously had an investment project that was 100% sure to bring the ROI asked for. We analyzed the investment project immediately with same approach as the innovation, and were able to conclude that they would reach their “100% sure” ROI target with the certainty of less than 5%!

Innovation work is often considered to be close to R&D. This means that the projects are in their infancy regarding the evaluation of their business potential. It is very difficult to predict value of innovations that no one is so sure of what they will be like. On the other hand, if we are not able to do this, we endanger the projects to be cut off due to budgetary reasons. Despite the difficulty of innovations’ value potential estimation it needs to be there. Otherwise the work has no monetary backup and it will be offered in the name of efficiency. And very often this is a mistake.

On Innovation in Innovation

The decreasing interest to innovation development is a fact. Many companies that were previously enthusiastic about getting into innovation bandwagon, seem to be cutting back their activities because of modest results.

Why is it then so difficult to get the promised benefits out of innovation development? The challenge is not the innovation itself, but the ways companies implement it. Different advisors help companies to build innovation as one of the many processes in the DNA of the company. This is where everything starts to go wrong.

Way of working and results are directly correlated. If we try to standardize the innovation process, the ultimate end result will also be “standard”. The core of innovation is breaking the boundaries of our current thinking and how we see the business. In a standardized process it is very easy to lose this. If we want to live up to the innovation promise, the way of working needs to correlate with its fundamental preconditions.

It is easy for consultants to fall into the trap of standardizing innovation processes for companies. This is what decision makers are asking for. The reason from decision makers’ point of view is naturally minimizing risk in starting something new. However, innovation can never be about minimizing risk. It’s about optimizing risk. The contents and procedures of the work itself needs to be same as what innovation is all about: breaking old ways of thinking. The only way to be constantly on the frontline of innovation is to implement the whole idea of innovation to the innovation work itself. When your innovation processes and projects start to concentrate too much on efficiency and faultlessness it all is lost.

To overcome the setbacks of current innovation development we need to keep on convincing the risk averse decision makers to understand the fundamental differences between running a on-going business and growth orientated entrepreneurship. Only when this is understood, can the innovation earn its promise.