Innovating on the Cheap

Innovating on the Cheap
Lance A. Bettencourt and Scott L. Bettencourt
Harvard Business Review, June 2011

Everyone knows that innovation is essential to a company's long-term success. But even in the best of times, innovation investments can be painful. Typically, success rates are low, and returns on investment are far from assured. That makes spending money on innovation hard to justify in a down economy.

Even when cash is tight, businesses don't have to stop innovating. Fortunately, it is possible to launch new offerings that excite customers and respond to unserved needs. The trick is to find assets already in hand that can be brought to market with minimal effort and resources.

In "Innovating on the Cheap," in the June 2011 Harvard Business Review, the authors reveal the six kinds of "in hand" innovation that can lead to big profits at low cost.

Lance A. Bettencourt is a strategy adviser with Strategyn and author of Service Innovation: How to Go from Customer Needs to Breakthrough Services. Scott L. Bettencourt is the CEO of Gardman USA.

Most managers think an innovation must be something absolutely, completely new. Yet the reality is that almost all companies have previous discoveries with overlooked innovation or market potential. The work is done, and the risks are low. All it takes to realize a swift payback is for the company to uncover the hidden possibilities.

Managers should look for:

  1. Innovations that were previously developed but never launched, owing to circumstances that may have changed.
  2. Features of past products that may meet newly critical customer needs.
  3. Existing offerings that should be repositioned, because customers like them for unforeseen reasons.
  4. Elements of bundled offerings that could stand alone.
  5. New combinations of elements, in which the bundled value to customers is greater than the sum of the parts.
  6. Overdesigned offerings that could be pared down for less-demanding customer segments.

Let's take a look at each of these types of low-cost innovation, and explore how you can search for opportunities in each area.

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