Starting in this edition, this new column seeks to share different perspectives on the issue of innovation. We’ll do this by putting four questions to a range of innovation experts and publishing their answers in the newsletter. Let’s start with Hans Sailer, the founder of the innovation network “INNOX”.
After completing his studies, Hans started working in the field and spent time with Telekom Austria as well as in the areas of controlling and sales & marketing, before arriving at management consultancy, where he came across his subject: innovation.
![Innox Logo mit weißem Hintergrund](https://www.agroinnovationlab.com/wp-content/uploads/2023/04/Innox-Logo-mit-weisem-Hintergrund-e1680711328902.jpg)
With a State Prize and other awards in his pocket, he began to organise events on the issue of innovation and to make countless contacts. He’s now spent over a decade running his network “INNOX”, an exchange platform for innovative companies and individuals, who support each other with experience, advice, action and input on new issues that allows them to constantly develop further: Because innovation is never finished.
What does innovation mean to you?
If I had to be brief, I’d say that “innovation is when the market shouts hurray” – when, for example, money is earned or costs are reduced thanks to a newly developed product, service or process. If I had more time, I’d mention three types of innovation:
- Efficiency innovation: this often means the optimisation of processes;
- Innovation: this is continuous improvement through new product features, new functions, new design – or, in an existing market, through the improvement of existing technology, such as the ongoing development of televisions, smartphones, etc. …;
- Radical innovation: this is when new technologies, services or business models open up new markets. For example, the invention of the aeroplane facilitated a completely new way of travelling and, thus, not only a new industry but also a new market.
What is NOT innovation?
For me, an idea alone is not innovation because, if you ask yourself “What’s the real value of an idea?”, you quickly come to the conclusion that this value is zero. Anyone who’s had to implement an idea knows that energy, work, brains, time, (often) money and the ability to cooperate, etc., have to be put into an idea in order to create something new. In other words, this doesn’t meet the definition of innovation that I gave at the start. Unfortunately, the term innovation is used very lazily and suddenly everything that’s marketed has become “innovative”. If you want to stay conceptually clean, you have to take great care.
Why should a company be innovative?
Business is a simple cycle. You invent something and earn money with it. Then you constantly improve the product/service and are ahead of the competition and, again, you earn good money. Then the competition is suddenly resourceful, produces cheaper and introduces its own innovations. Sales start to fall and you must come up with something new. Hence, you either innovate with the existing product better than the competition or you try to conquer or create a new market. If you want to survive on the market for a long time, you’re forced to be innovative.
What conditions does innovation need?
This isn’t easy to answer because many factors are responsible for the development of a “super seller”. I can’t list them all here, but there are some prerequisites that unfortunately aren’t easy for any company and can be described in three phases:
- Set-up phase: This is where the basis is laid for the emergence and implementation of innovation. It starts with the willingness of management to take risks and the clarification of several questions: Does the area of innovation fit the company strategy? Is there sufficient evidence of customer benefits (are we pursuing the wrong goals)? Do internal processes enable people to work well together across departments (many companies know from painful experience how previous innovation projects have been frustrated)? It’s essential to check: Do I have the necessary knowhow in house? How seriously do I stick to my guns (and adjust risk assessments) if everything doesn’t go right immediately?
- Value creation phase: This is where the value of the product or service is developed. The following questions must be answered: Do you focus on a few selected projects? How do you ensure that the speed of taking decisions doesn’t become a brake? Have you secured internal resources? Are teams properly staffed? In classically hierarchical companies, autonomy, freedom and power are required in order to move issues forward. It can be helpful here to have rules for radical innovation and motivating mini-budgets. Do you have the right talent or a good ecosystem (startups, user universities, bearers of knowhow) that you can exploit?
- Value capture phase: This is where a prototype becomes a product or service and the value created for the company is commercialised. It’s essential to check whether the conditions are in place for the new business to be integrated into the organisation. Ideally, the company’s core business can act as the first customer and, hence, quickly provide the first references. But how is the handover from development to sales structured? Are the right sales incentives in place? And are you on the right sales track, with customers looking for your product in the right place? Even if you’ve developed a top product, a lot can go wrong. You also need luck in order to be on the market with the right product at the right time. A product can suffer if it’s ahead of the market because not everyone will have enough staying power if the development of the market/demand takes longer than expected. I saw this myself in 2011 after receiving the State Prize for Electromobility for our consortium’s development of a charging station and billing system. It took years for the first cities to be won over to the idea and a decade before one visionary member of the consortium was able to earn good money from it.
I hope that I’ve been able to address some of the prerequisites for innovation and show that success has many fathers and mothers and that many conditions have to be met.
Dear Hans, thank you for your comments and sharing your experiences.