Monday, 12 November 2012
CEO, Commercialisation Australia
At Creative Innovation we celebrate creativity in its many forms, from lateral thinking to the performing arts to new and exciting ways of addressing day to day problems.
From the perspective of a start-up entrepreneur, it is in the fundamental definition of “innovation” that we find true inspiration.
Whilst often used interchangeably, innovation should not be mistaken for invention. Equating the two is a common misconception which leads to the belief that a pure focus on research and development and idea creation will ultimately lead to a more innovative society.
In fact, innovation = invention (creation) + adoption, meaning that only when a new invention is adopted by others may its inherent benefits be derived.
Whilst some inventions are bequeathed by their creators for the public good, the most common mechanism of generating adoption is via commercialisation. If people want to buy your invention they are more likely to use it.
As the CEO of Commercialisation Australia, it’s no wonder I am so often asked: “why don’t we see more successful businesses being built off the back of our world class creativity?”
The short answer is “because too many fail to rise to the real challenge: the construction of a value proposition.” It’s not enough to create a new product or service offering a host of features and benefits that convincingly address a real world problem. You also have to be able to answer the question, “why will someone buy my product or service?”
Unfortunately, the real world very rarely lays down the red carpet. Instead, having blockaded the front door to strangers, it forces you to find another way into the building.
Finding a way in is the entrepreneurial challenge, and it’s a challenge that requires a very different set of skills and experience than those required to create the new invention or idea in the first place.
I often refer to the necessary work as ‘Commercialisation R&D’ because, much like the creative process, the results are never guaranteed, there are plenty of dead ends, and the final result is often dramatically different from the one initially contemplated.
The secret to successfully commercialising a creative invention is to critique your proposition through the eyes of your target customer. How important are the features and benefits? What about after sales support…will you be there for the long haul…do you have credibility? What are the inherent risks in dealing with you? Who are you up against…how differentiated and compelling is your offering? Is purchasing from you an easy or a hard decision?
Depending on your target customer, the answers to these questions may vary considerably. For example, a major corporate client’s tolerance of risk may be substantially lower than that of an SME because the purchasing officer will typically gain little upside for a good decision but may suffer a variety of career limiting consequences for a bad decision. The SME, on the other hand, may be prepared to accept a higher level of risk if she believes it will deliver her a substantial competitive advantage.
But surely the most important element is that the product or service is fit for purpose i.e. it works?
Fitness for purpose is essential but not sufficient.
We all know the story of Betamax and VHS Video tape. Betamax was generally regarded as technically superior but VHS won the marketing battle and became the de facto global standard.
Some of the most important elements of a value proposition have nothing to do with the underpinning functionality. They go to the overall package that makes the buyer comfortable to deal with you rather than someone else.
As a start-up business, your challenge is to find ways of engendering confidence, respect and desire in your target customer so that the way is clear to make a purchasing decision.
However clever the invention, and however apparently perfect the solution to a problem, market success can prove elusive for many reasons. The good entrepreneur knows when to persevere and when to pivot and try something else. Success relies on having deep knowledge of the subject invention and the target market (its players, politics, trends, sensitivities, insecurities and opportunities) and a compelling value proposition. Those challenges are what make good entrepreneurs so rare and the ultimate prize so sweet.
For us to achieve a greater commercial conversion of our creative talents, we need to combine quality entrepreneurism with thoughtful inventiveness to deliver well targeted propositions. Success and failure along that path are but two sides of the same coin which one must manage and overcome in the ultimate realisation of innovation.
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