The secret of successful innovation

Why are some companies more successful in innovation than others? Most people know that lots of new launched products or services fail. A PDMA Study[1] showed that only 61% of launched product succeeded in the market. However if we compare the outperformers to the rest, we see that the best companies achieve an average success rate of 82% versus 53% for the rest.

In a PwC Study[2] innovation is being recognised as the most important growth lever. What might be surprising, is that 74% of the CEO’s ‘regard innovation as equally important to the success of their company as operational effectiveness, if not more’. PwC proved that the most innovative 20% in the study had grown at a rate of 16% higher than the least innovative in 3 years, and the forecast was even more aggressive.

So what lessons can we learn from these best performing companies? What is the secret of successful innovation?

  1. Define a clear innovation strategy

  2. Make sure your culture fits your innovation strategy

  3. Get ideas…lots of them

  4. Choose the best of the best and get rid of the rest

  5. Ask your customers- they know best

  6. Use a fit-for-purpose product development process

  7. Don’t forget a proper launch plan

  8. Learn from your mistakes


  1. Define a clear innovation strategy

Where would your business be if you did not have a strategy to pursue? The same applies for innovation. The best companies have a clear innovation strategy (79% vs 47%) which is aligned with their intended business outcomes.

They have an answer on the following questions:

How much innovation do we need?

Depending on the type of business you are, do you target to be the first to market or are you merely a fast follower? The best companies target to be first to market more often. They generate a far greater proportion of their revenue from new products and services (48.5% vs 25.0%)

level of innovation- pdma 2012


What type of innovation do we need?

Basically there are 3 types of innovation: incremental innovation; breakthrough innovation and radical innovation. Leading innovators target a higher proportion of breakthrough and radical innovations, particularly around products, services, technology and business models.

Best performing companies use Portfolio Management as a structured process for managing their portfolio of new product projects. They are also aware that breakthrough innovation requires dedicated funding not competing with operational funding requirements.

In which areas should we focus our innovation?

Focus is always important, particularly in innovation it is important to set the boundaries, so that everybody knows where to play ball.

  1. Make sure your culture fits your innovation strategy

So, maybe you want to be the next Google, but is that realistic? Your resources must enable your ambitions and of course you can make a stretch, but the sky is not the limit for everyone. Finding and retaining innovation talent is a challenge for most companies and funding of projects is not unlimited. But… you can change your culture in a way that it supports your innovation strategy. For the organizational setup you need to encourage collaboration across the organisation. Cross-functional teams are more or less the norm in NPD.

Next to this, the best companies outperform the rest on the following metrics:

innovation culture - pdma 2012

Source: 1, * is significant difference

  1. Get ideas…lots of them

The first thing you need to innovate is good ideas. But where do you find these? Of course you can hope that the idea box will be the ultimate source, but a better way to  use the diverse knowledge in- and outside your company is to organise brainstorming sessions. Numerous other techniques are available. Don’t forget to include your external stakeholders in these creative sessions, they are more likely to come up with out-of-the-box input.

The best firms devote more time to the ‘fuzzy front end’ and try to understand their customer needs. They use discussion forums, ratings and reviews, blogs, branded social networks, innovation hubs and wikis substantially more often than other companies.

customer needs- pdma 2012

Source: 1, * is significant difference

  1. Select the best ideas and kill them as soon as possible

Now that we have found plenty of ideas it’s time to get rid of most of them. Only the best ideas should survive. Most firms use a formal process to select the best ideas. The Best firms use a formal process with a direct budget to select ideas for advancement significantly more than the Rest (43.3% versus 30.7%). Best companies are good at selecting the right ideas: they only start 4.5 ideas to generate one product success vs 11.4 for the rest. Did you know that applying the Lean Startup method can help you considerably with this?

Also, later on in the development process, an idea might turn out to be not so good after all. Kill it immediately, because the longer you work on it the more resources are not available for your other ideas.

  1. Ask your customers- they know best

Too often we have seen product introductions that failed. In this link 25 product flops you will find some excellent examples what you should not do. I truly believe in early testing. You don’t need a working prototype to test, sometimes image combined with some explanation can already do the trick. Again, the Lean Startup methodology will help you. The best companies test more often. They favour voice of the customer, customer site visits and beta tests. Make sure you don’t only test the design, but establish if there is an actual need for your product. Would the customers use it? And if it is a brand extension, do they see the fit with your brand?

marktonderzoek productontwikkeling

  1. Use a fit-for-purpose product development process

Product development or innovation should be treated as a normal business process that can be structured. A formal product development process is typically set up in stages: idea generation; scoping; business case; development; testing & validation; launch. Each stage is preceded by a gate where formal criteria need to be met in order to continue. Stage-gate (like) processes are the norm, but make sure that the process is adapted to your context. Of the Best companies 67% use cross-functional NPD processes versus 41.8% of the rest. For large (best) firms, this is even 77%, for smaller firms only 57%. However these steps sometimes blur, sometimes you have to go back one step because of continuous learning and other things are being worked on simultaneously. This is expressed in this vortex picture of the product development process (newproductvisions.com) that I like really much.

waterval NPD proces

Source: www.newproductvisions.com




7. Don’t forget a proper launch plan

In order to launch your product successfully, you need a launch plan. A thorough planning of the launch stage is needed: where do I launch, distribution, how quickly can we upscale, do we have sufficient stock, what is the price are just examples of things you need to consider. All business functions need to have their particular focus on the launch and you need an evaluation framework for the early stages. The launch plan should include Key

Performance Indicators (KPI’s) which will help to evaluate the product’s performance. Best firms use customer evaluation tools like discussion forums, wikis, ratings and reviews, and innovation hub significantly more than the rest.

evaluatie tools NPD


  1. Learn from your mistakes

Last but not least, learn from your mistakes. You can learn from all products you offer, even if they are in different stages of their life cycle. What works, what doesn’t, what did we forget, what would have made it easier, what can we do better next time. Continuous evaluation helps you to incorporate your own best practices and learn from your mistakes. It helps you to continuously adapt your New Product Development Process. The Build-Measure-Learn loop used in Lean Startup integrates the feedback loop in the process. It helps you to join the Best versus the rest.

successful innovation



[1] Journal of Product Innovation Management, 2013: 30 (3): 408-429

[2] Breakthrough innovation and growth, PWC, 2013