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Well first of all Michel, I guess the word “renovation” is a play on words: the word
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“innovation”, which we're all familiar with, and renovation being not innovation,
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in other words the opposite. First of all let's be clear: we're talking
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about product and service innovation. Things a company or organization takes to its marketplace
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to its customers or users. Some companies use the word innovation to mean anything new
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the company does internally or externally. I'm not talking about that. This is product
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and service innovation to the outside marketplace. I guess the word innovation to me, and to
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most people, means something that is new to the external market place, to the world, or
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to the marketplace that my company serves. It could be based on new technology, but not
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necessarily. The iPod for example, one of the most successful
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products in history was an innovative system. Now mp3 players had been around for a while
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and so had various types of downloadable music such as Napster. But it was Steve Jobs that
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took all these pieces together and built an innovative, totally new system that delivered
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the most successful product and system in the world. That's a true innovation.
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At the other extreme we have renovations. This is where companies take their existing
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products and make small little changes. A little fix here, a little modification. Change
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the color, change the label. Add a little bit, subtract a little bit. Not very exciting.
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Many of these projects are sales force driven. The sales guys come and say: “Hey, I can
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get the sale. I can get the order if we can just change it a little bit.
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And unfortunately Michel the majority of product developments tend to be renovation-types:
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improvements: modifications, fixes, tweaks: not very exciting, not gonna make you a lot
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of money. And so, the other question I guess was: why
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is it important to do the bolder innovations? Simply because the evidence strongly argues
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that as companies have shifted away from innovation, to more and more renovation-type, smaller
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projects the productivity on R&D money spent has gone down steadily.
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And our studies of highly successful firms show that their portfolio of projects is much
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more towards the innovation end of the scale, and much less towards the renovation. Whereas
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the least successful companies when it comes to product development (making money, and
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measured on many different metrics); the least successful companies tend to emphasize renovation-type
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projects so the evidence is very clear on this: innovators win.
