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Innovation: Not Limited to Products

Dec. 1, 2008
So many areas are ripe for innovation because we're working under a set of new rules; the old ways are no longer adequate.

Many engineers believe that much of the success of a new product is dependent upon how innovative the idea is. After developing scores of products over more than three decades, I've learned that's rarely the case. In fact, one of the premises I make in my new book, From Concept to Consumer (FT Press), is that the invention is only 5% of what's needed for success.

While product innovation is important, there's so much more that determines whether an idea will be successful and make money.

First, you must get to market at just the right time with just the right product that sells for just the right price and still produces a profit. You need a way to distribute the product that enables you to get it into the right locations so people can see, try, and buy. You need to convey a clear message of what your product is about. You need good timing and just plain luck that you'll not run into new competition, technology or marketing shifts by the time your product goes on sale.

What I've learned over the years is that there are no simple solutions for success and no sure way to predict it. Products that looked like they'd be huge hits have failed miserably, while others to which few gave much thought have come out of nowhere to dominate their market.

The Segway was predicted by no less than the most successful VCs and CEOs to become a huge success, that would change the way cities were built, turned out to be a huge flop. Few anticipated the resistance from public officials, who saw them as a threat to pedestrians' safety.

On the other hand, the Ninetendo Wii game machine, with inferior technical specs compared to rival products from Sony and Microsoft, has succeeded beyond anyone's expectations.

Time after time, and in spite of endless focus groups, companies generally learn about their own product only after it gets into the hands of their customers. That, of course, has been amply demonstrated by Microsoft's Vista.

Innovating Elsewhere

With that said, innovation is still important in the product, but is equally important at each step in the chain of events between formulating the idea and selling it to the customer.

As an example, PCH International, an Irish-owned company located in Shenzhen, China, just outside of Hong Kong, has examined each step between engineering and sales, and how innovation can be used to compress the time and cost of each stage. Their goal was to minimize the disadvantage of building products 10,000 miles from the customer.

PCH created an information system with a database of nearly a thousand manufacturing companies that make every kind of part or component that goes into a product, all located within a 1&1/2 hour drive of their offices. The database contains detailed information about each company, their strengths and weaknesses, customers and expertise. This data assists them to develop and build products for their clients in record time using the most appropriate resources. A second component of this information system is a visual model, accessible over the Internet, showing the flow of their clients' products from parts ordering to manufacturing, testing and shipment. It provides a transparent view to their clients of what's going on 10,000 miles from home.

This information system also provides the capability to manage manufacturing and delivery of products on a just in time basis. When an end customer places a Web order from the U.S., it's sent to PCH, who aggregates the orders each day and sends the requirements to the various factories. The manufacturers deliver their products to PCH within 24 hours. Each individual order is packaged, addressed and picked up the same day by Fedex or UPS and delivered to the final customer within 24 hours.

All of this lowers cost because inventories are much smaller, no products are tied up on the sea, and models can be phased out much more quickly with no need to deal with obsolete products.

New Rules

So many areas are ripe for innovation because we're working under a set of new rules; the old ways are no longer adequate. Time to market has become more critical and product lives have become much shorter, often as little as 3 to 6 months for some consumer tech products.

The digital revolution has spawned tools and technologies that make building more complex products much easier to do. Digital files go from the designer's computer running amazing 3D design software to the toolmaker's shop for tooling with no need for drawings. Complex chips containing dozens of functions allow those barely skilled in electronics to create products of immense complexity.

In the past, companies have tried to do everything themselves and rarely outsourced. Now many companies are doing what they do best and finding others to do what they do best, even using their own competitors to help, all to speed up the process and reduce cost. With the Internet and ease of communication, those other companies can just as well be located around the world as around the corner.

So look at your work and see what can be done to bring innovation, not only to the product, but also to the way you design it and manufacture it. Find ways to work better, faster and at less cost. Resist saying it's being done this way because that's the way it's always been done. Innovation applies to every thing that we do.

Phil Baker has been developing consumer and computer products for forty years for companies of all sizes. He has been instrumental in developing products including Polaroid's SX-70 camera, Apple's Newton MessagePad and PowerBook notebook computers, Seiko printers, PDAs, and the Stowaway folding keyboard. Baker was one of the pioneers in using Asian partners to develop and manufacture consumer products. He initiated Apple's first design activities in Taiwan and Seiko's first in Hong Kong.

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