Understanding The
Difference Between
Innovation And R&D
In the early 1950s, the innovation process
relied more on Research & Development
as a source of new introductions of
products and services into the market.
Today, market conditions (the consumer)
dictate the process. The changing
market dynamics remain a key source of
innovation, therefore organizations that
value innovation must clearly understand
the difference between innovation and
R&D.
Research & Development focuses on
developing new products, services or
processes. Innovation on the other
hand focuses on speed to market that is
commercialization by better managing
the innovation process to deliver value,
faster. Both R & D and innovation are
important drivers of innovation for any
organization but they remain uniquely
different.
Using Research To Inform
Innovation
In my earlier years as a sales representative,
there was one statement that was agreed
by all; ‘numbers don’t lie.’ This is a fact
and a vital lesson I have carried through
to innovation. Understanding your
consumer, the market size and the real
need is vital in unlocking innovation
capabilities for your organization.
An organization, through research must
understand the real need of their target
consumer and how they can increase value
to these consumers while at the same time
decrease costs in delivering a product or
service.
Research is also helpful in understanding
the ever changing consumer trends that are
vital in informing what ideas to develop.
Through research, an organization can
identify which ideas have real commercial
potential.
Simplifying Complexities
Successful innovations introduce new
ideas and thinking that should bring
simplification and not complexities. This
should not limit creativity, but serve as a
guide to innovation teams on what must
be considered when introducing new
products or services.
The need to differentiate the product
offering brings with it complexities
that can impact on the project budgets
and timings. For example, the need to
differentiate through product variants and
new packs have an element of minimum
order quantities in terms of packaging and
raw materials. If not well managed, these
can end up as high inventory or expiries
that eventually impact on the company’s
profits.
Projects that need capital investment
(CAPEX) also come with complexities
of high cost and long project lead times.
To unlock innovations capabilities,
companies should avoid too much
‘baggage’ in form of huge quantities of
packaging and raw materials because the
fear of loss of revenue through ‘baggage’
can delay decisions that impact on the
success of the innovation or the business
as a whole.
Incremental Versus
Breakthrough Innovation
Incremental
innovation
focuses
on improvements of products and
processes over time. This is less risky
and almost always has guaranteed
results. Breakthrough innovation on the
other hand requires significant upfront
investment and focuses on revenue returns
much later. Any organization that does
not clearly differentiate these two, may
end up killing great innovation ideas for
immediate gain.
Think about Apple who develop fantastic
products and make consumers believe
they need these products (breakthrough
innovation) or Coca-Cola who over time
have innovated around their packaging
from the initial glass bottle, into can
and PET bottles (incremental) creating
more value to both the consumer and the
company.
Bringing It All Together
As a proven engine for growth, innovation
remains key to organizational performance.
To fully unlock innovation capabilities,
businesses must make innovation part of
strategy. Fostering a culture of innovation
will go a long way in guaranteeing success
of innovation initiatives.
Understanding the difference between
R&D and innovation can help businesses
adopt to the changing market dynamics.
Organizations can use research to identify
ideas that have real commercial potential.
Avoiding complexities that can negatively
impact on company profits will also go a
long way in ensuring that business achieve
real potential through innovation.
Senorine Wasike is an innovation
champion with over 10 years’ experience
in FMCG, currently working as the
Innovation Commercialization Manager
at Kenya Breweries Limited. You can
commune with her on this or related
matters via email at: Senorine.Wasike@
gmail.com