In today’s business markets, new product development is often seen as a stepping stone for transformative growth and enterprise value. We often think about innovation as an important element of a business's credibility. It can heighten a company out of obscurity and cement it as a household staple in the eyes of consumers. New product development isn’t only good for consumers, though. In this post, we’ll show you why launching successful new products can also be a catalyst for inspiring new investments in your business. Whether you’re looking to take your enterprise public or if you’re on the hunt for renewed investor attention, a successful new product launch is an attractive pathway to achieve your goal.
Isn’t innovation risky?
Innovation, for what it’s worth, isn’t the easiest thing to bring to life. It’s not as simple as jotting down “innovation” on your corporate values chart. It can also be risky. There’s lots of unknowns in creating new products or services, like:
- Not understanding your place in the market;
- Lacking data to inform product improvements;
- Lacking customer data; and,
- Not being able to predict market trends.
There’s also many unknown unknowns that you have to wrap your head around. It can make your head spin. But, for all the lack of clarity out there when it comes to innovation, there’s one (okay, two) things we do know:
- Innovation is worth it;
- Launching a new product is one of the surest ways to ‘get ahead’ in the market and attract interest in your business.
For every example of why innovation can be risky, there’s also one to illustrate how it can pay off big time in the long-term. Just look at UK company Dyson LTD. to bring home the point. They’re a perfect example of how innovations, specifically new, disruptive products, can elevate a business from obscurity to a household name. Even in a market - household appliances - that you’d think is saturated with competition, Dyson became a mainstay in the market and created a name for itself on the back of innovation, not in spite of it. Even today, Dyson’s main growth strategy stems from its continually-improving vacuum products that drive the company to earn operating profits of over £1 billion annually.
How do you innovate?
Okay, okay. New product development is critical to increase business value. So how do you do it? Especially for those new companies or the small-and-medium-sized firms, it can be tough to know where to start. A truly innovative firm needs a backbone to actualise its creative efforts. To commercialise new offerings, there’s a certain level of organizational maturity that you need to reap the gains. And that’s where the Innovation Value Pyramid comes in.
Innovation Value Pyramid
The Innovation Value Pyramid is a way to systematise innovation in your business. That, in turn, heightens the organisation’s business value. Think of it this way - if you attempted to sell your business, how would you put a price tag on it? You could add up all your inventory and capital. That’s one part of it. But there’s a hidden part of your business that investors and new vendors crave. And it’s not captured in financial terms. A truly valuable business is one that has:
- Innovative capacity;
- Excellent staff;
- Unique knowledge;
- An advantageous business model; and,
- A valuable market position.
These intangibles are sometimes difficult to quantify, which is where a renewed focus on the Innovation Value Pyramid comes in. It’s a system to help companies strengthen their capacities to do great. It’s quantified through intellectual capital.
The Innovation Value Pyramid is about transforming your business from level one to level four, which look like this:
- Owner-driven value. This frequently happens for new businesses. Owners take the reins and dominate the airwaves when it comes to trying to improve and progress the business. The problem is that the owner is just one person and has trouble juggling it all.
- People-driven value. Eventually, trust and innovation expertise is built within the organization. Departments are created and they can optimise themselves.
- System-driven innovation. Here is where things really start to get innovative. Staff have the maturity to develop systems and metrics to encourage and keep track of innovation. New ideas start to happen more naturally and they are acted upon more easily, rather than being passed off to the side of a desk.
- Culture-driven innovation. At this stage, the entire organisation is embedded with a culture of innovation. Employees have an “innovation is the way we do things” kind of attitude and they bring it, every single day. This enthusiasm rubs off on clients, stakeholders and investors.
Think about the pyramid like a balancing act. The more you increase your organisational maturity and embed innovation, the less you rely on the ownership group or key management to be the agents of change. If your staff are able to generate new ideas and carry them forward on their own, then your executive functions can focus on the big-picture items like maneuvering the market place, stakeholder relations, and more. We’ve talked about the Innovation Value Pyramid elsewhere (we’ve got a great exposé here that you can check out).There are quite a few ways to elevate business potential and move up the pyramid, but one way, in particular, can yield the biggest gains when it comes to developing expertise and organisational acumen: by launching a new product. It proves to investors that you have expertise and that you are successful in a specific domain. The attention, respect, and trust that a successful new product launch can bring to your business is beneficial whether you take your organisation public on the stock market, sell your business privately or try to scoop up new investors for your operation.
Tell a story of new product development
Are you looking for an example of how new product developments can tell a good story and inspire confidence in a brand name? ARM LTD, the semiconductor and software company based in Cambridge, England is a perfect example of this. Through continuous product development and by capitalising on trends in the computing world, they’ve grown to a juggernaut in U.K.-based tech innovation. It’s no surprise, then, that NVIDIA are set to acquire the company for a whopping $40 billion (US).But, your new product innovations don’t have to be in the tech sector. And they don’t have to be worth billions of dollars to add impact and value to your organisational maturity. Being able to tell the story of a new product launch is like a gold standard in investor-based storytelling. It’s a fairytale that attracts hyper-interest and buy-in for your organisation.
So the next time you’re debating about taking the next step in a new product journey, consider that a new launch is not just a way to deliver new services or products for customers. It’s also a sound investment in your business potential. Successful product launches can give you the storytelling potential and reputation to attract investors and increase the value of your business.
Sounds like a happy ending, no?